<h1>Abstract</h1>
1 The Essence of Corporate Auditing: A Theoretical Framework
Author: Zheng Shiqiao Zhou Minli (Academy of Auditing Science, Nanjing Audit University)
Abstract:Based on the classical auditing theory, a theoretical framework for the essence of enterprise auditing is proposed. In terms of connotation, enterprise audit is a governance system arrangement that independently verifies the agency issues and sub-optimal issues in the performance of enterprise management responsibilities from the three dimensions of behavior, information and system in a systematic way and communicates the results to stakeholders; From the perspective of extension, enterprise auditing is a system, which can be classified according to the perspective of the audit subject or by the perspective of the audit object. Since enterprise auditing is a system, the essence of enterprise auditing will form a system, different types of enterprise audits have their own personality essence, and all kinds of enterprise audits have their common nature. In terms of power attributes, enterprise auditing is ownership supervision. (Source: Friends of Accounting, No. 1, 2019, "Research on Improving the National Audit System" (17SJ03002) of the National Audit Office, a key scientific research project of the National Audit Office in 2017-2018)
2 CEO powers, corporate strategy and audit fees
Author:Yang Jinfeng Sun Weizhang Yang Yang (School of Accounting, Dongbei University of Finance and Economics, School of Accounting, Shandong Institute of Technology and Business, Shanghai National Accounting Institute)
Abstract:Enterprise strategy is the concentrated embodiment of the overall planning and business model of enterprises, and different types of strategies reflect the differences in business characteristics and operational risks, while the previous audit fee research has ignored the factor of enterprise strategy. Taking the A-share listed companies from 2007 to 2016 as a sample, the impact of corporate strategies on audit fees is examined. The study found that the more aggressive the strategy implemented by the enterprise, the more auditors are more inclined to charge them higher audit fees, and the corporate strategy is an important factor affecting the audit fee. Using unique data such as audit man-hours and audit adjustments to explore the mechanism of corporate strategy influencing audit fees, this paper finds that the reasons for higher audit fees include both the factors that auditors tolerate risks and charge higher risk premiums, as well as the factors that more audit resources are invested. As a key role in strategic decision-making and execution, the positive correlation between corporate strategic aggressiveness and audit fees is significantly enhanced when the CEO has more power. (Source: Modern Finance and Economics (Journal of Tianjin University of Finance and Economics), No. 1, 2019, National Natural Science Foundation of China (71602024); Shandong Social Science Planning Project (17CKJJ25))
3 Discussion on the realization path of national governance of economic responsibility audit services
Author:Han Min (Shijiazhuang Municipal Audit Bureau)
Abstract: From the perspective of the form of auditing, economic responsibility auditing occupies a key position in the existing auditing form, and if the economic responsibility audit can be focused on comprehensive implementation, it will serve the overall national governance. It can be seen that national governance and economic responsibility audits are intrinsically linked. Specifically, when it comes to economic responsibility audits, it should be possible to comprehensively clarify the audit paths related to them to ensure that economic responsibility audits can truly serve the progress and development of various fields at present. (Source: China Market, No. 1, 2019)
<h1>Audit practices</h1>
1 Strive to improve audit capabilities Adapt to the requirements of audit work in the new era
Recently, the Central Economic Work Conference was held in Beijing, which summarized the economic work in 2018, analyzed the current economic situation, and deployed the economic work in 2019. Thoroughly implementing the spirit of the Central Economic Work Conference is an important task of the current auditing organs. For the majority of auditors, how to improve audit capabilities and adapt to the needs of audit work in the new era is an important issue that must be faced and solved. The author experiences that auditors should improve their own capabilities, conform to the requirements of the times, conform to the nature and characteristics of the work, and specifically grasp the following four degrees.
