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Full Coverage of Internal Audit Based on Value Chain Analysis

Received: 15 October 2021     Accepted: 1 November 2021     Published: 10 November 2021
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Abstract

In order to adapt to the requirements of corporate governance, internal audit must enhance its value and innovate itself to meet new challenges. The value of internal audit mainly lies in the improvement of internal value rather than the improvement of quantitative value. The improvement of internal audit value must be aimed at risk management and internal control. The core of internal audit innovation is the innovation of audit concept and audit thinking mode, and the basic foothold should be on the innovation of audit content, which is the full coverage of internal audit. Full coverage of internal audit refers not only to the full coverage of the audited entity, but also to the full coverage of the audit content. Internal audit should not only be limited to the flow of funds, but should jump out of the small circle of financial audit and march into the decision-making audit and strategic audit. The scope of internal audit must be extended to all aspects of enterprise economic activities. Full coverage of internal audit requires that internal audit must be value-added internal audit aimed at increasing enterprise value, which is value chain audit. Based on the value chain analysis as the breakthrough point, putting the internal audit activity into the organization's value chain, the author put forward that the tentacles of the internal audit should be thoroughly all the value chain analysis, and according to the type of cost drivers respectively constructed three kinds of value-added internal auditing mode, the structured audit mode, process-based audit model and nodal audit model.

Published in Journal of Finance and Accounting (Volume 9, Issue 6)
DOI 10.11648/j.jfa.20210906.13
Page(s) 230-235
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2021. Published by Science Publishing Group

Keywords

Internal Audit, Value-added, Full Coverage, Value Chain, Corporate Governance

References
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[3] Audrey A. Gramling and Nur Irem Nuhoglu and David A. Wood. A Descriptive Study of Factors Associated with the Internal Audit Function Policies Having an Impact: Comparisons Between Organizations in a Developed and an Emerging Economy [J]. Turkish Studies, 2013, 14 (3): 581-606.
[4] Dan Wang and Yajun Guo. Study on the Internal Audit for Listed Companies Based on Value-added View [J]. International Journal of Business and Management, 2009, 4 (7): 52-55.
[5] Kenneth D'and Silva and Jeffrey Ridley. Internal auditing's international contribution to governance [J]. Int. J. of Business Governance and Ethics, 2007, 3 (2): 113-126.
[6] Kennedy Sakaya Barasa. Statistical Analysis of the Role of Internal Audit in Promoting Good Governance in Public Institutions in Kenya [J]. Journal of Investment and Management, 2015, 4 (1): 38-46.
[7] Zhao Baozhu. Audit Model Study of Professional Research Institutions in Power Grid Enterprise [J]. Journal of Finance and Accounting, 2019, 7 (5): 161-167.
[8] Dessalegn Getie Mihret and Getachew Zemenu Woldeyohannis. Value-added role of internal audit: an Ethiopian case study [J]. Managerial Auditing Journal, 2008, 23 (6): 567-595.
[9] Xiaolong Qu and Bin Liang and Hsing Hung Chen. Research on the Value-added Role of Internal Audit [J]. International Journal of Higher Education Teaching Theory, 2020, 1 (4): 211-213.
[10] Sun Lihui. Research on the Economic Value-Added Effect of Internal Audit Joint Internal Control [J]. Frontiers of International Accounting, 2019, 8 (3): 100-106.
[11] Wadesango Newman and Makerevi Comfort. Investigating the Value Creation of Internal Audit and Its Impact on Company Performance [J]. Academy of Entrepreneurship Journal, 2018, 24 (3): 1-21.
[12] Cecily Raiborn; Janet B. Butler; Kasey Martin,; Mina Pizzini. The Internal Audit Function: A Prerequisite for Good Governance [J]. Journal of Corporate Accounting & Finance, 2017, 28 (2): 10-21.
[13] Lise Muriel Botha and Naomi Wilkinson. A framework for the evaluation of the perceived value added by internal auditing [J]. Meditari Accountancy Research, 2019, 28 (3): 413-434.
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[15] Lourens Erasmus and Philna Coetzee. Drivers of stakeholders’ view of internal audit effectiveness: Management versus audit committee [J]. Managerial Auditing Journal, 2018, 33 (1): 90-114.
Cite This Article
  • APA Style

