Internal Audit And Enterprise Risk Management

In November 2001, the financial scandal of Enron Corporation was exploded. Six months later, WorldCom was exploded again. It is just like domino effect, resulting in 338 firms, totaling 409.3 billions assets asked for bankruptcy protection in the same time, which makes people begin to focus on internal control. Internal audit plays an important role in enterprise management, it is not only an essential part of internal control, but also key means of supervision and prompting of internal control. This paper researches the frontier of internal audit, which is supposed to have theoretical as well as realistic significance.This paper is organized as follow: The first part reviews the historical evolution of internal audit, analyzes the development of internal audit definition. Internal audit has to change with changing environment and managerial requirement, risk-oriented internal audit is the latest development of internal audit. The second part discusses the conception of corporation governance, considers internal governance is the core of corporation governance; we must enhance the supervision of board of directors to keep corporation governance efficient. Internal audit is the right-hand assistant of board of directors to function effectively. The third part reviews the historical evolution of internal control, introduces the contents of Enterprise risk management and the new changes of internal control, and emphasizes the important role of internal audit on cultivating the whole control consciousness, enhancing"soft control", constructing effective communication and promoting system self-evaluation. The fourth part reviews internal control and corporation governance is syncretizing as integral enterprise risk management system, sketches the outline of the integrated system, thinks internal audit act as supervisor, consultant, coordinator and proponent in this integrated system. The fifth part analyzes domestic cases like CAO(China Aviation Oil LTD.), ChangHong, Skyworth, YiLi etc., which indicate there are many problems in domestic enterprise risk management. It concludes that...