The Research Of The Relationship Between Risk-oriented Internal Audit And Corporate Governance

The famous corporate governance expert Tricker consider that the 21st century is the century of corporate governance. November 2001 , Enron financial scandal was exposured,later WorldCom's financial fraud was exposured, caused the shock of the global financial sector, people hold great suspected on corporate governance. And now, WorldCom's internal audit staff Cynthia Cooper, depend on her outstanding insight, personality audit independent, excluding her own safety, exposed the inside fraud of WorldCom , People's attention on internal audit was increased.November 4, 2003, the U.S. Securities and Exchange Commission announced new rules of corporate governance, one of which is that all listed companies must set up an internal audit positions. IIA Chairman Leroy E. Bookal raised: "Effective corporate governance requires four important conditions, internal auditors, board of directors, senior managers and external auditors", Internal Audit and the Board, senior management, external auditor, to be the cornerstone of the corporate governance, contribute to corporate governance. Thus the development opportunities of the internal audit was arrivaled.This article first conducted a review course of the development of our internal audit , obtained the necessity of of risk-based internal audit,then we have analyze the theoretical characteristics of risk-based internal audit, and its role in corporating governance. Corporate governance structure is an effective incentive balances of the mechanisms and checks established between all participants in the company's. Internal audit as a monitoring and evaluation mechanism means to promote corporate governance structure and effective operation. Corporate governance, need the internal audit to provide timely, continuous monitoring, as well as timely assessments of thebusiness risk, participate in the corporate strategic planning, help the businesses to make strategic response to the risk, through the risk assessmenting, controling and governancing processes, to achieve the improving of the corporate governance, increasing the corporate value and achieve the goal to create value for the enterprise.Risk-based internal audit in our corporate governance have some problems, such as risk-based internal audit is still in its infancy, risk management philosophy is weak, risk management system is not perfect, technology is old, the company not pay enough attention to the internal audit, internal audit function and the scope of work is limited, vague understanding of internal audit, internal audit staff'quality is not higher,ect. For these problems, we think we should take these measures: First, we should strengthen risk management awareness, strengthen the risk management mechanism. Second, promoting the risk-based internal audit at the corporate governance strategic perspective. Third, changing the internal audit function. Fourth, changing the mode of internal audit ,establishing the independence of the internal audit position. Fifth, improving the internal audit staff'overall quality in corporate governance. Sixth , promoting the computer audit and improving the audit efficiency. In the final part, the paper analyzes the successful implementation of risk-based internal audit in Wuhan Iron and Steel Group',to find the proper way to participate the risk-based internal audit in governancing practices, and demonstrate the theme of this article.Strengthing the internal audit can be make the governance better.