The first is to raise the height around politics. General Secretary Xi Jinping stressed that the central and state organs are first and foremost political organs and must take a clear stand on politics. As an important part of the supervision system of the party and the state, the primary responsibility of auditing supervision is to promote the implementation of major central policies and important decision-making arrangements, and to promote the implementation of orders and prohibitions. Auditor General Hu Zejun pointed out at the 2018 National Auditing Organs Centralized Rectification and Mobilization Meeting that stressing politics not only has a problem of political attitude, but also a problem of political ability. The author experiences that in a certain sense, political ability is the "soul" of other abilities, reflecting the height of an auditor's ability. Specifically, it is necessary to implement the "four consciousnesses" and the "four obediences" in the auditing work, be good at grasping the direction of auditing from a political height, highlight the key points of auditing, look at audit matters, and make audit conclusions. It is necessary to effectively improve the level of policies, focus on the implementation of major central policies, accurately grasp the policy regulation and control objectives, operation mechanisms and implementation difficulties, deeply reveal problems, promote the deepening of reform and policy improvement, promote high-quality development, and play a constructive role in audit supervision at a higher level.
The second is to expand the breadth around comprehensiveness. With the increasing development of informatization and the deepening of reform, the ties between different industries and fields have become closer, various policies have superimposed on each other, and the systematicness and relevance of economic operation have gradually increased. In this context, auditors can not be confined to a narrow professional vision and knowledge field, but to enrich themselves in an all-round way, improve the "breadth" of the ability structure, achieve "one specialty and multiple functions", comprehensively learn to master the policy system, professional knowledge and business processes in various fields of economic operation, and also have big data thinking and application capabilities to achieve integration. In this way, we can calmly respond to the needs of different projects, comprehensively and systematically view and deal with specific audit matters, and improve the comprehensive grasp of audit business.
The third is to grasp the depth around professionalism. Auditing is a professional supervision of economic and social operation, when making audit conclusions and putting forward audit recommendations, it is necessary to reflect professional standards, not to be large and improper, large and large, and truly play a role in promoting rectification and improvement and decision-making reference value. In recent years, the digital economy has flourished, new models and new formats have emerged continuously, and financial innovations have emerged in an endless stream, while contradictions have been intertwined, problems have been concealed, and the trend of diversification of methods is obvious. This requires auditors to have "depth" in ability, to grasp the mechanism of policy role, the mechanism of power checks and balances, and the principle of economic operation, to be able to extract the essence from the surface and inside and to extract the rough when verifying problems and analyzing judgments, and to strive to reveal the truth, to the point, to discover the law, to avoid inaccurate judgment, in-depth verification, impenetrable analysis, and untrue suggestions.
The fourth is to consolidate the thickness around regularity. State auditing is an institutional arrangement for regular supervision of economic and social operations. The author understands that this "regularity" is reflected in the continuous attention and supervision of the implementation of major policies, the promotion of important reforms, and the use of key funds. In recent years, the central government's major decisions and deployments such as the three major battles, "three to one, one reduction and one supplement", and "six stability" and other major decisions and deployments and important economic policies have been continuously implemented, and reforms in various fields have been promoted in depth. In the face of the arduous task of reform and development, the audit work should focus on the requirements of "three increases" and "four promotions" put forward by General Secretary Xi Jinping, accurately focus, face difficulties, continue to exert efforts, and do good deeds. This requires auditors not only to have a solid business foundation, but also to have a tenacious will quality. Tenacity is both a precious spirit and a thick ability. In our work, we must avoid the problems of low self-requirements, weak ability to continue to fight, and walking around in the face of contradictions, constantly change our ideological style, earnestly strengthen study, cultivate the spirit of hard work, overcome difficulties and make achievements for a long time, continue to promote the implementation of policies, and promote the improvement of national governance. (Author: Zeng Wenxiang, Chongqing Special Office of the National Audit Office Source: Official website of the National Audit Office)
2 Several key contents that should be paid attention to in the audit of the financial business field of central enterprises
In recent years, the financial business of some entity central enterprises (hereinafter referred to as central enterprises) has developed rapidly and has become the main business segment and profit growth point of the group company. According to statistics, as of September 2018, nearly 70 central enterprises have controlled or participated in various financial subsidiaries such as banks, securities, funds, insurance and trusts, and carried out entrusted loans, financial leasing, trusts, insurance, insurance brokerage, securities and other financial businesses through financial companies, financial leasing companies and other platforms. With the rise of the "boom" of the financial business of central enterprises, in the audit of central enterprises, it is necessary to pay attention to the implementation of major central policies and policies and decision-making arrangements in the field of financial business, further increase the intensity of auditing, and pay attention to the problems of central enterprises in terms of weakening the effect of central regulation and control policies, deviating from the main business, derealization to virtuality, and preventing and resolving major risks.
