Of internal control and internal auditing relationship

 Of internal control and internal audit relationship
Abstract: Internal control and internal audit is interactive, the development of internal control the development of the internal audit, internal audit oversight and internal controls to promote further improvement and refinement. Internal control and good interaction of internal audit, corporate governance will help promote innovation, and effectively reduce the risk of corporate governance, improve internal operating conditions of the modern enterprise system to ensure that business objectives. This paper describes the meaning of internal control and internal audit and its contents start with the meaning of its contents, in the analysis of internal control and internal audit on the basis of the relationship, combined with our internal control and internal audit of the status of internal controls to correctly handle the relationship with internal audit measures.
Keywords : internal control, internal audit, relations
internal control is the social and economic development to a certain stage of the product, is an important means of modern business management. particularly in today's deepening economic reform, for economic activities, supervision, and strengthen self- constraint mechanism and improve economic efficiency is more important. internal audit as an important component of internal control, internal control is a necessary means to achieve. in the modern enterprise system to achieve business goals, internal control and internal audit of the relationship between issues need to be realistic.
First, the meaning of internal control and its content
the development of internal control theory has undergone a long period, can generally be divided into internal containment area, the internal control system, the internal control structure and the overall framework of internal control, and several different stages. COSO Committee noted that: compliance to achieve the objectives of the process to provide reasonable assurance. establishment and implementation of corporate control have a significant impact the general term for a group of factors is the basis for other parts of the internal control. control environment includes integrity and ethical values of employees, employee competence, management ideas and management style, organizational structure, Board of Directors and Audit Committee, the management authority and responsibility of the method of allocation, human resources policies and measures, external impact.
2, risk assessment. is a business management at all levels of internal and external risk perception. risk refers to the possibility of not achieving organizational goals. risk assessment is a prerequisite for setting goals, the target must be sales, production, supply, finance and other operations combined. risk assessment, including risk identification and risk analysis.
3, internal control activities. is to ensure the business goals established policies and procedures, including control of the business license, certificates and records control, asset access and usage control, segregation of duties, independent auditing.
4, information and communication. is refers to the relevant information and, effective way to identify, imputation and passed to relevant personnel, to effectively perform their duties.
5, control. was to evaluate the quality of internal control procedures. It includes the daily management and supervision activities , including internal audit and external groups and units to monitor the exchange of information.
the relationship between the above five factors can be understood as: the core business is people, people of integrity, moral values and competencies that constitute the enterprise's internal control environment, which is the basis for the development of enterprises. Every business has its own development goals, in order to achieve the goal of influencing factors must be analyzed, namely, risk assessment. for the risk assessment need to take appropriate internal control activities to control and risk reduction. At the same time with the internal control environment, risk assessment and internal control related activities, information should be obtained in a timely manner, processing order, and delivery within the enterprise, which is information and communication, information and communication activities in the internal control system around the around, reflecting the enterprises functioning of the management activities. In order to ensure the normal operation of the internal control system, also need to monitor the entire internal control process. among the five elements of internal control and contact with, form a complete system, with the flexibility to conditions change. But between the various elements is not an element of an element under the influence of the order process, any one factor can influence the other elements, such as risk assessment not only affect the internal control activities, information, and may also affect communication, monitoring behavior.
Second, the modern meaning of internal audit and its contents
1999 International Institute of Internal Auditors make a new definition of internal auditing: Internal auditing is used to increase the organizational value and improve organizational operations independent, objective assurance and consulting activities. it systematic, disciplined approach to risk management, control and governance processes to evaluate and improve the effectiveness and help organizations achieve their objectives. This new definition would extend the scope of internal audit to risk management and corporate governance, internal audit is that internal control and governance processes for the evaluation of the effectiveness and improvement are necessary.
modern internal audit work mainly covers the following topics:
1, the auditing .'s internal auditing of enterprises, focusing on its assets, liabilities and profit and loss of real, legitimate and profitability. examine the main elements: the development of the company's compliance with the requirements of relevant national laws and regulations; companies have a period of time the assets, assumed liabilities, operating results and the distribution of true legitimacy; company's assets the security, integrity and increasing the value of the situation.
2, cost-effective audit. internal audit conducted by the economic benefits of the audit, mainly from improved production and management and improve the internal management system of two aspects. On the one hand, the internal audit by the enterprise supply, production, marketing of all aspects of human, financial and material elements of the inspection, analysis, constructive comments, can help The departments and units responsible development of improved production and management measures to improve economic efficiency; the other hand, by evaluating the internal audit departments and units of the internal control that management deficiencies, and other means to make management recommendations to help the sector, improve the internal management of the unit, increase economic efficiency.
