The Discussion On The Application Of Risk-based Internal Audit In Huadian Energy Limited By Share

In twenty-first Century,the risk brought by economic globalization becomes more and more prominent.The question about how to prevent and resolve those various risks in the enterprise's development and management process has become the top concern.With the publishing of a series of international and domestic scandals,the role of external audit has been questioned,while internal audit becomes more and more popular because of its important role in the enterprise risk management.In 2003,China's Internal Audit Association released the first batch of China's internal audit standards,which was a very important step in the professional process of the internal audit in our country.There is a big gap of theoretical and practical study between international and domestic internal audits,which also means a large space for development.This thesis analyzes the current application situation of risk-based internal audit in Huadian energy Limited by Share Ltd,revealed the existing problems and corresponding reasons,and lastly putting forward some countermeasures and suggestions,which will have a certain reference value for the application of risk-based internal audit in domestic companies.The first chapter introduced the research background and significance of the thesis.This chapter reviewed the literature and also introduced research background.With the rapid development of economy in the 21 st century,the increasingly intense competition among enterprises,risks have become diversified.As an advanced model,risk oriented internal audit makes up the limitations of the traditional internal audit and contributes to optimizing enterprises' risk management.The research idea of this thesis started from the problems then found out the reasons and finally searched for solutions.This paper combined both theoretical and practical research,and laid more emphasis on practical analysis.The second chapter was the overview of basic theories of risk oriented internal audit.Based on the studies and sum ups of the definitions of risk oriented internal audit from both domestic and foreign scholars,this thesis put forward its own definition that the risk oriented internal audit aims to optimize the enterprise risk management,ensure that the risks the enterprise bears are within the acceptable level,besides,it considers audit risks through the whole audit process,takes risk evaluation as guidance,and determines audit goal,audit scope and methods of internal audit according to the risk assessment result.Compared with traditional internal audit,this thesis insisted that risk oriented internal audit has many advantages.It takes risk as the focus,faces the future,closely concerns the goal of value increase,and considers thoroughly those potential risks that may affect the achievement of enterprises' strategic objectives.It has the function of risk management and value creation;it also has its own implementation conditions and programs.The theories of risk oriented internal audit mainly include theory of fiduciary responsibility,risk management theory,strategic management theory,and enterprise re-engineering theory.Chapter three introduced the application of risk oriented internal audit in Huaneng Company.This chapter introduces the basic situation of Huaneng Company.As one of the five state-owned power groups,it mainly engaged in the supply of power generation,heating,green energy and electric power equipment production.In the aspect of organizational structure,Huaneng Company altogether has fourteen departments,fourteen holding and shareholding enterprises.As an independent department,Huaneng Company's internal audit department aims to use systematic and regulatory methods to improve risk management and control,and assists enterprises to achieve their goals.For the sake of adapting to the development trend and improve audit efficiency,Huaneng Company develops the specific implementation process of risk oriented internal audit considering its own conditions.The fourth chapter was the analysis of existing problems and corresponding causes of risk oriented internal audit applied in Huaneng Company.This chapter proposed five main problems with regard to the application of risk oriented internal audit in Huaneng Company.Firstly,audit methods were too backward to identify significant risks.Secondly,audit scope was too narrow and limited to operating performance audit.Thirdly,information technology was not taken full use of to build the internal audit information platform.Fourthly,audit results were failed to effectively promote the value increase of Huaneng Company.Fifthly,follow-up audits were failed to be continually concerned.Considering the five main problems,this thesis analyzed the main reasons.Firstly,the internal audit lacked enough attention of company's management level.Secondly,the setting of internal audit was not reasonable which weakened the authority of internal audit.Thirdly,the risk assessment system was not perfect.Fourthly,internal auditor's structure and professional competence needed to be optimized and improved.Fifthly,audit recommendations were not effectively implemented,and follow-up audits were not attached importance to.Chapter five introduced the suggestions to improve the risk oriented internal audit applied in Huaneng Company.Considering the problems and causes analysis in Huaneng Company,four suggestions were proposed in this thesis.Firstly,Huaneng Company needs to increase the attention of company's management level on risk oriented internal audit.Secondly,Huaneng Company needs to strengthen the independence of internal audit department,and improve the professional competence of internal audit staff.Thirdly,Huaneng Company needs to improve the technology procedures and methods of internal audit.Fourthly,Huaneng Company needs to expand the functions and scope of internal audit,and tracking the implementation of audit recommendations.