Enterprise Group Internal Audit Study

Corporation Group Internal Auditing (CGIA) is a kind of independent and objective assurance and consulting activity. Through CGIA, separate auditing bodies can be set in the enterprise group and full-time auditors can be allocated leaded by the superintendent of this enterprise group, systematic and normalized methods based on the rules of the national related law, statute and policy can be adopted to evaluate and improve the risk management, manipulation and affectivity of the management process of members of the corporation groups, further to assist corporation group to attain the goals. The aim of CGIA is to add the values and improve organizing management. There are two reasons about the yield of CGIA. One reason is the demand of inner management of corporation group. The continuous development of the corporation , the sophistication of economic work , the diversity of administrative level as well as the decentralization of the productive and operating sites require the establishment of internal auditing institution within the corporation group. This internal auditing institution should be independent outside the various functional departments, should make the relative individual and impartial determination in many aspects such as business activities and conditions of the corporation group, and should serve the manager of the corporation group. The other reason is the pressure applied to the corporation group from the external auditing and society. The external auditing can not meet all the demands of the corporation manager with the profound and fine development of the auditing activity. The internal auditing is needed to share part of auditing business. Furthermore, the drastic market competition requires the corporation to establish the internal auditing system, to look inside, to blocking holes, to economize cost, and to improve economic performance.As the major element of the corporation group, the internal auditing plays a very important and special role in the process of the business administration of corporation group. The primary aim of CGIA is to evaluate the control system of corporation groups to ensure the timely discovery of the potential financial risk and the management drawbacks in the corporation groups. Internal auditing applies the auditing methods based on the controlled system and carries out auditing activities around the relevant risk. Internal auditing is not the auditing of financial documents, but also involves various activities of corporation groups' management. Through the development of 20 years many problems still exist for CGIA in our country in spite of a number of achievements. The target of foreign CGIA has been transferred from the financial auditing of debugging and anti-skullduggery to the inspection and evaluation of the economic performance of corporation group. The internal auditing has accomplished the progress from protective to constructive function. However, the main function of the internal auditing of China is still to carry out financial auditing work. There's a wide gap between foreign and domestic CGIA. Therefore the exploration of the EGIA of our country is of considerable practical significance to the transition of the EGIA idea of our country, the modification of the internal auditing work and the improvement of the management performance.In this paper, firstly, the change of the definition of Chinese and foreign internal auditing has been studied. The start point of this paper is to investigate the definition of internal auditing defined by the international internal auditing institute. Secondly, the connotation and scopes of CGIA has been investigated based on the analysis of the characteristics of corporation groups. According to the characteristics of the development of CGIA of our country the five major problems of CGIA at present, such as the irrational institutional set-up, the over-narrow auditing scopes and inappropriate function location have been presented base on the basic theory of CGIA. Lastly, the countermeasures for the solution of the existing problems of internal auditing, such as the internal auditing target transformation to the increase of corporation values, the choice of effective institutional set-up mode, the performance of the internal auditing functions, the implementation of the risk management auditing , the impelling of the professionalization of internal auditing, have been presented based on the latest theory achievements of international internal auditing and the present status of Chinese CGIA. The emphasis of this paper is the section of problems and countermeasures. The latest international internal auditing theory achievements have been introduced into Chinese CGIA through analyzing problems and searching the countermeasures, which provides major theory significance and actual value for the development of Chinese CGIA.