3, economic responsibility audit. was to evaluate the internal organization, personnel engaged in economic activities in certain period of time to determine its operating results, a clear financial responsibility, including leading cadres here term economic responsibility audit and annual economic responsibility audit.
4, the internal control system review. mainly on the integrity of internal control systems, to evaluate the applicability and effectiveness.
5, to carry out the audit of clear property rights. clear audit of its property right, to avoid the state-owned assets, the collective loss of assets or other acts detrimental to business interests.
6, other audit. combined with their own characteristics of the industry, carry out the operation, management and other aspects of the audit.
In addition to these six, the internal audit should also include provision of advisory services for enterprises, namely, customer service consultants and other activities, the type and scope of services in consultation with the client, the purpose is to increase the value, change the sound corporate governance, risk management and internal auditors can be exempted from the responsibility of management control procedures.
Third, internal control and internal auditing relationship analysis
internal control review and be reviewed, evaluated, and the relationship being evaluated. from the basic process of internal control can be seen, the internal control system is by design, through implementation of the system of internal control, internal control system to the test, then the evaluation of internal control system, an integral part of the whole process of the four, control activities again and again, the first two aspects of enterprise management and the responsibility of the various functional departments, and then two areas is the primary role of internal audit of space, the internal audit of internal control system as an important sub-system, is also monitoring the control system to control and then, in the control system has an irreplaceable, important position, resulting in corporate governance, organizational structure and procedures of operation, the formation of internal control, internal audit interactive hands ��ϵ.
(a), the internal audit of internal control is the control range from the traditional accounting controls and gradually extended to the management control, operational control, risk control until control of all business processes, involving all aspects of corporate activities.'s development path from the point of view of internal audit, internal audit focus from disadvantages to the traditional correction-based troubleshooting shift management audit of the financial audit, performance audit and risk audit, the audit function has been extended to the traditional supervision and evaluation of supervision and evaluation and consultation, the ; change, the internal audit objectives are set by the Authority's internal control changes to improve internal control systems. internal control and internal audit together there is a clear interaction between the internal control of the direction is the direction of internal audit, internal control content is internal the contents of the audit, internal control is a key part of the internal audit focus. shifting the focus of internal control, the objective to promote the internal audit focus servo and metastasis. Comparison of sound and effective control, the scope of the audit can be appropriately reduced, samples can appropriate reduced audit risk to be controlled, otherwise, appropriate to expand the scope of the audit will need to increase the audit sample, to avoid audit risks.
(b), the internal audit of internal control internal controls and improve the role of a watchdog.
audit of internal control system is the internal audit staff from the research and analysis of the internal control system to start by compliance testing, as reflected in the audited information on the authenticity of economic activities, reliability, accuracy, and make the evaluation of effectiveness, and on this basis, the decision was to be substantive audit scope and content of the test, while the revised audit of the direction and objectives, the implementation process in the audit plan to form an audit opinion. In recent years, , the internal audit of the most important concept innovation is to emphasize the internal audit control system, the most explicit direction that object into the process and results of the audit object, both note that the results of the audit, more emphasis on the audit process; to a particular point in time from a static situation in the whole process of the audit into the dynamics of the audit, not only pay attention to the static internal control standards under the audit, pay more attention to the effectiveness of the audit process. the size of its internal controls, the control effect of the advantages and disadvantages, the main means of testing standards and testing to be completed by internal audit, internal audit has found that the internal control system as a the important role of defects, as the testing of internal control system, monitor, and information respondents.
(c), internal control and internal audit of the interaction together, is conducive to innovation and corporate governance.
Corporate Governance innovation in the development of internal control together with the interaction of internal audit as an effective corporate governance continue to improve the inject new vitality of governance.
1, conducive to improve and perfect control system. through the interaction of internal control and internal audit control systems can be found together in the weak links, revealing the existence of potential corporate governance risks, propose feasible The improvements and programs to enable more effective control system to run.
2, is conducive to early detection of potential risks of corporate governance. internal audit by the evaluation of the effectiveness of internal control, not only to expose and constraints of various immoral and non-standard behavior and prevent a variety of adverse effects caused to the company, as well as early detection of risk areas to be the focus of treatment, prevention, rich content of corporate governance.
3, is conducive to the implementation and functions of the board of supervisors extension. In the corporate governance structure, the Supervisory Board due to multi-party factors, can only be limited to the supervision of the company's senior management, the authorized agent in the lower base in the blind spot, resulting in corporate governance structure of the functions in the control of the board of supervisors can not be implemented. internal control and internal audit of interaction, so that different levels of authority and agency to fully reflect the situation, help to form a top-down, bottom-up all-round monitoring, the board of supervisors to implement and extend the functions.
