Research Paper on Internal Control and Auditing 1 "The Value of Internal Audit Control in Reducing Financial Risks"
With the development of modern enterprises, the role of internal audit has been paid more and more attention. Effective internal audit control plays a preventive role in reducing the financial risks of modern enterprises. This paper mainly discusses the value of internal audit control in reducing the financial risk of modern enterprises, hoping to bring some enlightenment to others.
Keywords: internal audit control; The value of financial risk; analyse
Internal audit is an important tool and means of enterprise management, which mainly performs internal supervision and control functions for modern enterprises. Through internal audit activities, the management level of modern enterprises is improved, the management system tends to be perfect, the accuracy of financial information made by senior management is guaranteed, the asset safety of enterprises is guaranteed, and finally the operation and development of modern enterprises are promoted.
First, modern enterprise financial risk analysis
The financial risks of modern enterprises are divided into systematic and unsystematic. The financial risk of systematic enterprises mostly refers to the force majeure factors and influences such as economic crisis and inflation. This paper mainly discusses and analyzes the financial risk of non-systematic enterprises. The financial risk of non-systematic enterprises refers to the risk formed by the enterprise's own financial capital operation activities, which is embodied in fund-raising, investment, operation and income activities.
(A) the financial risks of enterprise financing
The fund-raising activities of enterprises are the starting point of enterprise management and capital resource allocation. Influenced by the market economy, there are many uncertain factors in fund-raising activities, such as bank loans, bonds, stocks, high-level decision-making, management measures, leasing and mergers. , these will constitute the financial risk of enterprise financing.
(B) the financial risks of enterprise investment
The investment activity of an enterprise is the second link of capital operation. In order to preserve and increase the value of funds, it is necessary to invest funds in reasonable business activities. Foreign investment mainly aims at securities and control rights in order to obtain economic benefits. Domestic investment is mainly aimed at asset purchase or technology development of production and operation, in order to obtain the purpose of capital appreciation. No matter what kind of investment, it is related to the economic market situation. Production and operation investment needs to consider business scale, project return rate, investment payback period, investment correlation, investment supervision and other risk factors. Securities investment needs to consider risk factors such as interest rate, inflation and company operation.
(C) the financial risks of business operations
Enterprise operation involves the management of funds. The risks involved include whether the product can be sold in the economic market and whether the settlement cost can be recovered. Enterprise management includes procurement activities, production activities and sales activities. In purchasing activities, factors such as purchase amount, quality of raw materials, related payment methods and specific arrival time will all cause the risk of enterprise procurement. In production activities, cost control, product quality, new product development and other factors will indirectly constitute the risk of enterprise production. In sales activities, factors such as sales amount, payment recovery, customer management and the quality of sales staff will all constitute the risk of enterprise sales.
(D) the financial risk of enterprise income
The income activity of an enterprise is the factor that ultimately affects its business activities. Income activities include income recognition and income distribution. Once it is improperly confirmed or allocated, it will cause financial risks in the income of enterprises. If too little revenue is recognized, it will lead to too much cost carry-over, which will lead to a virtual reduction of financial profit in the current period, which will directly affect the reputation of the enterprise and cause operational financial risks. On the other hand, if the income is recognized too much, the enterprise needs to pay extra taxes and fees, resulting in unnecessary financial risks. Similarly, in the income distribution activities of enterprises, the form, amount and time of income also need to be properly grasped to avoid affecting the reputation and economic operation of enterprises.
Second, internal audit control to reduce the value of financial risks
(A) to strengthen the audit of enterprise financing activities, reduce the financial risk of financing.
Internal audit should be combined with the actual financing mode of enterprises to prevent risks. For example, to raise funds through bank loans, it is necessary to analyze the conditions of borrowing enterprises, the reasons and methods of borrowing, the proportion structure, the repayment period of project investment loans, and the loan amount. , to ensure that the enterprise's borrowing activities are reasonable and have repayment ability. For example, bond investment, internal audit needs to review the issuer, bond interest payment, custody related systems, sinking fund related systems and so on. To ensure that the financing risk of corporate bonds is controllable. Enterprises should analyze the characteristics of various fund-raising activities in combination with internal audit to avoid financial risks caused by improper fund-raising methods.
(2) Strengthen the audit of enterprise investment activities and reduce investment financial risks.
