On how to strengthen internal control of listed companies

Abstract: Internal control is a measure of an important symbol of the management of listed companies. With the development of China's socialist market economy, the listed company's internal control is increasingly important internal control theory and practice of development has experienced a long period of time. My current listing understanding of internal control is inconsistent, confusing, resulting in this situation is mainly due to the market economy developed, inadequate attention to internal control. listed companies in China should be unified guidance of internal control and regulate the construction, to build a comprehensive overall framework.

Keywords: internal control, the overall framework, competition, control environment, oversight mechanisms
First, China's listed company's internal control problems
(A relatively poor internal control environment
Internal control environment is the composition of an organization's internal control environment, particularly within the organization to reflect management's attitude toward internal control, internal control other elements of the basis of any business control are present in some of the control environment, control environment reflects the internal control of business enterprises on the importance of attitude as listed companies unity of ownership and management, decision making and management of the subjective and arbitrary large. corporate management often is not enough understanding of the importance of internal controls or unwilling to establish and implement internal controls, the former is that they think that their business enough to ensure the safety of property, which is driven by the profit motive. management of listed companies want to maximize profits while minimizing tax evasion, and improve internal control will effectively prevent such illegal acts.

(B does not regulate the internal control system
At present, although China's listed companies are required by the SEC in accordance with established internal control system, but the practices are more extensive process, the lack of a unified, detailed, with strong operational and post-op process. After problems are often shirk responsibility, resulting in not held accountable, while some companies even have the internal control system, but not implemented, the system does not perform, do not follow the system of assessment to non-existent, can not play its constraints, supervision. Some companies accounting system flexibility is too large, so comparability of the information poor, misguided decisions, resulting in heavy losses, and sound regulatory framework and improve operational processes is an important part of the internal control system, can effectively prevent risks.

(C ineffective internal audit oversight
China's internal audit agency was initially established under the Government's request, the company did not really recognize the role of internal audit, internal audit organizations that did not really play its role, which is mainly manifested in the first, our internal audit function still troubleshooting a variety of measures. focus only on post-supervision, do not pay attention before, during control, only the emphasis on the audit of financial statements, and ignore the status of the company's management to analyze, evaluate, and make recommendations. Second, China's internal audit institutions are often led by management and substantially with other departments in parallel, so the independence of the poor, less authoritative. Third, most of the internal audit staff transferred from the accounting department or accounting department staff part-time, lack of audit knowledge , especially with the expansion of business scale, the business complex, difficult to meet the needs of the internal audit staff.

(D risk awareness apathy
With the continuous development of market economy, companies face greater environmental changes at this stage and survival risk, such as market risk, credit risk, operational risk, reputation risk, technology risk, and with the tools to change the type of transaction and merger faced acquisition, bankruptcy, e-commerce, etc. should be established to identify the companies, analysis and risk management mechanisms, and identify high-risk areas, to strengthen the management, but China's listed companies is the lack of such a mechanism, shareholders, board of supervisors, managers and mutual supervision, restraint mechanism is not established, there is no risk assessment board committee or non-existent, resulting in the feasibility study of the case without random decision-making.

Second, measures to strengthen internal control of listed companies
(An improved internal control environment
Management thinking is dominated by the soul of business operation, corporate values, business philosophy and the concept of internal controls such as a concentrated expression. Management of listed companies must establish a modern management thinking, conscious form of risk management concepts, and through effective information delivery system to ensure that All employees are clearly aware of their internal controls "responsibility."
Build the organizational structure of the key issues is to define the key areas of responsibilities and the establishment of appropriate channels of communication. Organizational structure in the design, on the one hand deal with the responsibility of each department and the right to be clearly defined, it is necessary to prevent duplication of power, but also avoid a power vacuum, so that each deal with all aspects of a business have the appropriate agencies and personnel responsible for specific, on the other hand, not only to help communication between departments and employees, but also help to eliminate barriers between departments and provide opportunities for staff cooperation.

(B to improve risk management
Modern society is a highly competitive society, every listed company, regardless of their size, structure, nature or how the industry will face challenges and the success of the risk of failure.

The face of a market economy under the conditions of various risks. First, all employees of listed companies must establish a sense of risk and only aware of the risks, will take the initiative to strengthen internal control, to take measures to control risk, followed by a listed company in the business process should be strengthen risk management. With economic development, the changing economic environment, the risk of corporate assets, information systems risks, mergers and acquisitions and other risks gradually increase, therefore, listed companies should establish and improve risk prediction, risk assessment, risk control and risk constraints mechanism, and the technical development of risk avoidance, risk transfer and risk dispersion management strategies to effectively prevent and control risk. Links to free download http://www.hi138.com
(C improve internal control monitoring system
China's listed companies set up internal audit agency, can be used with international practice "two-tier leadership model." Specifically: the board of directors consists of independent directors of the audit committee, set up in the management system audit Internal audit institutions to carry out the audit for its business, and report to the Audit Committee is responsible for the work, and accept the guidance of the board of supervisors, for their administrative aspects, and report to the General Manager responsible for the work of this two-way charge, independent dual reporting model higher, in the business also has a strong handle on the authority, can accomplish very well the internal audit of internal controls and supervision.

For listed companies, China's response to mandatory audit of its internal control in the first three years will be listed as a clearance audit of internal control audits, required to be listed companies must accept until after the listing in the annual audit must also continue to accept the internal control audit.

(Four complete communication system
Company management staff should be given control of their conscientiously perform their duties must be clear information so that each employee clearly understand their position in the control system and the role of information transfer and their respective objects, contents, methods and channels, so that information can be in accordance with established routes and levels of accuracy and orderly transfer.

Employees in their daily work every day exposed to some of the key business issues, so they are always the first to realize the problem exists. To make the information timely feedback to management, should establish an open and clear feedback channels to ensure timely reporting and resolving exceptions.

References:
[1] Chen Liuqin, Jiang Jin. On the improvement of internal control mechanism of listed companies [J]. Shihezi University (philosophy and Social Science, 2004,1
[2] Zhang Hailan, Feng Jianrong. System of internal control standards for listed companies to build [J]. Accounting Communications, 2009,3 Links to free download http://www.hi138.com