Research on the Validity of Internal Audit in Chinese Natural Monopoly Industries
|School||Northeast Normal University|
|Keywords||Natural Monopoly Industries Internal Audit Validity Empirical Analysis|
This paper researches on the validity of internal audit in chinese natural monopoly industries.Research on the natural monopoly industries is a popular issue in economics and law disciplines etc.,and research on the internal audit is a hot issue in today’s management etc. areas about corporate governance subject.Find tailored point within the different subject areas to integrate research which has important significance for rich and development of these subject areas’theories and practices.China’s national never stop to pay attention to natural monopoly industries,because they are the backbone of our national economic and the guarantee of the national lives,they are also the patriarch level heroes to witness the the transition process of planned economic system to the deepening of reform and opening up in our country,they make the fundamental contributions to our country’s economic construction and development and national modernization realization,but for natural monopoly industries with special properties they have some problems constantly, in order to let them get rid of the old mode and routine of operation to take the steps of the times and with the ship of economic globalization to fulfill their social responsibility for the country and people,there issues a series of monopoly regulation reform measures and corporate restructuring rules,meanwhile, internal audit as a link of constraint and supervision mechanism in modern enterprise system,its effectiveness issue has been payed much attention by academics and practitioners.Has been the second decade of the 21st century,how the process of corporate restructuring in natural monopoly industries is?What effects it produces?This paper makes the internal audit which is one link of corporate governance as a breakthrough point for the research,and makes the natural monopoly industries listed state-owned enterprises as research samples, and adopts the section datas in shenzhen and shanghai stock exchange of 2009, applies the empirical analysis method,based on the academic achievements about some related problems of natural monopoly industries and internal audit from previous scholars and analysis of these two issues related theories,it uses earnings management level which represents the quality of financial report, external audit costs and risk level as the inspected variables to analyze the relationship within them respective and the internal audit in enterprises,and inspect the validity of internal audit in these special properties industries.The research conclusions of this paper as follows:(1)From the information of surveyed enterprises’annual reports by manually collection,we can know that all the valid samples established internal audit department and made it directly affiliated to the audit committee which is affiliated to the board of directors,the internal audit circumstance in the enterprises is much improved than it in previous years.(2)The empirical analysis indicates that the internal audit in surveyed enterprises produces inhibition to earnings management in a certain extent and reduces enterprise of earnings management degree; In addition,if the enterprise pays more on the internal audit,its external audit costs could be higher; But, there is no evidence that the internal audit of enterprises plays a significant role to affect the risk management of enterprises. Internal audit oriented to risk management is the popular issue in the subject area of internal audit nowadays,the internal audit should focus on the following aspects if it wants to make a function on the new expanded functional area:At first,the relevant specific standards of internal audit shall have the straightforward and timeliness contents to improve the standards’feasibility;Secondly, the enterprises themselves should continue to improve their recognition and attention to internal audit and strengthen its functions.