The Role Of Internal Audit In Corporate Governance

< p > < strong > 1. < a href= "http://www.91se91.com/news/index_c.asp > > internal audit < /a > is a powerful measure to solve the problem of information asymmetry. < /strong > /p >

< p > there is a principal-agent relationship between the shareholders and the managers of the company. The shareholders supervise the business activities of the operators by selecting directors. Shareholders, directors and operators become the important subjects of corporate governance. The reports on the performance of the entrusted financial responsibility and the reports on the performance of the entrusted management responsibilities are important for the information asymmetry between the trustee and the trustee. In terms of the contracts between the trustee and the client, the observable variables of the entrusted management responsibility and the observable variables of the performance of the entrusted financial responsibility are helpful to the fulfillment of the contract.

Modern internal audit is a comprehensive audit including financial audit and management audit. It is necessary to examine the performance of entrusted financial responsibility and entrusted management responsibility, so as to ensure that the trustee can act according to the interests of the principal, so as to narrow the interests gap between the principal and the trustee.

Internal audit not only plays a role in the confirmation of financial accounting information, but also plays a role in the field of operation, and ultimately reduces paction costs and agency costs.

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< p > < strong > 2. internal audit is conducive to the supervision of the company's < a href= > http://www.91se91.com/news/index_c.asp > internal management < /a > /strong < /p >

< p > in modern corporate system, there are not only principal-agent relationships between shareholders, board of directors and managers, but also the principal-agent relationship between employees and managers or corporate groups at the operational level. This is manifested in the fact that managers or corporate collective decisions are implemented hierarchically, and the information of all levels of the company is reported or pmitted to the next level.

In order to ensure the safety of the company's property and the implementation of its management decisions at all levels, it is not enough to rely solely on the supervision of the shareholders or the board of directors.

Although internal control has played a certain role in supervision, but from the effectiveness of the monitoring system, there is a need for a department to timely and accurately feedback the problems in the operation of the internal control to the top managers, so as to control, balance and assess the operation of the internal control, so as to ensure its efficiency.

Internal audit is an effective way to evaluate internal control, because internal audit institutions can discover defects and loopholes in the implementation process of internal control system in accordance with their independence, understanding of the company's situation and accumulated experience in long-term audit work. Through analyzing the causes and effects of the problems, the internal audit system can put forward practical and constructive suggestions and measures to improve the internal control of the company.

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< p > < strong > 3. internal audit is an important carrier to create < a href= "http://www.91se91.com/news/index_c.asp > Company Value < /a > /strong > /p >

< p > internal audit can not only play a guarantee role in supervision and checks and balances, but also make full use of the functions of advisory services and explore ways to improve company value by taking advantage of all the business reviews conducted by the company, which is consistent with the value of corporate governance.

In fact, the fundamental driving force for the development of internal audit is to increase value. In a cost sensitive market environment, the management of a company requires every member to create value for the organization.

As the objective of internal audit, it has injected vitality into the internal audit to bring it closer to the value chain of the organization, and the high quality services it provides will be affirmed.

Most types of audits, including compliance auditing, can create value for organizations by enabling them to keep abreast of the effectiveness of the control system.

Modern internal audit can comprehensively evaluate and predict the effectiveness of risk management, control and governance process through systematic and professional methods, and put forward relevant advice and improvement measures to the top management of the company, thereby increasing the value of the company.

On the other hand, the existence of internal audit will objectively act as a deterrent to managers and other functional departments in the organization, so that they will have to maintain a good control system and strive to improve their performance.

This passive "self-discipline" behavior objectively leads to an increase in organization value.

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