Research On The Impact Of Internal Audit To Financial Restatement Of Listed Company

In recent years, domestic and foreign financial fraud incidents occurred frequently, the focus of attention gradually from traditional external audit to the enterprise’s internal audit. To monitor and evaluate the operation of the internal control and financial report information is the main function of the internal audit. Before financial statement was audit by CPA and officially disclosed, internal auditors should supervise and inspect it. For this reason, internal audit is the primary gatekeeper of corporate financial report information. The effectiveness of the internal audit is directly related to the level of quality of corporate financial report. It is generally thought that the higher the quality of financial reporting information, the smaller the probability of its occurrence of misstatements and omissions. The financial restatement is the supplement and correctness of the misstatements and omissions found in the listed companies of financial reports. The occurrence of financial restatement shows that financial report is low quality and unreliable. The improper financial restatements leave opportunities to corporate fraud, which causing the company’s market value losses and higher capital costs and other adverse economic consequences. This paper will research the impact of internal audit to financial restatement under the background of our system of internal audit and financial restatement.The article first defines the concept, stage of development, the basic functions of internal audit and the system and concepts of financial restatement. Analyzing the influence factors of internal audit, the article chooses two variables of the independent establishment of internal audit and its model. Analyze its influence on financial restatement, and then verified by using the method of empirical analysis. It concludes that independent establishment of internal audit can effectively reduce the occurrence of financial restatements behavior, while the influence of internal audit mode to financial restatement is not obvious.Finally make policy recommendations:Strengthen internal audit in corporate governance and corporate management functions; Set up the internal audit institutions in a reasonable manner; Strengthen the communication of internal audit and external auditors.