Internal audit in the construction of internal control role of discussion

Abstract: With the economic globalization, the rapid development of Information Technology and business competition is increasingly fierce, the internal audit of the higher requirements, objective research and the development trend of internal audit for audit and actively explore new theoretical framework to prevent audit risk, internal audit staff to develop new audit concept and so very important.

Internal audit is the audit of China's socialist system is an important part of the internal organization of an independent evaluation activities. Correctly understand and properly play the internal audit function is to establish modern enterprise system requirements.

Keywords: internal audit, internal control, building role
As China's <<the basic norms of internal control>> the introduction of comprehensive risk management and actively promote the concept of internal audit should be to enforce the basic specification as the carrier, and consciously integrated into the internal control system, the promotion of enterprise-wide risk management system upgrades and improve and promote the internal audit focus gradually shifted from the pre-post evaluation of control risk management, while achieving the transformation and development of internal audit work.

June 28, 2008, five ministries ---- China's Ministry of Finance, the Commission, the Audit Commission, CBRC, CIRC jointly issued a <<Internal Control specification>> This form of government regulatory requirements promulgated internal control standards, internal control system indicates that China embarked on a legal and standardized track, which is to promote our internal control system, carry out supervision and evaluation of the effectiveness of internal control, internal audit of the full realization of the transformation and development milestone , while promoting and supporting businesses to strengthen their risk management, risk prevention and control to enhance the predictability, sensitivity, and risk management of the timeliness and effectiveness, and promote the healthy operation of the internal audit should be to seize the opportunity in the construction of the internal control system play to their independence and objectivity and are familiar with the advantages of various systems within the company to help businesses improve internal control building while achieving the industry by leaps and bounds, our internal audit staff is currently a serious problem.

An internal audit is an important component of internal control
Internal auditing is an independent and objective confirmation and consulting activity designed to add value and improve
Good organization's operations, it is through the application of systematic, standardized approach to evaluate and improve risk management, control and governance process is more effective to help the organization achieve its goals, internal control, the basic purpose is to promote the efficient operation of the organization, therefore, whether it is internal control and internal audit, and their goal is to strengthen the anti-risk ability, improve operational efficiency, effectiveness, provision of reliable financial reports and to follow the laws and regulations to provide reasonable assurance.

Internal audit is an important component of internal control, internal control system is to confirm the effectiveness of those in the internal control has a very special place. It was "special" because it is relatively independent of the company's production and business activities outside the can be as small as possible without affecting or affected the company's management activities, through the company's internal audit of internal control system operation and implementation of supervision and inspection of enterprises that have occurred Cuobi be corrected, and business system of internal control system design and actual implementation process of the weak links out of control nature, analysis and evaluation of potential impacts, and will improve the feedback to managers. It can be said of other internal audit of internal control procedures and measures to control one.

Second, internal audit and supervision of the operation of the internal control system
(A) understand the internal control system: internal audit staff to be from the control environment, risk assessment, control activities, Information and communication and supervision of five aspects of the company by asking the staff to check documents and records generated by the internal control to observe the scene management activities to understand the internal control system.

(1 control environment: First, the control elements of internal control environment is the foundation of all the ways and means of controlling the survival and operation environment, internal audit staff through corporate officers of ethics, values ​​and abilities, the management philosophy of management and management style, management approach to licensing as well as organization and personnel management system, management and board focus on the management and evaluation of the direction, etc. to determine the control environment is good, whether in shaping corporate culture, to provide mechanisms and discipline affect their sense of control plays an important role.

(2 risk assessment: In recent years, with the accelerated process of economic globalization, more and more enterprises in China to join the highly competitive international market, enterprises are facing growing risks, companies are increasingly concerned about the environmental changes brought to risk, to understand how external business risks and internal risk assessment, including: the risk of macroeconomic policy (including commodity price risk, tax risk, the export tax rebate rate risk, market or business risk (including fluctuations in raw material prices and quantity of supply stability , product selling prices and market share changes, financial risks (including foreign currency exchange rate risk, interest rate risk and liquidity risk, the risk of internal security and stability of production, etc. Internal Audit are in the business environment, as well as the company's overall business activities, risk appetite, risk tolerance, which are more clearly understood, more accurate judgments on how to identify risk management, how to estimate the likelihood of the risk, severity, and to take effective countermeasures are fully and accurately.

(3 control activities: to understand their business license and authorization controls in general specifically authorized, certificates and records control, access and use control, separation of incompatible duties and independent audits, etc. Now most of the company's financial and logistics systems are using ERP systems , material procurement plan application, approval, bidding, procurement, acceptance, use, semi-finished and finished product storage and shipment, and all through the sale of computer operations, internal audit staff should learn more about the implementation of control procedures.

Imperfect control of certain activities, not because of its internal audit staff and business activities in the past never had an error or fraud and relax these controls, such as a company have been made by the cashier from the bank statements and independent preparation of bank deposits adjust the balance sheet, receivables administered by the staff or independent verification and debt and other units, although there may have never had problems, but in fact this control system there is a deviation from the activity itself, prone to fraud or fraud concealed.

