Research On Audit Committee Characteristics And Internal Control Quality

ABSTRACT:After Shanghai Stock Exchange and Shenzhen Stock Exchange have issued internal control guidelines of the listed companies China promulgated a series of policies.The implementation of Enterprise Internal Control Guidelines in2012indicated our internal control information disclosure from voluntary to mandatory, which set off a wave of research about internal control. The audit committee system is an important measure to improve the corporate governance structure. It has a significant impact on the efficiency and effectiveness of the implementation of the internal control system. Accordingly, this paper takes Shanghai and Shenzhen A-share listed companies on2010-2012as research samples and builds logistic regression model, systematically explores the relationship between audit committee characteristics and internal control quality based on the perspective of independence, expertise and diligence. The results indicate that the independence, expertise and diligence of audit committee are positively related to internal control quality. Further, according to the nature of ownership of listed companies, the samples are divided into two groups by state and non-state to test the effect. The results indicate that the audit committee system in the non-state-owned listed companies plays a better role. Therefore, it is particularly important that the non-state-owned listed companies with the low quality of internal control improve independence, expertise, diligence of their audit committee.The conclusion affirms the positive role the audit committee has played to improve internal control quality. However, the reality is that while the audit committee system has been gradually established and implemented in the listed companies in China, there are still some problems such as a mere formality, inadequate disclosure, independence and expertise not meeting the relevant regulatory requirements and other issues. Therefore, China should continue to strengthen the construction and improvement of audit committee system, internal control system and the disclosure of related information. This paper provides useful guidance for enterprises improving corporate governance structure and comprehensively strengthening internal control, investors evaluating internal control quality level of listed companies, the relevant regulatory institutions improving the relevant standards of internal control system, accounting firms and other intermediary agencies issuing audit opinions of internal control. Simultaneously, it also enriches the relevant research.