An Empirical Study on the Internal Control Efficiency of Listed Engineering Companies

Abstract

authors carried out an empirical study on the internal control efficiency of publically listed engineer- ing companies in China. This study presents an exploration of the relationship of independent director ratios, audit committee quality and auditor independence with the internal control efficiency of publically listed engineering companies and forward suggestions and recommendations on raising the internal control efficiency of publically listed engineering companies. requires that the leader of the listed company should provide self-evaluation report of internal control based on the company's internal control design and operating effectiveness and the company should also regularly employ external audit institutions to provide authentication opinions in terms of the internal control self-evaluation report. From then on, the listed companies in the US entered the internal control information mandatory dis- closure phase. In recent years, in order to guarantee the effective operation of the capital market, China also issued a series of policies and regulations related to the internal control information disclosure of listed companies. In 2006, Shanghai Stock Exchange (2006) and Shenzhen Stock Exchange (2006) issued Control Guidelines for the Listed Companies which clearly require that listed companies should prepare internal control self-assessment report based on the released details about internal control. In 2008, the Ministry of Finance (2008) and five other ministries jointly issued The Basic Norms of Internal Control in Companies. specification is based on the US Sarbanes-Oxley Act, requiring that the listed compa- nies should issue internal control self-assessment report to determine whether the internal control is implemented effectively. Ministry of Finance and five other ministries in 2010 issued the three guidelines with relevance to internal control of listed companies, marking the transition of the internal control information disclosure in China from the voluntary disclosure phase to the mandatory disclosure phase.