Independence Of Internal Audit,Ownership Concentration And Internal Control Defect Repair

Internal control defect is a loophole or weak part which will affect the effectiveness of internal control in normal operation.The existence of internal control defect will affect the realization of enterprise strategy,finance,management and so on.Defects in internal control can lead to a series of economic consequences,including changing investors’risk perception,increasing audit fees,lowering stock prices,raising capital costs,and bringing litigation risks,finally affects the Enterprise’s management effect and the efficiency.The existing research is based on the corporate governance level and the management level to explore the impact of internal control defect repair,not the organic combination of the two.CYBERNETICS describes the internal control system of an enterprise as the rules and regulations that enable the enterprise to operate according to the expected goal through the coupling of information between the main bodies,through the governance level and the management level.By virtue of its detached independence,internal audit acts as a bridge between management and management,providing oversight and evaluation functions to owners while providing advisory services and decision-making advice to managers.Internal Audit is a system arrangement that checks and balances the power by the power and coordinates the power of supervision and control.To this end,the review of internal control defect repair can not exceed the effectiveness of independent internal audit function.Based on the theories of principal-agent theory and control theory,the listed companies with internal control defects observed from 2017 to 2019 are divided into groups according to the property right nature of the enterprises,divided into state-controlled listed companies and non-state-controlled listed companies.This paper examines the relationship between internal audit independence and internal control defect repair in listed companies by multiple regression analysis model,and examines whether stock ownership concentration has moderating effect on the relationship between internal audit independence and internal control defect repair.It is found that internal audit independence can effectively promote listed companies to repair internal control defects.When the degree of independence of internal audit is higher than when the degree of independence of internal audit is lower,it has more positive effect on repairing the defect of internal control.When the property right is different,the degree of ownership concentration has different effects on the relationship between the independence of internal audit and the repair of internal control defects.When the ownership concentration of non-state-controlled listed companies is high,the positive effect of internal audit independence on the repair of internal control defects is more significant.By introducing the independence factor of internal audit,the paper extends the influence factor of internal control defect repair from governance level to management level,and expands the existing research field.The internal audit independence should be re-measured in terms of the appointment and removal of the head of the organization,the scope of responsibility,the reporting level and the degree of decision-making participation,so as to further highlight the essence of the audit independence.The findings of this study are helpful to solve the agency problems caused by the difference of controlling shareholders under different property rights.