Modern Risk-Oriented Internal Audit: Theoretical Analysis And Its Factual Application

Recent years, the financial scandal case, such as overseas Barings Bank bankrupt, Enron, MCI Worldcom and domestic China Aviation Oil (Singapore) Corp ,Bank of China , CNCRC , had revealed one rule, that is , the stronger internal control, the better result, no control, no result. People's eyes have to shift back to the establishment of internal control system, highlight the functional expansion and application of internal audit. From COSO internal control Framework to SOX act all required higher standard on internal audit. Then risk-oriented audit is the most updated stage of internal audit development. And it's also the five development objective for China Institute of Internal Audit.The industry of architectural design belongs to one special category, presently it is classified as modern service named as the third industry. Most architectural design company came from the institution. Its management style is simple and extensive. With nearly ten years reform and development, it features diversified competitors, investment industry and customer demand. The case study unit-Shanghai XD Architectural Design Group Co., Ltd is the leader of the industry, has certain representative features. During its development period, also with the unsound internal control, the weakened internal audit function, not keen on the risk judgments and result in some loss. In Dec, 2006, the architectural design industry was faced the deadline of the all round opening up of service market within 5 years committed by china entrance into WTO. It's very important to reveal the present and potential risk of company and secure its development within an all around opening up competitive market and more international cooperation. Thus, it's necessary to establish a comparative internal audit system and introduce modern risk-oriented internal audit model. Through systematic analysis and review audit risk, we can further identify range, key point and method of audit to enhance the function of internal audit.This essay, based on the basic theory study of modern risk-oriented audit, further the application and development in the internal audit area. Along with the case study, the establishment model of modern risk-oriented internal audit and its further future and function has been presented.