Internal audit plays a role in strengthening, preventing and controlling risks for enterprises to choose investment strategies and decisions, so as to improve investment benefits and achieve expected investment goals. The audit of enterprise investment activities is divided into three stages. First, the review of the previous plan. Including the consideration of budget, feasible implementation, expected profit and other factors, which requires internal auditors to be sensitive to data and be able to correctly estimate the rationality and investment value of investment plans. Second, review the investment. Internal auditors need to check the specific implementation of the plan and supervise the reasonable improvement of the factors appearing in the plan. Third, audit the investment results. Internal auditors need to analyze the cost, income and value in detail, so as to control the financial risks in investment activities. For securities investment activities, internal audit needs to review investment risks, investment duration, liquidity, investment portfolio, expected investment returns and other aspects to ensure that securities investment risks are effectively controlled.
(3) Strengthen the audit of business activities and reduce financial risks.
Internal audit should strengthen the management of commercial credit, accounts receivable and inventory to reduce financial risks in business activities. For commercial credit management, internal audit should review customer files, conduct comprehensive rating and scoring, and determine a reasonable credit limit. For accounts receivable, internal audit should review the actual authenticity, strengthen the audit of reconciliation and aging, and take bad debt measures in time. In view of inventory management, internal audit should strengthen inventory accounting and monitoring, supervise and count inventory regularly to ensure the accuracy of accounting information.
(D) Strengthen the audit of enterprise income activities to reduce the financial risks of income.
Internal audit can effectively prevent the risk of income confirmation and income distribution of enterprises. In order to ensure the authenticity of revenue recognition, internal audit needs to examine and analyze revenue recognition in detail from the aspects of sales invoice, revenue recognition time, sales breakdown and deferred revenue, so as to ensure the authenticity and accuracy of financial statements and avoid possible manipulation risks. For income distribution, internal audit needs to confirm the dividend payment rate and dividend policy to ensure the good financial situation of enterprises and stabilize economic development.
Three. Concluding remarks
The four major business links of an enterprise are fund-raising, investment, management and income activities. The effective supervision of internal audit can effectively prevent and control the financial risks of the four major links of enterprises, so that the business activities of modern enterprises can be well supervised and guaranteed.
Author: Ye Min Unit: Shandong First Institute of Geology and Mineral Exploration.
References:
[1] Yin Shuping. Strengthening Internal Audit to Control Tax Risks of Enterprises [J]. Economic Perspective (Part II), 20 13
[2] Yi Jun, CoCo Lee. Internal Audit to Prevent Financial Risks of Enterprises [J]. Administrative Assets and Finance, 20 14.
[3] Yue Ting. On the risk and control of modern enterprise financial internal audit [J]. Time Finance, 20 13
[4] Ding Qi. On enterprise financial internal audit and risk control [J]. Manager, 20 14
The second research paper on internal control and audit "Discussion on the development of internal audit ability of China People's Bank"
Since 20 1 1 put forward the internal audit transformation, the People's Bank of China has decided to establish a risk-oriented audit model, explore performance audit, deepen internal control audit, information technology audit and other key transformation work. The transformation work has achieved positive results, and the transformation results have solidified into systems and standards, providing guidance for carrying out audit projects and realizing organizational value-added. At present, with the deepening of internal audit transformation, higher requirements are put forward for the internal audit ability of the People's Bank of China. Based on this, this paper analyzes the development status of audit ability and studies the countermeasures to improve the internal audit ability of the People's Bank of China.
Keywords: audit ability; Audit environment; Audit mode
First, the meaning of internal audit ability
There is no unified and clear definition of internal audit ability in Sawyer's Internal Audit, Internal Audit Basis and other documents, but Sawyer's Internal Audit mentions more & ldquo internal audit ability standard &; Rdquo provides a reference for us to understand the internal audit ability. The research fund project "Building a Global Internal Audit Competency Framework" initiated by the International Institute of Internal Auditors 1996 refers to the opinions and suggestions of 200 industry veterans around the world, and adopts a unique research method to make the internal audit competency standard truly represent the global & ldquo; best practice &; rdquo。 The author summarizes the meaning of internal audit ability, that is, in a specific organizational environment, according to certain audit standards, in the process of implementing audit activities, using the knowledge and skills of auditors. The internal audit function is completed by the interaction of junior internal auditors, internal auditors in charge and internal audit managers, and the audit ability is reflected in the work.
II. Development Status of Audit Capability of China People's Bank
(A) the audit environment is not ideal, and the right of supervision and management do not correspond at the level.