4 is conducive to the comprehensive real information delivery. internal audit in an independent capacity to form audit report to provide true information to the relevant departments, thereby contributing to the scientific decision-making and enhance the function and value of corporate governance, but also a partial solution to the client and agents between with Chinese characteristics and internal audit system, to improve the internal self-restraint mechanisms, the establishment made a great contribution to the modern enterprise system. However, some of the enterprise's internal control and internal audit to establish, implement, and improve the desired results have not been, in general, not optimistic.
(a), of some enterprises have not fully internal audit of internal control as a expanded from the traditional accounting control to management control, operational control and risk control in all operational aspects of the company, some of the contents of internal audit has taken place is still stuck in the matters to be audited for the object, focusing on the authenticity of the review of its accounting information and legitimacy, aimed to prevent, detect Cuobi financial revenue and expenditure, the internal audit service is limited to light weight monitoring financial and accounting aspects. the development of internal controls and internal audit failed to promote the development.
(II), China there is no real internal audit business to fulfill its proper functions, so that part of the enterprise's internal audit, saying the play did not test internal controls, monitor and feedback role.
some enterprises in internal audit, there is no adequate internal controls for compliance testing and substantive testing, and internal audit and other functions as are led by leaders of the unit directly in the internal audit found internal control problems, because of Foreign Yang strong independence and authority of the internal audit unit in the same level of other departments, because the same level, but also mutual restraint, and some companies is Over time, internal audit oversight inevitably become a mere formality. so that the internal audit process that the integrity of the internal control system and the effectiveness of internal controls did not perform timely response.
(c), internal control and internal audit did not form good interaction together, did not fully play their role in corporate governance, the driving force of innovation.
in some business management, corporate governance structure is imperfect, weak internal control environment and internal controls for internal audit did not ;, and internal audit have not played a test of internal controls, monitor and feedback role, leading the internal audit is not an effective test evaluating internal control, internal control systems are not promptly improve and perfect; internal audit and Since the effectiveness of internal control system and not sound better development. internal control and internal audit did not form a good interaction, internal audit can not fully convey the information, leading to the potential corporate governance risks can not be early detection and improved , the functions of supervisory board has not implemented an extension.
five internal controls and correctly handle the relationship between internal audit response
(a) increasing the development of internal audit concepts, to improve the internal audit system, the internal audit and internal control and common development, promote the internal control system.
with the number in the appropriate internal audit, the better the quality of internal audit staff. so that it can meet the modern enterprise system, the internal control system needs. in the internal audit, matters of internal audit from the past extended to have occurred and are occurring, that results from the monitoring of internal control extends to the process and results monitoring, troubleshooting a variety of measures from the internal audit-based shift management audit of the financial audit, efficiency Audit and risk error prevention audit auditing a variety of measures. auditing supervision and evaluation functions from the traditional extended to the supervision and evaluation and consultation, the changes to improve internal control systems.
(b) improve enterprise management awareness of the importance of internal audit, strengthening the role of internal audit, internal audit to truly become a test of internal control, monitor and feedback role .
through the establishment of sound internal audit system to ensure that internal audit's independence and impartiality, we should first enhance the status of internal audit, the setting for the audit should be higher than the other functional departments. At the same time, it must be the internal audit staff from the accounting , separate financial officers, internal audit and key in the conventional project audit, the audit work directly on the board of directors or supervisory board is responsible, so as to ensure the independence and authority of internal audit. In addition to the training of internal audit staff, audit staff update knowledge, improve their skills to enable them to adapt to the characteristics of internal audit work, clarify their job responsibilities. We should give full play to the role of internal audit, internal audit approach from a simple post audit of the traditional way, transferred to the advance, the audit up and implementation of internal audit staff should rely solely on the strength of the internal audit internal audit and external audit to the combination of direction. so that the internal audit of internal control plays a comprehensive and effective monitoring and evaluation, and promote the establishment and improvement of internal control, reasonable and effective internal controls to ensure that the design and operation.
(c), to create a good internal control environment and improve the internal control system and internal audit system, and promote innovation and corporate governance.
standardized corporate governance structure, from business owners standpoint, the power of enterprise managers to exercise internal control process is incorporated into the scope of supervision and internal control to it as the focus of monitoring object, clear the shareholders, board of directors, the duties of supervisors and managers, decision-making system, management systems and monitoring systems fulfill their duties, coordinate operations, and effective checks and balances. to ensure that internal audit conducted by the internal control testing, evaluating internal control system soundness, compliance and effectiveness. in the internal audit improve and perfect the internal control and internal audit as an important component of internal control, for improvement in internal controls, improve their internal auditing. to ensure that a comprehensive internal audit of the information can be conveyed, the timely submission of internal control weaknesses and the corresponding recommendations for improvement, encourage business at a reasonable cost to promote the effective control and reduce the risk of corporate governance, to improve the internal operating conditions, to ensure that the modern enterprise system of business goals.