    Yushen Ma. (2021). Full Coverage of Internal Audit Based on Value Chain Analysis. Journal of Finance and Accounting, 9(6), 230-235. https://doi.org/10.11648/j.jfa.20210906.13

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    ACS Style

    Yushen Ma. Full Coverage of Internal Audit Based on Value Chain Analysis. J. Finance Account. 2021, 9(6), 230-235. doi: 10.11648/j.jfa.20210906.13

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    AMA Style

    Yushen Ma. Full Coverage of Internal Audit Based on Value Chain Analysis. J Finance Account. 2021;9(6):230-235. doi: 10.11648/j.jfa.20210906.13

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  • @article{10.11648/j.jfa.20210906.13,
      author = {Yushen Ma},
      title = {Full Coverage of Internal Audit Based on Value Chain Analysis},
      journal = {Journal of Finance and Accounting},
      volume = {9},
      number = {6},
      pages = {230-235},
      doi = {10.11648/j.jfa.20210906.13},
      url = {https://doi.org/10.11648/j.jfa.20210906.13},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20210906.13},
      abstract = {In order to adapt to the requirements of corporate governance, internal audit must enhance its value and innovate itself to meet new challenges. The value of internal audit mainly lies in the improvement of internal value rather than the improvement of quantitative value. The improvement of internal audit value must be aimed at risk management and internal control. The core of internal audit innovation is the innovation of audit concept and audit thinking mode, and the basic foothold should be on the innovation of audit content, which is the full coverage of internal audit. Full coverage of internal audit refers not only to the full coverage of the audited entity, but also to the full coverage of the audit content. Internal audit should not only be limited to the flow of funds, but should jump out of the small circle of financial audit and march into the decision-making audit and strategic audit. The scope of internal audit must be extended to all aspects of enterprise economic activities. Full coverage of internal audit requires that internal audit must be value-added internal audit aimed at increasing enterprise value, which is value chain audit. Based on the value chain analysis as the breakthrough point, putting the internal audit activity into the organization's value chain, the author put forward that the tentacles of the internal audit should be thoroughly all the value chain analysis, and according to the type of cost drivers respectively constructed three kinds of value-added internal auditing mode, the structured audit mode, process-based audit model and nodal audit model.},
     year = {2021}
    }
    

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    T1  - Full Coverage of Internal Audit Based on Value Chain Analysis
    AU  - Yushen Ma
    Y1  - 2021/11/10
    PY  - 2021
    N1  - https://doi.org/10.11648/j.jfa.20210906.13
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    T2  - Journal of Finance and Accounting
    JF  - Journal of Finance and Accounting
    JO  - Journal of Finance and Accounting
    SP  - 230
    EP  - 235
    PB  - Science Publishing Group
    SN  - 2330-7323
    UR  - https://doi.org/10.11648/j.jfa.20210906.13
    AB  - In order to adapt to the requirements of corporate governance, internal audit must enhance its value and innovate itself to meet new challenges. The value of internal audit mainly lies in the improvement of internal value rather than the improvement of quantitative value. The improvement of internal audit value must be aimed at risk management and internal control. The core of internal audit innovation is the innovation of audit concept and audit thinking mode, and the basic foothold should be on the innovation of audit content, which is the full coverage of internal audit. Full coverage of internal audit refers not only to the full coverage of the audited entity, but also to the full coverage of the audit content. Internal audit should not only be limited to the flow of funds, but should jump out of the small circle of financial audit and march into the decision-making audit and strategic audit. The scope of internal audit must be extended to all aspects of enterprise economic activities. Full coverage of internal audit requires that internal audit must be value-added internal audit aimed at increasing enterprise value, which is value chain audit. Based on the value chain analysis as the breakthrough point, putting the internal audit activity into the organization's value chain, the author put forward that the tentacles of the internal audit should be thoroughly all the value chain analysis, and according to the type of cost drivers respectively constructed three kinds of value-added internal auditing mode, the structured audit mode, process-based audit model and nodal audit model.
    VL  - 9
    IS  - 6
    ER  - 

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Author Information
  • Department of Accounting, Shang Dong University of Technology, Zibo, China

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