The first is to increase the auditing of the implementation of the central macroeconomic regulation and control policies in the financial business field of central enterprises. Entering the new era, China's economy has shifted from the stage of high-speed growth to the stage of high-quality development, and is in the period of transforming the development mode, optimizing the economic structure, and transforming the growth momentum. However, the audit found that some central enterprises have raised funds from restrictive areas such as real estate, government financing platforms, and "two highs and one leftover" through the establishment of funds and trust plans, and even directly invested in real estate development with the help of low-cost financing within the enterprise, frequently taking "land kings", which weakened the effect of the state's macro-control and economic and financial policies to a certain extent. Therefore, when auditing the financial business field of central enterprises, efforts should be made to promote central enterprises to conscientiously implement the major decisions and deployments of the central government and pay attention to the implementation of relevant policies.
The second is to pay more attention to promoting the orderly combination of industry and finance in the financial business field of central enterprises, promoting the development of the main business and serving the development of the real economy. Finance is the bloodline of the real economy, and serving the real economy is the vocation of finance and the purpose of finance. The "original intention" of the development of financial business of central enterprises is to promote the development of the main business, broaden financing methods or channels, enhance the ability of rational allocation of financial resources, revitalize existing assets, and provide low-cost financial support for the development of related industries of the group, in order to develop "industrial finance" rather than "financial industry". At present, in the profit composition of some central enterprises, the main business, real estate, and financial business even reach three points of the world, and there is a risk of derealization to virtuality and deviation from the main business. Therefore, when auditing the financial business field of central enterprises, we should combine the functional positioning of the central enterprise, as well as the original intention and goal of carrying out financial business, start from its management system, assessment mechanism, etc., investigate and understand whether its business development is in line with the positioning of the enterprise, whether it is conducive to the realization of the overall function and goal of the enterprise, whether it has realized the promotion of production with financing, based on the main business and industry, and promoted the combination of industry and finance, so as to promote the development of enterprises more clearly, get rid of the tendency of utilitarianism and short-sightedness.
The third is to pay attention to whether risk isolation is achieved between financial business and core industries and establish a financial business risk monitoring and reporting system, and resolutely adhere to the bottom line of no systemic financial risks. In recent years, some central enterprises have carried out a large number of high-risk businesses such as financing trade, "industrial chain" financial services and financial derivatives, ignoring the authenticity of the transaction background and reducing their ability to control risks such as high leverage. Due to the increase in financing trade and non-substantial trade and high-leverage businesses such as "idling" and "single", problems such as defaults have occurred frequently, and central enterprises have become the last payers and suffer huge losses. Therefore, when auditing the financial business field, we should pay attention to whether there is effective risk isolation between its financial business and the core industry, whether it has established a relatively perfect financial business risk monitoring system, increase the audit of high-risk business such as "industrial chain" financial business, entrusted loans, domestic guaranteed foreign loans, financial leasing, and financial derivatives, and promote the bottom line of not having systemic financial risks. (Author: Zhu Hanqiu, Chongqing Special Office of the National Audit Office Source: Official website of the National Audit Office)
3 Reflections on several issues related to deepening internal audit work
Reform and improve the internal audit management system
The 19th National Congress of the Communist Party of China and the Third Plenary Session of the 19th Central Committee of the Communist Party of China made major decisions and deployments to reform the auditing management system. According to the "Plan for Deepening the Reform of Party and State Institutions" of the CPC Central Committee, the Central Audit Committee was established in order to strengthen the leadership of the Party Central Committee over auditing work, build a centralized, unified, comprehensive coverage, authoritative and efficient auditing supervision system, and better play the role of auditing supervision. The internal audit management system is an important part of the audit management system, and is an important guarantee for internal audit to maintain independence and objectivity, fully perform its duties and responsibilities, and play a better role. To reform and improve the internal audit management system, we should adhere to and strengthen the party's centralized and unified leadership over internal audit work as the primary principle. In practice, many departments and units have made useful explorations, such as the establishment of internal audit committees, internal audit work leading groups, etc., as the decision-making and deliberative coordination body for the internal audit work of party committees (party groups). In order to enhance independence and authority, internal audit institutions should carry out their work under the leadership of the party committee (party group) of their own departments and units, and strictly implement the reporting system for major matters, and all major matters involving the determination of audit plans, audit status reports, handling of violations, transfer of illegal issues, etc., must be reported to the party committee (party group).