First of all, under the current management system, the independence and objectivity of internal audit, the assessment and promotion of internal auditors and other vital interests are within the scope of banks. In the specific implementation of audit projects, internal auditors often consider interpersonal relationships and vital interests, which is incomplete, incomplete and ineffective. Secondly, regional banks are responsible for auditing the central branches within their jurisdiction, whether it is performance (resignation) audit or special business audit, which is related to specific business work, and the business work of each central branch is managed by the central branch of the provincial capital city. Even if the branch finds problems in the audit process, there are cross-level problems in the later rectification, so the branch will turn the later rectification into the responsibility of the provincial capital branch. The provincial capital city center sub-branch carries out the audit of the city center sub-branch under the authorization of the branch, but because the provincial capital city center sub-branch has no supervision right of the city center sub-branch, it is difficult to fully grasp the audit situation of the same audit project in the province. This kind of supervision power does not correspond to the business management power at different levels, which makes it difficult to effectively play the internal audit function and affects the effectiveness of audit work. The mismatch between supervision power and business management power under the regional banking management system is not conducive to better playing the value-added role of internal audit service business management and improving the performance level.
(B) The overall quality of the current audit team can not fully meet the requirements of further deepening the transformation of internal audit.
The knowledge structure of auditors in most branches is not reasonable, and there are many professionals in accounting and economic management, but few people know about finance and computer-aided auditing. In the current audit environment, there are few opportunities for internal auditors to rotate their posts, and few people know about the people's bank of China's money and credit, treasury and other businesses, which affects the deep-seated discovery of professional problems. In order to complete the audit task, it is necessary to transfer personnel from professional offices, and the ability of transferring personnel from professional offices greatly affects the quality of audit projects, thus affecting the efficiency and effectiveness of audit work. The business system of the branches of the People's Bank of China has developed rapidly, and new systems and regulations have been continuously introduced. However, most of the existing auditors have no in-depth understanding of the specific business, and the requirements for various systems are still stuck in the past, which cannot keep up with the needs of business development. The training of auditors can only rely on online learning of head office distance training, and the training effect is affected by time and personnel autonomy, so it is difficult to improve the quality of personnel.
(c) The communication with leaders and business customers is not effective enough, which leads to their insufficient understanding of internal audit.
Communication with the leadership: the internal audit of branches and sub-branches is conducted by the president &; First place in ldquo. The attention of the supervisor and the president is a strong guarantee for the smooth development of the internal audit work, but in fact, the internal audit work is usually assisted by the secretary of the Disciplinary Committee (or other vice presidents). If the leader in charge of basic business is also in charge of internal audit, the independence of the internal audit department will be affected. Communication with business customers: There are still many managers and business departments of the People's Bank of China who have insufficient understanding of the effectiveness of internal audit, lack correct understanding and understanding of the various confirmation and consulting services that internal audit can provide, and still stay in the traditional understanding of finding problems and mistakes, and have insufficient comprehensive understanding of internal audit to prevent risks, strengthen internal control and increase organizational value. When accepting the audit, there is psychological exclusion and conflict. In particular, they think that risk-oriented audit and performance audit involve a wide range and are too detailed. They are worried that they will be punished if they report problems. They take a passive attitude of cooperation, and there are phenomena of late reporting and concealment when providing audit materials, which increases the difficulty of audit.
(d) Computer-aided auditing methods have not been widely used, and the internal auditing mechanism needs to be improved urgently.
At present, when carrying out audit projects, the use of computer-aided audit by auditors is not extensive enough, because the current audit projects are mainly compliance audits, and most auditors habitually look through materials to find problems, which is also intuitive and easy to find; For computer-aided audit, once the other party does not actively cooperate with data export, data collection will inevitably take a lot of trouble. With the deepening of internal audit transformation, the Head Office has established a risk-oriented audit model, constructed performance evaluation indicators and information technology risk assessment models, and provided theoretical support and practical guidance for the transformation practice. However, the internal audit system has not been revised and improved in time according to the needs of the current situation, and it cannot provide institutional guarantee for the transformation work. Some branches and sub-branches have issued operating guidelines for performance auditing in related fields to provide guidance for carrying out audit projects. Because there are no objective and fair standards for risk and performance indicators, weights, evaluation and control measures, the comparability between performance and failure is not strong, which is not conducive to the implementation of audit quality control.
Three, improve the people's Bank of China's internal audit ability countermeasures
(1) Optimize the audit environment and improve the audit organization and management.
