Abstract
The Audit Committee is a specialized agency under the Board of Directors, and supervising the company's internal control is one of its duties. This article takes the 2012-2017 Shanghai-Shenzhen A-share non-financial listed company as a research sample, focusing on the chairmen, CEOs, CFOs, board secretaries and executive directors other than the CEO, discussing the impact of their concurrent appointment as audit committee members on the arising, correction and repair of internal control weakness in listed companies. The study found that different types of executives who are concurrently members of the audit committee would lead the internal control weakness to different directions. In general, excluding some less significant results, executives concurrently serve as members of the audit committee could stimulate the arising of internal control weakness and promote the correction and repair of the existing internal control weakness of the listed company. This indicates that when a listed company does not have internal control weakness, its executive layer intervention will weaken the effectiveness of the audit committee's governance and induce the arising of internal control weakness. Conversely, when the company inherently has internal control weakness, the intervention will strengthen the effectiveness of the audit committee's governance, making the audit committee more effective in monitoring internal control weakness. In addition, an important finding is that the existence of the Secretary of the board among the members of the audit committee will limit the chairs’ role in promoting internal control deficiencies.
Highlights
1.1 Research background and significance1.1.1 Research backgroundThe governance standards for listed companies issued in January 2002 clearly pointed out that the board of directors of listed companies can set up an audit committee, and the basic norms of enterprise internal control issued in June 2008 clearly proposed that enterprises should set up an audit committee under the board of directors
The above research shows that the identification and identification of internal control defects of listed companies is the key to evaluate the effectiveness of their internal control
It is not difficult to find that when it comes to the members of the audit committee, scholars at home and abroad study independence As a whole, it rarely involved the impact of other personnel other than independent directors on internal control defects, and few scholars specialize in the study of chairman, CEO, CFO, the relationship between the Secretary of the board of directors and executive directors other than the CEO serving as members of the audit committee and the defects of internal control
Summary
The governance standards for listed companies issued in January 2002 clearly pointed out that the board of directors of listed companies can set up an audit committee, and the basic norms of enterprise internal control issued in June 2008 clearly proposed that enterprises should set up an audit committee under the board of directors. The audit committee is an important mechanism to assist corporate governance and is responsible for the supervision of internal control. The attitude of listed companies towards internal control defects is becoming positive and optimistic, but the overall quality of internal control is declining Is this related to the involvement of heavyweight executives in the audit committee? Management phenomena show that the audit committee of Listed Companies in China does not effectively perform the responsibility of supervision and governance. This paper will conduct further research on whether senior executives serving as members of the audit committee can promote the audit committee to better perform its supervision responsibilities on internal control, and what changes will occur to the defects of internal control after all kinds of senior executives serving as auditors
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