Study Of Management Audit On The Basis Of Corporate Governance

In the context of the financial crisis, enterprises are facing a variety of pressures of increased competition, shortage of resources, environmental pollution. At the same time, many companies consider unilaterally maximizing their profit as their operation goal. The phenomena, such as blind investment, large shareholders’infringement of small shareholders, shareholders’ infringement of creditors, financial fraud of listed companies, and so on, have occurred from time to time. Social Responsibility Events doing harm to consumers and other events infringing stakeholders’ interests, such as clenbuterol event of Shuanghui Group, back mixing plastic of Kumho tires, Songhua River pollution made by Jilin Chemical, often came out one after the other. The phenomena of information asymmetries make people difficult to make scientifically and effectively decisions of financing, investment, credit and consumption in social and economic life. These phenomena are not only against the interests of stakeholders, but also seriously hampering the sustainable development of listed companies.The main content of the traditional audit of certified public accountants works for the financial audit. It neglected the comprehensive management audit on whole process of management, which led to frequent occurrence of above phenomena. Management audit is based on the company’s management process which is the comprehensive audit from before, during and after management. Management audit can help to promote the optimal allocation of corporate resources, and help to promote the company’s scientific decision-making, and help promote the company’s scientific development. Management audit is also conducive to achieving the company’s sustainable development and harmonious development between corporate and social. However, the current management audit work has just begun. The standard systems of management audit have not been established. Management audit has been carried out sporadically by only a few companies, which is difficult to adapt to the requirements of the sustainable development of socialist market economy for the audit work. Therefore, people at all levels and from all walks of life need objectively to strengthen all aspects, such as the organization, research, and promotion of the management audit. Under the mentioned above, the purpose of this research is to combine management audit with corporate governance. In the mean while, the study of management audit is raised to the level of corporate governance. Management audit systems have been analyzed and researched systematically on the basis of corporate governance. By doing so, the corporate governance structures are perfected and the level of corporate governance is improved.Judging by the surviving literatures, most of scholars paid attention to corporate governance by neglecting the role of management audit in corporate governance, or they paid attention to management audit by neglecting the study of management audit based on the requirement of corporate governance. The article starts from the challenges and problems which corporate governance is facing in the development. The meeting points between management audit and corporate governance are elaborated on the basis of principal-agent theory, corporate governance theory, social responsibility theory and stake-holders theory. This paper analyzed the concrete role of management audit playing on corporate governance. Through the investigation and analysis of demand of management audit, results are as follows: People are not satisfied with traditional financial audit. The interest of stake-holders can not be protected effectively. It is urgent to promote the development of management audit and construct the management audit systems so as to play a notable role on corporate governance. At the same time, using structural equation modeling approach, "management audit and corporate governance are grouped into the six latent variables from the practical possibility, which are internal control audit, financial management audit, information system audit, corporate performance, relationship among the stake-holders and information disclosure. Then,50 observed variables are designed and formed into a questionnaire. After making a survey to collect research data, this paper made related reliability and validity analysis. Then using structural equation modeling to make an empirical study of "management audit can drive corporate governance," with SPSS 17.0 and AMOS 17.0 software. Last, a favorable conclusion is made and as follows:management audit can promote the development corporate governance to a greater extent. The train of thought of constructing the management audit systems is proposed based on the theoretical analysis and empirical study. In the meanwhile, some suggestions and countermeasures have been made.This paper contains the following contributions:(1)Use method of empirical study to check the role of management audit on corporate governance. This article used structural equation modeling to make an empirical study of "management audit can drive corporate governance," with SPSS 17.0 and AMOS 17.0 software and verified the role of management audit playing on corporate governance on the basis of investigated data. The model and empirical research are leading and pioneering work.(2)The SPACE function model of management audit is proposed. Generally audit has three functions, namely supervision, evaluation, attestation. Through research, another two functions, which are prevention and construction, are proposed. The functions of audit are enlarged. The five functions of S-P-A-C-E make up for the lack of traditional financial audit. These functions of management audit help to play an important role on corporate governance.(3)Construct a new corporate governance structure framework embedded by management audit section. The article expurgates the relationship among the stake-holders based on the MA-CG model and the circle of corporate governance. Then a new corporate governance structure framework embedded by management audit section, which is good for stake-holders to participate in the corporate governance, is proposed. The management audit and financial audit would illuminate each other.This paper has used many research methods, such as inductive and deductive methods, history and literature research methods, comparative analysis method, the method of combining theory and Practice, normative research and empirical research methods.Finally, the article made five conclusions as follows:Management audit is an objective need to improve corporate governance. Management audit is the urgent needs for stakeholders to make scientific decisions. Empirical studies have shown that the management audit has an impact on corporate governance. Management audit functions can help to promote the function expansion of the traditional audit.