Development Trends of Internal Auditing

At present, the internal audit in Chinese enterprises mainly focuses on the reliability and integrity of information, compliance with policies, plans, procedures, laws and regulations, protection of capital security, and conservation of resources. It is carried out in terms of effective use and achievement of business goals. However, internal audit has not yet played its due role in supporting internal management in terms of organizational structure, work focus, depth and breadth of audit content, audit methods, and standardized management, and it cannot adapt to the requirements of modern enterprise systems. The author believes that the development of internal auditing in my country under the new situation should specifically grasp the following changes:

1. The main function of internal auditing has changed from error detection and fraud prevention to serving internal management

At present, our country's internal auditors tend to devote most of their energy to verifying the authenticity and legality of financial data and supervising production and operations. The main function of auditing is to detect and prevent fraud rather than to analyze and analyze corporate management. Evaluate and make management suggestions. The audit objects are mainly accounting statements, account books, vouchers and related materials. The main work is concentrated in the financial field and does not go deep into the management and operation fields. For example, when auditing a certain sales revenue, it is often reviewed whether the contract amount is the same as the customer payment amount, and whether the paid bills are complete, regardless of whether the price is reasonable, thinking that it is a matter of the operating department and has nothing to do with finance; For example, in the audit of investment projects, it is often reviewed whether the investment agreement is complete and whether the enterprise has correctly accounted for the investment income of the invested unit according to the equity method or cost method according to the investment proportion in the corresponding accounting period. As for whether it should invest, the investment Whether the rate of return is reasonable, whether the selection of cooperation partners is appropriate, and whether there are better options are generally not analyzed in depth. In fact, the real problems and even fraud in enterprises often lie in these processes. Another example is that when audit projects are established, they are often established based on regular projects such as financial revenue and expenditure audits, out-of-office economic responsibility audits, and economic efficiency audits. There are almost no projects specifically established for testing and evaluating the internal control system. Some problems are only discovered during the audit process. There are problems with internal control. Therefore, the overall internal control system of the enterprise cannot be systematically and authoritatively evaluated, and the potential risks of the enterprise cannot be discovered and objectively evaluated, and thus it is impossible to make substantive and preventive management suggestions for management*.

With the establishment of modern enterprise systems, the strengthening of external control mechanisms, the improvement of internal management levels, and the popularization of computerized accounting, there will be fewer and fewer errors in accounting, and the function of internal audit will be It is also necessary to shift from the traditional "error checking and fraud prevention" to serving internal management. The focus of internal auditing should also change from internal inspection and supervision to internal analysis and evaluation. Internal auditing cannot be limited to the financial field, but will extend to all areas of business operations and management.

2. The establishment and positioning of internal audit institutions should be transformed from a single institution parallel to each functional department to a higher-level and more complete structure

At present, most of the supervision institutions of Chinese enterprises There is only an internal audit department, and it is basically in a parallel position with other functional departments. Some small and medium-sized enterprises do not even have an independent internal audit department, so the independence and authority of internal audit cannot be guaranteed. In actual work, due to such a setup, the internal audit agency generally does not audit the financial department and other operating management departments of the head office at the same level, but only audits second-level enterprises; even if it audits the financial department of the head office, it is usually difficult to Achieve satisfactory results.

With the standardization of enterprise systems and the establishment of corporate governance structures, the organizational structures of larger enterprise groups will be established in accordance with the modern enterprise system, that is, they should be established under the shareholders' meeting, the board of directors and the general manager. There is a top-down business guidance relationship between the Board of Supervisors, the Audit Committee and the Audit Department. The Audit Department should be set up higher than other functional departments. It should be responsible for and report to the Audit Committee in terms of business, and report to it administratively. The general manager is responsible for and reports to. For smaller companies that do not have an audit committee, the audit department should be accountable to the board of directors and accept the guidance of the board of supervisors on business matters. This dual-responsibility organizational form is conducive to the full play of the role of internal audit.

3. The composition of the internal audit team should evolve from pure financial personnel to an organizational structure of diversified high-quality talents with comprehensive knowledge and abilities

As internal audit shifts from the financial field to the As the field of operation and management expands, the personnel composition of the audit institution should also be diversified. It should not only have talents who understand finance and auditing, but also be equipped with specialized talents who are proficient in various related businesses of the enterprise. Select those with rich experience and higher professional qualifications. High-level personnel join the internal audit department, allowing the internal audit organization to play a greater role under the modern enterprise system.

Four. The implementation of internal audit should develop from relying solely on the strength of internal audit personnel to integrating with external audit

Internal audit work can be divided into two parts. One is The audit of the authenticity and legality of financial data, and the second is the analysis and rating of corporate operations and management. For the first part, the internal auditors can put forward specific requirements for each project according to the different audit purposes of different types of projects, and entrust the firm to conduct audits according to the internal audit purposes, so as to ensure the authenticity, legality and completeness of the accounting information.

Since internal auditors are familiar with the company's situation, they should focus their work on the analysis and evaluation of corporate operations and management and the company's business processes, and participate in and supervise the entire audit process. The organic combination of internal and external audits can not only solve the problem of small manpower and heavy tasks in internal audit institutions, but also help improve the efficiency and quality of internal audits.

5. Internal audit has gradually transformed from post-audit to ex-ante and in-process audit

At present, our internal audits are all ex-post audits, which mainly play a supervisory role. With the improvement of management level, the role of internal audit will not only be limited to post-event supervision, but also pre-prevention and in-process control. It will conduct full-process and all-round supervision and evaluation of the company's internal control. The enterprise's procurement plan, production plan, sales plan, capital plan, investment plan and expense budget should all be reviewed in advance and controlled during the process. Experienced internal auditors should be able to promptly discover problems in each link and minimize the company's risks.

6. Internal audit work should be transformed from decentralized management to industry management

At present, the establishment of internal audit institutions in each unit, the allocation of internal audit personnel, the establishment of internal audit procedures, and the There is no unified management of the formulation of audit standards and the supervision of internal audit quality, which is not conducive to the role of internal audit and the development of internal audit work. With the establishment of modern enterprise systems and the continuous development of internal auditing, it is necessary to establish the national China Internal Auditors Association, and local and industry internal auditors associations to establish industry self-discipline management of internal audit institutions and internal auditors. Guide and supervise the implementation of internal audit work.