The Study On Internal Control Audit Of GEM Listed Company A

As a result of the Enron and WorldCom financial fraud scandals, the United States issued the Sarbanes- Oxley Act in 2002 to enhance the internal control quality of listed companies. The act requires certified public accountants to audit the internal controls over financial reporting. In the process of rapid development of China's capital market, there are many financial fraud events such as YinGuangXia, Greenland and WanFu which exposed the defects of the listed company's internal control system, negatively affecting the operation of the capital market. In 2008 China gradually released the basic standards of internal control and other documents to establish a standard system of internal control. However, this standard system has not been implemented on the GEM companies. The GEM companies' developing time is short and the internal control of them are weaker than companies listed on the main board so that the GEM companies have more urgent need for internal control audit. Data of 2014 shows that only 3.2% of the China's GEM companies disclosed the standard internal control audit report, and the rest of the GEM companies implemented internal control attestation which represents less assurance than the internal control audit.Internal control audit for the GEM companies is the theme of this paper, and the case study of company A has certain research significance. In this paper, the author analyzes the process of internal control audit implemented by certified public accountants. Through the analysis of the process, the author finds the problems that wearing down the efficiency and the effect of internal control audit.. The author analyzes these problems and finds some reasons to explain these problems: auditor's insufficient professional competence; the lack of internal control audit guidelines; the client's internal control system still not perfect; limit from audit cost control. Finally, this paper puts forward some suggestions to solve these problems,including understanding the control environment from all angles; giving enough attention to internal controls which are not directly related to financial reporting; enhancing the awareness of risk; following the internal control evaluation in time; optimizing the audit procedures and process; applying the integrated audit accurately. The author hopes to give some enlightenment to the study on internal control audit of GEM listed company.