With the increasing specialization of business departments, higher requirements are put forward for internal audit. With limited time and resources, it is imperative to integrate limited audit resources. Cross-regional audit of audit team is mainly an independent audit team composed of internal auditors of superior banks or the completion of audit projects beyond regional restrictions. For example, Shijiazhuang Central Sub-branch of the People's Bank of China formed an independent audit team and completed the audit project of Taiyuan Central Sub-branch of the People's Bank of China. Cross-regional audit of audit team can better avoid the risk of damage to audit objectivity and help maintain the independence of internal audit. Because both of them belong to the People's Bank of China at the grass-roots level, there will be no big deviation in their understanding of the business, which can well solve the emotional factors and incomplete disclosure of audit findings in the audit work of branches of the People's Bank of China, and is conducive to improving the quality and effect of internal audit work. Through the cross-regional communication of audit team, it can also stimulate the work vitality of internal auditors and promote business communication and talent growth. Whether joining an audit team or forming an independent audit team, it is also a rare growth for internal auditors in the process of cooperation and exchange. The requirement of ability urges internal auditors to learn from each other, learn new methods, learn new contents and discover innovations. In addition, for auditors who are worried that engaging in internal audit will affect their assessment and personal promotion, it is suggested that the audit results should be taken as an important basis for assessment and promotion.
(b) Improve the professionalism and level of the internal audit team.
First of all, according to the actual needs, taking into account the level and scale of branches, constantly optimize the professional structure and knowledge structure of internal auditors, let people from business departments come to internal audit posts, let internal auditors rotate to business departments, and let business department heads come to the post of internal audit project leader, with appropriate post rotation and different professional experiences. It is easier to deepen the understanding of occupation and change the perspective of looking at problems, seek innovation in audit work and enhance the professional and technical content of audit work. Secondly, under the premise that the overall number of internal auditors of the People's Bank of China has not changed much, in order to give full play to the role of internal audit in preventing risks and adding value to the organization, the internal audit departments at all levels of the People's Bank of China put the training of professional and international internal auditors in a prominent position, encouraged auditors to actively participate in the qualification examinations for internationally registered internal auditors and senior auditors, and constantly improved the professional quality of internal auditors. Build a continuing education platform, make full use of the remote training system to share practical cases of risk assessment and performance evaluation, encourage internal auditors to learn more and participate more, actively carry out investigation and research on audit theory and practice, and improve their own abilities and professional skills.
(3) Actively and effectively communicate with leaders and business customers.
Communication with leaders: after the completion of the audit project, depending on the seriousness of the problems found in the audit, the head of the dean will personally listen to the report of the presiding judge on the relevant work and the audit report. Through close contact with the competent leader, the internal auditor is required to be more capable. In addition to earnestly carrying out the audit work and writing the audit report, it is also necessary to clarify which business areas are the president's key concerns and which audit findings need to be the president's key concerns, and report to the president accordingly. This will not only enable the president to obtain information about the organization and key business risks from the report of the audit project, but also deeply understand the role of internal audit in adding value to the organization and preventing risks. Communication with corporate customers: Internal auditors should use&; Service providers within the ldquo organization &; Rdquo communicates effectively with business departments. Whether it is confirmation service or consulting service, finding problems is not the main purpose. Its focus is to analyze the root causes of problems through the appearance of problems, so as to help organizations solve problems in a targeted manner. For example, in the performance configuration audit of office equipment, it is found that office equipment is aging and the software runs slowly, which leads to long business processing time and affects work efficiency. Such audit findings will obviously make superior leaders pay attention to the problem that aging office equipment affects work efficiency, provide funds to support the renewal of aging equipment, and solve practical problems for business departments, and business departments are more willing and more active in cooperating with internal audit. As an important means to improve internal management, internal audit will be recognized by more people.
(four) in-depth promotion of computer-aided audit, improve and perfect the internal audit mechanism.
Accelerate the informatization process of internal audit, promote the transformation of audit means, actively promote computer-aided audit, expand the coverage of audit inspection, improve the pertinence and effectiveness of audit, and gradually establish an off-site audit system in related fields of the People's Bank of China. Gradually build and improve the audit information platform. Before the new system is developed and applied, the internal audit department actively negotiates with the science and technology department, leaving an interface for the audit, gradually realizing the docking with the audit interface of the business department, realizing the data collection of the business department, and then processing, analyzing and feeding back the data through the audit information processing system.
Author: Hu Youjiao Unit: Shijiazhuang Central Sub-branch of China People's Bank.
References:
[2] Zhang Qinglong. International Institute of Internal Auditors' Research on the Internal Audit Capability Model of Public Sector and Its Enlightenment [J]. Audit Research, 201,(2).
[3] Research Group of Internal Audit Department of Nanchang Central Sub-branch of People's Bank of China. The Construction of Audit Capacity Building Framework of China People's Bank &; Mdash& ampmdash& ampmdash; Transformation of Central Bank's Internal Audit Based on Perspective [J]. Finance and Economy, 20 13, (10).
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