Discuss The Operational Mechanism Of Internal Audit In Enterprise Risk Management

Enterprise risk management is a significant part of modem enterprise management. It plays an indispensable role in the whole corporation. In September of 2004, COSO released Enterprise Risk Management -Integrated Framework. It provides guidance of theory for enterprise to management risk. Internal audit plays the role of supervising, appraising, inspecting, reporting and improving, is a necessary part of enterprise risk management. It has been a hot point both in theory and in practice now that how internal audit plays the role in enterprise risk management to improve validity of it and promote value of organization. The object of this paper is educing an operational mechanism to instruct the activity of internal audit through studying the enterprise risk management framework and internal audit, promoting value of stakeholder.Guided by Enterprise Risk Management - Integrated Framework which was released by COSO, the paper starts with the guidelines of studying the role internal audit should play in enterprise risk management and uses auditing, management, economics and statistics theory, makes a systematic study on operational mechanism of internal audit in enterprise risk management.Firstly, on the base of analysis and compare the actual enterprise risk management framework, the paper puts forward enterprise risk management conception framework. Secondly, surveying 38 companies about the actuality of internal audit and enterprise risk management, the paper indicates that internal audit should play the role of supervisor and consultant. Thirdly, on the base of conception framework putted forward by this paper, the paper discusses deeply the operational mechanism of internal audit in enterprise risk management and the way in which internal audit play the role. Enterprise risk management conception framework contains eight factors, internal audit plays the role of supervising the other seven factors of enterprise risk management conception framework, which are environment analyzing, objective setting, event identification, risk assessment, risk response, control activities, information and communication. The paper points out concretely that how to supervise the other seven factors to promote value of enterprise risk management. Finally, the paper brings forward a conception which is ERM auditing, brings internal audit and enterprise risk management together.Through building a comprehensive internal audit and enterprise risk management mechanism, the paper resolves the risks of enterprise. Wish this paper may devote to the development of enterprise risk management.