The Research On Value-added Internal Auditing Based On Corporate Governance

Auditing especially internal auditing has developed rapidly with the growth of economy. Because the traditional internal audit only served in the management level, the function, content and audit range have been limited. Along with the unceasingly strengthens on corporate governance, the goal of internal auditing and corporate governance have gradually become same, that is to add value to the organization. And the function, content and audit range also changed with the change of goal. The value-added internal auditing has been born.In June 1999, the Institute of Internal Auditors (IIA) has made a significant adjustment about the definition of internal auditing. The new definition says that: internal auditing is an independent, objective assurance and consulting activities designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, internal control, and corporate governance processes. This was the first time that "corporate governance process" was written in the definition of internal audit. This definition has risen internal auditing to the corporate government level, and pointed out the goal of internal auditing is adding value to organizations. The value-added internal auditing is a modern internal auditing. Because the goal of value-added internal auditing has extended, its function has also expanded from assurance to consultant, the auditing range has expanded form internal control and business scope to risk management and corporate governance. It achieved the value-adding goal through displaying two big functions (assurance and consultant) in three main fields (internal control, risk management and corporate governance).In addition, on July 30, 2002 the United States issued the U.S. Sarbanes-Oxley Act of 2002(SOA).This act has clearly explained the function, status and auditing range of audit committee and internal audit, which promoted the application of value-added internal auditing in practice.Based on the two backgrounds above, this paper has researched on the value-added internal auditing. The normative research approach, contrast analysis and case analysis have been used in this paper. And this paper has carried out the analysis and the research of the subject from six parts. Section 1 is to introduce the present research situation in domestic and foreign. Section 2 is to introduce the new definition about internal auditing, and analyze the difference with the traditional definition. In addition, this section also introduced the clause related to internal auditing in SOA. These contents are the foundation and the background to the behind studies. Section 3 is to analyze the change of function, the change of relationship with audit committee and independent auditor from the difference between value-added internal auditing and traditional internal auditing. At the same time, this analysis has considered the SOA. Section 4 is to make a clearly analysis about how the internal auditing to add value in three main fields according to the new definition. Section 5 is to research the theory and method about how to measure the increase of value and established a Balanced Score card model to internal auditing department. The last part has analyzed the present situation of internal auditing work in our country, and proposed the corresponding suggestion.The whole research has considered the clause related to internal auditing in SOA and the corporate governance, analyzed how the value-added internal auditing perfect the corporate governance and add value to the organization. This paper has paid attention to the relationship between theory and practice.