(4 Information and communication: Information and communication is the lifeblood of business operations, whether it is management's decision-making or executive level of daily operations, you need to ensure timely and effective communication and complete Information. To understand the main types of business activities, economic business process, accounting system design and the main accounting documents, books and the type of project financial statements, financial statements preparation, the anti-fraud mechanism and the reporting mechanism in order to determine the enterprise's information and communication is smooth.

(5) Supervision: the supervision of the internal control system is divided into two types of routine monitoring and special inspection, such as about whether a company set up a budget management system, whether monthly or quarterly business analysis will be held on the operating results and key financial indicators review and analysis, analysis of budget execution deviations and corrective measures, whether the relevant provisions of the Audit Committee was established by an independent non-executive directors and chaired the internal audit system is detailed and specific operational, to ensure the independence of internal audit work, etc. turn affixed to the free download http://www.hi138.com (two pairs of sound internal control system designed to judge the rationality
(1 sound judgments
The so-called integrity of the system of internal control that the system should be as complete as possible, covering all major industry companies
Operational procedures and high-risk areas, in particular, will have serious consequences for control weaknesses need to focus on, such as money funds are the most liquid corporate assets, enterprises should establish a good comprehensive internal control system to ensure that all accounts into the fully incorporated into currency funds, money to spend funds in accordance with the approved uses of the, cash, bank deposits and to properly report the correct storage, and correctly predict the business income and expenditure of funds required for the amount of money to ensure liquidity and profitability, any small mistake could cause serious consequences. If persistent tracking audit, focusing on the previous audit system design aspects of the rectification.

(2 rational judgments
Internal control system is not the more rigorous the better, but should give full consideration to the specific situation and cost-effective. Internal control to enterprise scale, scope of business, competition and adapt to the level of risk, internal audit staff should analyze the internal control The layout is reasonable, whether redundant or unnecessary controls, controls whether a reasonable division of functions, personnel division and segregation of duties is appropriate, whether due to meticulous division of labor affects the efficiency, resulting in buck-passing, with or without the general control point error As a key control site; weigh the cost of implementation and expected benefits, the right cost to achieve effective control.

(Three internal control system to determine the effectiveness of the implementation
Sound internal control system design is just one aspect of rational, critical in the implementation, such as the Singapore company China Aviation Oil Group, Ernst & Young designed specifically requested a "Risk Management Handbook>>, but in the actual implementation process is seriously out of control, resulting in loss of $ 550 million, so the effectiveness of internal control to determine the actual implementation is a very important aspect.

Internal audit staff against objective assessment of internal control manual and check the implementation of internal control, in accordance with the provisions of the business processes of an important business or operations of a typical test checks, mainly through inquiry, discussion, inspection, sampling, walk through testing, analysis and other methods Check the execution of business operations and record Cuobi exist, analyze the nature and causes of the business in order to verify the trustworthiness of the implementation of internal control to confirm the compliance and control points to be implemented in earnest, in order to determine the internal control of compliance, such as the New York Stock Exchange in 1939, the McKesson Robbins in audited financial statements on inflated assets of $ 19 million, of which approximately $ 10 million inflated inventory, so inventory monitoring disk to become substantive testing of the production cycle an important part of the internal audit staff need to develop detailed and thorough inventory monitoring disk plan, understand the contents of inventory, nature, the importance of the inventory items and storage sites, field visits or spot checks of inventory stored on-site, and in particular attention due to special reasons can not live inventory inventory, custody or have been entrusted to other units of inventory pledged to do so, verify the authenticity of their effectiveness, the production cycle to determine the effective implementation of internal control system.

Third, strengthen the internal audit, to promote the building of internal control
Internal control system of internal audit under the supervision of the overall results of the evaluation of internal control system
And issue evaluation report, the low reliability of high school can be used to evaluate, control can also be used to quantify the risk expressed as a percentage for internal control to set a sound and reasonable, and in the control test has not found errors or mistakes are rare, it can be evaluation of the high degree of confidence, more robust design of internal controls, but there are still some weaknesses in the control test and found some errors, can be evaluated as medium trust level, for internal control design or unreasonable, although well-designed but not effectively implemented, and when the error occurred in the control test frequently, it should be evaluated as a low degree of trust and now our country has asked listed companies to disclose in their annual reports system of internal control self-assessment report.

Internal audit is a good run for the enterprise to improve health services, evaluation of internal control system to make later, more important is the internal control system design and practical implementation problems in the process of issue management proposals to management and supervision of their conduct rectification of Management proposal is for the internal audit staff during the audit noted significant deficiencies in internal controls make written recommendations to promote the enterprises to improve management level, so that internal audit can only be fully integrated into the production and management of all aspects of the real so that preventive measures truly comprehensive transformation and development of internal audit.

References:
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