Abstract: In order to improve the quality of financial information, the United States implements the SOX Act 404 clause in the capital market and implements the internal control audit system for small public companies. However, it encounters a difficult problem that the audit cost is higher than the audit efficiency, which ultimately exempts the internal control audit arrangements for small public companies.China, on the other hand, tries to develop a new way of internal control audit in the SME board by balancing audit costs and benefits.This paper uses descriptive statistical analysis method to demonstrate the effect of internal control audit system arrangement on reducing audit cost and the impact on the quality of financial information.The results show that China′s SME board has achieved different development effects from the US capital market by innovating the internal control audit system. It not only reduces the audit costs of SMEs effectively from the two dimensions of relaxing business types and reducing the implementation frequency, but also guarantees and improves the quality of financial information of SMEs to a certain extent. The conclusion reveals the successful experience of exploring a new way in the development of internal control audit system in capital market.

Key words: internal control audit (ICA), audit costs, financial information quality