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Today Shenzhen Stock Exchange issued the Working Guidelines on Internal Audit of Companies Listed on the SME Board, in attempts to further regulate internal audit of these firms and enhance the quality of internal audit practices.
Since the implementation of the Corporate Governance Campaign, many listed companies have failed to effectively put in place the internal audit system, as shown in the results of self-checks conducted within and inspections by regulatory authorities. Such weakness will directly or indirectly compromise the quality of information disclosure by listed firms.
Therefore, the Guidelines set out basic requirements for internal audit work, concerning the responsibility of related departments, emphasis of the internal audit work, and compilation and conservation of internal audit reports.
In addition, the Guidelines require the internal audit organs of listed companies to keep timely track of the major investments, assets sales and purchases, external guarantee, and connected transactions, and focus on issues that were once the “soft rib” of internal audit practices.
Listed companies are also required to set up a self-inspection mechanism, with their internal audit departments responsible for reviewing and evaluating the effectiveness of internal control and advising on improvement measures.