The reform and improvement of the internal audit management system should focus on optimizing and rationalizing the internal audit management system. At present, there are still some problems in the internal audit of some departments and units, and to solve these problems, it is necessary to guide and promote external forces such as audit institutions, competent departments, internal audit associations, etc., and it is inseparable from the improvement of the importance attached to internal audit work within the organization.
To reform and improve the internal audit management system, we should explore innovative assessment and incentive mechanisms to ensure that internal auditors perform their duties and responsibilities. All departments and units should further establish and improve the assessment and incentive mechanism for internal auditors, clarify the basis, methods and assessment standards for performance evaluation, comprehensively and objectively evaluate the work performance and development potential of internal auditors, and formulate scientific and reasonable reward and punishment incentive measures. Not only through positive assessment to motivate officers to start a business, with the performance test responsibility, but also through the necessary responsibility to urge internal auditors to adhere to professional ethics, maintain diligence and responsibility.
Service Improvement Risk Management Implementation Risk Management Audit
Risk management audit is a review and evaluation activity carried out by internal audit institutions to review and evaluate the appropriateness and effectiveness of the organization's risk management process using a systematic and standardized method. There is an essential difference between risk management audit and risk-based audit. The former is a review and evaluation of the risk management process, which is a type of audit; the latter is an audit forensics model that emphasizes the application of audit risk assessment and analysis throughout the entire audit process.
Risk management audits should be based on internal control research. Internal auditors should focus on risk management mechanisms, risk identification methods, risk assessment methods, risk response measures, as well as managers' attitudes, concepts, competence and other contents of risk management, combined with the audit results of internal control, finance and performance, make professional judgments on the status and effect of risk management, and evaluate the rationality of risk management, the appropriateness of measures and the effectiveness of implementation.
Risk management audits should focus on strategic management and performance. Internal auditors should stand at the height of organizational strategic management, use systematic thinking, fully grasp the overall development trend of the organization, identify the bottleneck of organizational development, and provide information for organizational strategic decision-making. It is necessary to be proficient in the use of traditional auditing methods such as review, inspection, interview, and analysis procedures, as well as to learn to master common risk assessment methods such as key risk indicator analysis and life cycle analysis, understand the best practices of risk management, and compare and analyze the specific situation obtained through testing and evaluation, so as to find the gaps and the causes of the gaps, and put forward opinions and suggestions for service organizations to improve risk management.
Gain a comprehensive understanding of performance audits
Grasp the relationship between performance and real and legal. Performance audits cannot be completely separated from financial revenue and expenditure and legality audits. Performance audit is based on the authenticity and legality of the basic data, and performance audit is of practical significance only if the real and legal audit of the financial revenue and expenditure of the audited unit is completed and the untrue and illegal matters are adjusted.
