Research On The Added Value Of Enterprise Under Subordinate Mode Of Internal Audit

Since the exposure of a series of corporate accounting scandals such as Enron and WorldCom, the Internal Audit gradually became the focus of public attention, the governance layer were aware of the huge losses due to imperfections of governance to listed companies more deeply. In July2002, the United States formulated the Sarbanes-Oxley Act, making a more stringent specification to the Audit Committee and developing the company’s stock listed on the need to establish the rigid requirements of the Audit Committee. In the bill, it did not directly mention the roles that internal audit played, but the expansion of the management and the audit committee implies that the functional role of internal audit should be extended. In2006, the SFC promulgated the revised Guidelines for the Articles of Association of Listed Companies, which require that the internal audit staff is responsible to respond to the Board of Directors and report the internal audit clear. The same year, the Shenzhen Stock Exchange listed companies internal control guidelines on internal audit provision: companies should be specific and clear responsibility and authority of each position, the establishment of the mechanism of checks and balances among the various departments and the creation of specialized internal audit function department responsible for the supervision and review. Visible, the position and role of internal audit in corporate governance has become increasingly important. But the roles that Internal Audit played are not optimistic, such as it has not really developed to the height of corporate governance, the independence and authority of internal audit has not been a guarantee; the attitude of the Board and the management has to be improved.Therefore, the relationship of the internal audit and corporate governance has a certain theoretical significance and strong practical significance.In this paper, based on the rules internal audit played in corporate governance we use three years of relevant data in2008,2009and2010from China’s Shanghai Stock Exchange A-share listed companies to investigate the value-added enterprise value of internal audit under the model established factors and different membership models. The study finds that:(1) when the company choice the internal audit mode, the main consideration includes seven factors:whether the company sets internal audit system, years of listed companies, company size, debt ratio, profitable ability, independence of the Board,the structure of the dual leadership. Among them, the establishment of the internal audit system, company size, debt ratio, net profit margin of sales and whether chaiman of the board combined with the general manager passed10%significant test.The establishment of the internal audit system of listed companies, the larger the size, the lower the debt ratio, the higher the sales margin, the more clear separation of duties of the chairman and general manager of internal audit is more inclined to belong to a higher level.(2) Internal Audit plays a role in corporate governance. If the listed company has set up internal audit, external audit costs will be relatively low. The text slaves modes by value-added enterprise value, only the mode of the Board and general manager mode passed5%or more of the significant test, and the symbols and the expected signs, it indicates that under the mode of the board of directors and general manager, the company has lower external audit fees, in the other word, value-added effect is more pronounced. The conclusion is consistent with the regulation that "China Securities Regulatory Commission requires that listed companies should establish internal audit and accountable directly to the Board ".According to this study, we make policy recommendations to enhance the role of internal audit value from the external environment and internal environment. Improve the external environment and internal environment of the internal audit at the same time, multi-pronged approach from the layer of corporate governance, management, internal audit staff to the company’s general staff, and then gradually improve the concept of internal audit work, raise the importance of internal audit work and recognition, strengthen the supervision and guidance on internal audit work, and lastly it maximize the internal audit services to enhance corporate value.