Regulatory Role of Financial Performance on Internal Control and Audit Costs: Evidence from China

Abstract

With the development of China's economy, many problems such as financial fraud have gradually appeared in the market environment, which has a very adverse impact on the sustainable development of China's economy. At the same time, the importance of audit supervision has become increasingly prominent. Therefore, the relationship between the internal situation of enterprises and external audit needs to be further studied. This paper discusses the relationship between internal control, financial performance and audit costs, focusing on how financial performance plays a role in the relationship between internal control and audit costs. In the following sections, we will explain how internal controls and financial performance affect audit costs.