Focus on resource allocation and development strategies. It is necessary not only to pay attention to the operation and management of the organization, promote the maximum utilization of existing resources, fully tap the potential of people and property, and improve the management level, but also pay attention to the development strategy of the organization. The organizational development strategy not only reflects the sustained growth of the organization, but also reflects the development direction of its implementation of the major decisions and deployments of the Party Central Committee and the State Council. Internal audit should promote the organizational development strategy to serve the realization of the national development strategy through performance audit.
Focus on relativity analysis. The auditor shall select the technical methods that are compatible with the audit object, the audit objectives and the audit evaluation standards according to the importance, audit risk and audit cost. Among them, the analysis method is the most common. When using the analysis method, in addition to the absolute quantity, change trend and other analysis, we should pay more attention to the relative analysis of the evaluation indicators.
Updated the concept of internal economic responsibility audit
It is a basic duty for an internal audit institution to audit and supervise the performance of economic responsibilities by the leaders of the internal management of the unit. Its main objectives are to evaluate the performance of the economic responsibilities of the leaders of internal management and promote them to conscientiously perform their economic duties; to strengthen the assessment of internal management leaders, to provide a basis for the management or personnel departments to evaluate, reward and punish, and appoint cadres; and to promote the audited units to improve internal management and strengthen the building of a clean and honest government. With the recognition and expectation of the organization's internal audit function, the content of economic responsibility audit has been continuously expanded, which is not only "economic responsibility" in the narrow sense, but also social responsibility and environmental responsibility are gradually included in the content of economic responsibility audit. It can be said that any internal audit has elements of economic responsibility, and the content of the economic responsibility audit also covers all aspects of the performance of the duties of the unit.
The implementation of internal economic responsibility audits should pay attention to the implementation of the "three distinctions" requirements put forward by General Secretary Xi Jinping, closely follow the central spirit and the requirements of reform and development, analyze problems realistically, and see whether they are mistakes in promoting reform due to lack of experience and first trial, whether they are mistakes in exploratory experiments that have no clear restrictions at the higher level, whether they are unintentional faults to promote development, and we must adhere to the comprehensive and objective view of the problem in history, so that the audit evaluation is more accurate and objective, and the responsibility determination is more convincing.
To implement an internal economic responsibility audit, it is also necessary to achieve the "three combinations" of responsibility, family foundation and development. It is necessary to focus on the performance of the economic responsibilities of leading cadres, but also to find out the family background of the audited units through audits, and based on the problems found in the audit, put forward suggestions for promoting the improvement of internal control, risk prevention, and improvement of the system, so as to better serve the improvement of organizational governance, achieve organizational goals, promote the healthy and sustainable development of the organization, and enhance the constructive role of economic responsibility auditing.
Accurately grasp the audit of natural resource management and ecological environmental protection responsibility
The internal audit institution's audit of the performance of the natural resource asset management and ecological environmental protection responsibilities of the unit and its subordinate units is a new task of internal audit in recent years. The Provisions clearly require internal audit institutions to audit the performance of their natural resource asset management and ecological environmental protection responsibilities of their own units and their subordinate units. According to the relevant regulations, the basic objects of China's internal audit institutions to carry out natural resource asset management and ecological environmental protection responsibility audits are mainly the leaders of party committees and governments, departments and units at all levels.
Internal audit institutions should fully understand the extreme importance of conducting audits of natural resource asset management and ecological environmental protection responsibilities in the new era, and accurately grasp the main risks faced by the organization in natural resource asset management and ecological environmental protection. Make good use of modern analytical means such as big data analysis technology and geographic information technology to objectively evaluate the performance of audited leading personnel in performing their responsibilities for natural resource asset management and ecological environmental protection, promote natural resources and ecological environmental protection, and effectively play the role of auditing in the process of building a beautiful China.
The audit of the responsibility for the management of natural resource assets and ecological environmental protection should focus on the implementation of the guidelines, policies, and decision-making arrangements for the construction of ecological civilization, compliance with laws and regulations and major decisions on the management of natural resources assets and ecological environmental protection, the completion of natural resource asset management and ecological environmental protection objectives, the performance of natural resource asset management and ecological environmental protection supervision responsibilities, the organization of natural resource assets and ecological environmental protection related funds collection and management, and the construction and operation of projects. Through auditing, we will promote the exploration of the preparation of natural resource balance sheets and the implementation of a lifelong accountability system for ecological and environmental damage.
