A Relevance Study Between Enterprise Social Responsibility And Internal Control Audit

In the development of economy, stakeholders including shareholders and debtors creditor of a company concern more about the effectiveness of internal control audit and show more demands for true information about internal control, which drives the execution of internal control. As far as Chinese national condition is concerned, a properly handled relation between internal control audit and internal control mechanism will help the stakeholders to balance the relation among government, enterprise, industry and the society in a timely manner, with the information provided by internal control audit. Given the status quo, the normativeness of internal control audit remains to be improved in many aspects. Since the year of 2011, internal control audit has been carried out in batches according to classifications and has developed into a stage where both voluntary and compulsory internal control audit can be found from where there was only voluntary internal control audit. However, there are still companies giving substandard report on internal control audit of poor quality. This research, starting from the viewpoint of social responsibility of enterprises, is designed to review how exercising social responsibility can advance the implementation of internal control audit within an enterprise by studying the interaction between exercising social responsibility and executing internal control in the year of 2012 and 2013 in companies listed in Shanghai and Shenzhen stock exchanges.Firstly, starting with a study of the status quo of enterprises in practising social responsibility and implementing internal control audit, the author of the dissertation does a literature review and a comment of existing studies. Secondly, guided by the principal-agent theory and information asymmetry theory, the research finds that the stakeholders of a company need to establish a mechanism arrangement which takes internal control audit as a measure to coordinate their benefits and that a company needs to take social responsibilities actively to display its capability to the stakeholders and transit its reliable information via internal control audit. Then, the research reviews the correlation between social responsibility and internal control audit empirically, finding that the social responsibility and internal control audit of enterprises have obvious positive correlation. In other words, the more a listed company is willing to practise its social responsibility, the more likely it would take internal control audit. A positive correlation can be found obviously between the report on social responsibility and internal control audit of a company. This is particularly true for those companies willing to make their social responsibility report public. Such conclusions confirm the hypothesis of the research.The research in this dissertation finds that the social responsibility and internal control audit of enterprises have positive correlation. In other words, the more a listed company is willing to practise its social responsibility, the more likely it would take internal control audit. A positive correlation can be found obviously between the report on social responsibility and internal control audit of a company. This is particularly true for those companies willing to make their social responsibility report public. Finally, the research gives suggestion for companies to exercising their social responsibility, upgrading company mechanism and implementing internal control audit.