The Role Of Internal Audit In Corporate Governance

There are principal-agent relationships between shareholders and managers of the company, and 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 entrusted financial responsibilities and the reports of entrusted management responsibilities are important for 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 conducive to the fulfillment of the contract.

Modern internal audit includes financial audit and audit.

The comprehensive audit should examine the performance of the entrusted financial responsibility and the 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.

In modern corporate system, there is not only the principal-agent relationship 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 down to 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

According to their independence, understanding of the company's situation and accumulated experience in the long-term audit work, we can find flaws and loopholes in the implementation process of the internal control system. We can put forward practical and constructive suggestions and measures to improve the company's internal control by analyzing the causes and effects of the problems.

Not only can it play a guarantee role in supervising and balancing, but also can make full use of the functions of consulting services and explore ways to improve company value by taking advantage of the review of all businesses in 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.

Therefore, paying attention to the construction of the internal control system, improving and perfecting the internal audit has become a pressing matter of the moment, and is also based on the thinking of corporate governance.