Strengthen the rectification of problems found in internal audit and the use of results
Establish product awareness of internal audit results. The results of internal audit are the core "products" of internal audit inputs and outputs, and are a concentrated reflection of the effectiveness of work. Only when internal audit achieves rich results can it talk about value creation, results application and supervision and rectification accountability. Therefore, we should firmly establish the product awareness of audit results, strive to create high-quality, high-output internal audit products, and continuously improve the added value of products.
Establish and improve the responsibility mechanism for rectifying problems found in audits. It should be emphasized that the completion of the audit work is not marked by the discovery of audit problems and the issuance of audit reports, but by the rectification of audit problems, so strong measures should be taken to supervise rectification, effectively open up the "last mile" of audit rectification, and promote the constructive role of internal audit to be better played. Each unit shall establish and improve the rectification mechanism and accountability mechanism for problems found in the audit, make it clear that the main responsible person of the audited unit is the first responsible person for rectification, conscientiously rectify the problems found in the audit and timely study and analyze the suggestions made by the audit, and take the internal audit results and rectification as an important basis for assessment, appointment and removal, reward and punishment and related decision-making. The internal audit institution shall assist the principal responsible person of the unit to supervise and implement the rectification work of the problems found in the audit, and pursue the responsibility of those who are ineffective in rectification and repeated trials.
Implement incentive mechanisms for the use of audit results. In order to encourage organizations to make effective rectifications and protect the enthusiasm of internal audit institutions, Article 22 of the Provisions clearly puts forward the provisions on the effective use of internal audit results by audit institutions. Internal audit institutions and personnel should actively explore and innovate, further enhance the awareness of results, create work results that can be recognized by audit institutions, and win the support of their departments and units; on the other hand, they should strengthen communication, exchange and coordination between internal audit and audit institutions, realize information sharing, and improve awareness. (Author: Li Fengyan, Director of the Internal Audit Guidance and Supervision Department of the National Audit Office Source: China Audit News)
<h1>The latest news</h1>
Notice of the Secretariat of the Chinese Auditing Society on the Collection of Membership Dues for 2019
Auditing Societies of All Provinces, Autonomous Regions, Municipalities Directly Under the Central Government, Cities Separately Listed in the Plan, and the Xinjiang Production and Construction Corps, Audit Theory Research Societies of each special office of the National Audit Office, members of other units, and individual members:
In accordance with the provisions of the Articles of Association of the Chinese Auditing Society and the Measures for the Collection and Management of Membership Fees of the Chinese Auditing Society, I will begin to collect the membership dues for the year 2019. Members of various units and individual members are requested to pay the membership fees to the Secretariat of the China Auditing Society by bank transfer before March 15, 2019. The prescribed membership fee standards are: enterprise unit members, 3000 yuan / year; public and social group unit members, 2000 yuan / year; individual members, 150 yuan / year.
Bank account name of China Auditing Society: China Auditing Society, Bank: Industrial and Commercial Bank of China Beijing Zizhuyuan Branch, Account Number: 0200007609014477473. When transferring dues, please be sure to fill in the name of the paying unit or the name of the individual member.
According to the Constitution of the Chinese Auditing Society, if a member does not pay the membership fee for 2 years, it is regarded as an automatic withdrawal and will no longer be given to the "Audit Research" and so on.
Address of the Secretariat of the Chinese Auditing Society: No. 4, Zhongguancun South Street, Haidian District, Beijing. Postal code: 100086.
Contact: Zhao Na, Wang Daqiang
Contact number: 010-82199819, 82199815.
Secretariat of the Chinese Auditing Society
January 2
(Source: China Auditing Society)
Editors-in-charge: Zhang Nan, Dong Zihao