The Position Of Internal Audit In Corporate Governance

The basic principles of internal audit clearly define that internal audit is an independent and objective supervision and evaluation activity within the organization, which promotes the realization of organizational goals by examining and evaluating the appropriateness, legality and effectiveness of business activities and internal control.

Corporate governance is a brand new concept. So far, the theory and practice circles at home and abroad have not yet formed a completely consistent understanding. At present, it is difficult to define the definition of "corporate governance" accurately and underground.

But from the perspective of the emergence and development of corporate governance, it can be understood from two aspects: narrow sense and broad sense.

Narrow sense of "corporate governance" refers to the owners (mainly shareholders).

A mechanism of supervision and checks and balances, that is, by establishing a system to rationally configure the relationship between rights and responsibilities between owners and operators.

It is supported by shareholders' meetings and board of directors.

The internal governance of the corporate governance structure.

The purpose is to ensure the maximization of owners' interests and prevent operators from damaging the interests of owners.

This is also the viewpoint adopted in this article.

The generalized "corporate governance" refers to a mechanism of supervision and balance between shareholders and other stakeholders, that is, to establish a set of formal and informal internal and external systems and mechanisms to coordinate the relationship between enterprises and stakeholders.

It includes not only internal governance based on corporate governance structure, but also external governance implemented by other stakeholders from outside the enterprise by means of relevant systems and mechanisms, which is governed jointly by stakeholders within and outside the enterprise.

The purpose is not to maximize the interests of the owners, but to ensure the maximization of the interests of the stakeholders.

To achieve this goal, corporate governance can not be limited to checks and balances of power, but must focus on and ensure the scientific decision-making of enterprises. Not only do we need to establish a complete and effective corporate governance structure, but also we need to establish effective companies.

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Internal audit and group interests are bundled together. The ultimate goal of internal audit is to enhance internal audit supervision, improve management and improve economic efficiency.

The internal audit is entrusted by the owners and stands on the owners' position. It supervises and evaluates the company's financial status and business activities, and has high authority and independence in the corporate governance structure.

Internal audit plays an important role in internal control.

Internal audit is an important part of enterprise internal control. It is a control layer independent of specific operations and management. It is directly responsible to the highest decision makers. It also evaluates the adequacy and potential risks of specific operations and management departments' internal control, and puts forward audit proposals to reduce the risks arising from the ineffectiveness of internal control.

At the same time, internal audit helps enterprises to create "soft control" environment, and is a consultant for internal control process design.

From the development trend of internal audit in recent years, its function has expanded from traditional supervision and evaluation to supervision, evaluation and consultation, and gradually changed from "supervision oriented" to "service-oriented oriented"; the focus of internal audit shifted from simple financial audit to management audit and risk audit.

Internal audit plays an increasingly important role in supervision and staff management in the management of enterprises, assisting managers to manage and control activities more effectively, rationally using resources, improving economic efficiency, monitoring and ensuring the value of assets, increasing the investment returns and economic benefits of shareholders. It is the highest goal of enterprise operation and the central task of internal audit.