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Corporate Governance, Internal Control and the Role of Internal
Auditors – A Survey of Chinese Managers

Author details:
Dr. Jane J. Zhang
School of Accounting, Economics and Statistics
Edinburgh Napier University Business School
Craiglockhart Campus
Edinburgh EH11 1DJ, UK
Tel: [phone]
Fax: [phone]
Email: [e-mail]

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Corporate Governance, Internal Control and the Role of Internal
Auditors – A Survey of Chinese Managers

Abstract
This study investigates the role of internal audit in relation to corporate governance
(CG). Despite the fact that the contribution of internal audit has been argued essential for organisations to achieve their business objectives, very little has been known of corporate managers’ perception as to the practical functions of internal audit in the context of CG. This study attempts to bridge the gap by examining the role of internal audit in China’s current CG system via seeking the views of corporate managers. This study finds that the managers view internal audit as an important part of CG and the role of internal auditors has been considered much wider beyond traditional financial control. It reveals that internal audit in China has been greatly influenced by the recent developments of CG and the internal audit function has changed towards more involvement in risk management and internal control. The survey results suggest
China’s CG codes do not provide adequate explanations on internal audit. The results also indicate that Chinese companies have recognised the major role that internal audit function plays and have increasingly provided the resources to improve the quality and expertise of their internal auditors.

Key words: China; Corporate Governance; Internal Audit; Internal Control;
Risk Management.

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I.

Introduction

This study explores and documents the relationship between corporate governance and internal audit. While prior studies have argued

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