I. Internal Audit of General Electric Company
General Electric Company is one of the largest industrial companies in the United States and the largest electric company in the world. The company has 12 categories of products and services, including household appliances, broadcasting equipment, aviation machinery, new technology product development and sales services.
(A) GE's internal audit objectives and contents
General Electric has set a goal for the company's audit office, which can be said to be unconventional even in the United States: going beyond the books and deepening the business. The application of this measure makes them create a very successful example in checking and improving the operating conditions of subordinate units, ensuring that the investment effect conforms to the overall strategic objectives of the company and cultivating enterprise management talents.
GE's internal audit includes two types: one is the audit of the financial department of its subordinate enterprises, focusing on checking whether its own operating conditions and financial activities meet the requirements of the head office; Followed by the audit at the head office level. The most representative feature of GE is the audit of its company's audit bureau.
(B) the characteristics of GE internal audit
Ge believes that there are two key factors that must be solved to do a good job in auditing, one is the accounting standards and principles accepted by both parties, and the other is the double reporting system.
The financial department of the head office keeps a set of accounting standards and principles promulgated by the state, and the responsibility of financial departments at all levels is to adhere to these principles. The financial department of the company provides a basic accounting structure around which all enterprises operate. This structure helps to adhere to the same accounting standards and principles, and the main supervision of the audit is whether the subordinate enterprises seriously abide by these standards and principles.
Another important issue in handling audit work is the principle of double reporting. The chief financial officer of each industrial group shall report to the person in charge of the enterprise and directly report to the financial vice president of the head office.
In the audit work, auditors start with the audit first, but never stop at the simple audit. Instead, we should spend more time and energy to study the businesses that may have problems, including business processes and related strategies and measures, in order to find out whether the business effect, the development and utilization of internal resources, product quality and service have improved. They pay special attention to high-risk and general interests. Because people are used to being smart in the face of risks, they often have various disadvantages such as low efficiency, waste and lack of progress. And these areas are the focus that auditors should pay attention to.
(III) Personnel structure of GE internal audit
The vast majority of GE internal auditors are young people who have worked for several years, and about 80% have accounting degrees. 15% people have knowledge background and management experience in related industries; 5% people are engaged in information processing. Every year, the company carefully selects dozens of applicants from hundreds to enter the audit office, and at the same time sends the same number of personnel from the audit office to enrich the management cadres of GE's business groups. A considerable number of management cadres at all levels, including vice presidents, have audit experience, and 60 ~ 70% of the accounting managers above the intermediate level in GE are transported by the company's audit department. About 40% of the people who leave the audit office every year can be directly promoted to middle-level and above managers.
(IV) GE internal audit workflow
Before the audit begins, the audit team should understand and study the situation and listen to the ideas and suggestions of other experienced members. They vividly called this investigation a "bombing" of their brains, and then determined the goal of this audit.
In the audit, the audit team has full authority over the whole audit work, and its activities such as holding investigation meetings, conducting individual conversations and collecting information are independently arranged by it. Then it is to analyze the situation, sort out the clues and measure the interaction between various problems. In order to achieve the audit goal, they can do anything they think necessary, with only one purpose: to find a solution to the problem.
Even if a solution is found, things are far from over. Generally, the specific suggestions for implementing the plan are put forward by the audit team. They always turn the new plan into their daily work and will not stop until they are implemented, so that they can stick to it after they leave. In this process, the audit team has to deal with the leaders and business personnel of the audited department countless times.
Generally speaking, the internal audit of GE Company is far from what most people think of as the audit concept (most people may think that the audit is often after the event and only does finance). It has become the most effective tool for GE to control subordinate enterprises, and it is also the concrete embodiment and guarantee of GE's ownership of subordinate enterprises.
Second, the characteristics of GE internal audit analysis
1, independent authority. The internal audit department of the company directly reports to the "third-hand" of GE Company, which increases the weight and authority of the opinions of the internal audit institutions, and the internal auditors themselves feel "particularly loud", so the audit work is often more actively coordinated by the leaders of the audited departments.
2. The selection of internal auditors is strict and the composition structure is reasonable. When GE selects internal auditors, it doesn't pay much attention to the auditor's original major, but to the quality and talent of people. They asked each newcomer to bring new contributions and new ideas to the audit department that others did not or could not do. People who enter the audit office have various academic backgrounds and often have different views. Different experiences and viewpoints help to find and solve problems. Most of the auditors lucky enough to be selected can maintain the traditional professionalism of this institution. They are conscientious in their work, with a high degree of consciousness, enthusiasm and creativity, and tireless.
3. Unique in the arrangement of audit work. On average, every three months, auditors accept a new task, each time with different audit objects, different members and different types of business problems. Auditors absorb nutrients from each other and often find problems in comparison. When designing the solution, the good experience of other audit objects will naturally be integrated into the solution, which invisibly improves the efficiency and effect of internal audit and promotes the realization of internal audit value.
These practices of GE seem strange on the surface, but the contents of internal audit have been creatively developed by them and benefited from them. GE's experience tells us that no matter how big the enterprise is, it can be controlled. The key is to find practical methods that conform to the spirit of modern enterprise management. It is a good choice to strengthen the internal audit function and enhance the internal audit value.
Third, the internal audit of enterprises in China.
Drawing on the experience of GE's internal audit, the author thinks that the function of internal audit should be strengthened from the following aspects to promote the realization of internal audit value:
1, strengthen independence. Leaders should endow internal audit institutions and personnel with organizational independence or relative independence, and create conditions to introduce an independent audit committee system, so as to lay a good organizational foundation for internal audit to play its function of managing and controlling risks. Internal audit institutions and personnel should absorb international advanced internal audit theory, pay attention to improving professional quality, explore risk management audit, and strengthen the function of risk control.
2. Strictly implement the audit avoidance system. If the internal auditors are not directly involved in the business management activities of the enterprise and have relatives or economic interests with the audited entity, they should take the initiative to withdraw.
3. Preventive. If modern enterprises want to survive, develop and remain invincible in the fierce market competition, they must establish a strict and perfect control system, a strict and scientific management system and an effective and smooth operation mechanism. Only in this way can we ensure the realization of business objectives. Internal audit focuses on the study and evaluation of the rigor and perfection of internal control system, the scientificity and completeness of management rules and regulations, and the adaptability and effectiveness of methods and measures. Through inspection and analysis, we can find the weak links and loopholes in enterprise management in time, remind enterprise managers to take measures to improve them as soon as possible, and play a role in preventing both the symptoms and the root causes before they happen.
4. Pay attention to efficiency. Internal audit should focus on promoting management and improving efficiency. On the one hand, it is necessary to carry out investment project feasibility assessment, business risk prediction audit and production technology audit to play a role in promoting economic benefits; On the other hand, auditing the cost and internal control system contributes to plugging loopholes, reducing costs and reducing losses.
5. locate in "service". Internal audit is mainly engaged in evaluating the internal control system from the past to the present; From checking corruption risks to evaluating investment risks and operational risks; From the past "police" image to "consultant", the focus is on serving the audited unit or department. Its purpose is to assist managers to successfully complete production and operation tasks and achieve business objectives.
6. Constantly update ideas, study new methods and adopt new technologies. The internal audit work should also develop under the changing business environment and the conditions of enterprise survival and development. Conceptually, the audit object is regarded as the service object; In terms of methods, complex risk assessment technology is widely used to improve audit efficiency; In the link, it mainly focuses on the planning and decision-making stage, and identifies risks as soon as possible; On the goal, pay more attention to seeking ways to avoid or reduce risks; Technically, master and use modern tools, such as computer audit; In terms of quality, it requires not only the professional level of higher education and the practical work experience of enterprise management, but also audit qualifications, such as certified public accountants and registered internal auditors.
7. Internal audit should continue to develop from post-audit to post-audit and preventive audit, with emphasis on trend and risk analysis.