Empirical analysis of the internal control disclosure of information and analysis of the literature review

[Abstract] June 2008 and April 2010, the state has issued <<Internal Control Standards "and <<internal control supporting the guidelines>>, increasing internal control by the state and society. Disclosure of information on internal control Research literature on foreign, mainly U.S. and UK have formed a relatively complete internal control system, and the earlier study, more in-depth. The less the domestic literature, especially empirical Research literature. In this paper, the internal control disclosure of information at home and abroad empirical Research literature, to sort out and reviewed, and Research analysis.

[Keywords] internal control, information disclosure, empirical Research

One of the problem

In June 2008, China's Ministry of Finance, Audit Commission, CBRC and CIRC five departments jointly issued the <<Internal Control Standards "(Accounting [2008] 7 .2010 26 April, the Ministry of Finance , the Commission, the Audit Commission, CBRC, CIRC jointly issued a <<matching internal control guidelines for>> the internal control to ensure the accuracy and reliability of accounting information, the full safety of the assets and business activities effectively and to prevent fraud fraud actions to achieve management objectives play an important role for increasing state and society.

Internal control disclosure of information on research, literature on foreign, mainly U.S. and UK have formed a relatively complete internal control system, and the earlier study, more in-depth, while less domestic literature, especially empirical research literature. This empirical study of literature at home and abroad to sort out and reviewed.


Second, the internal control disclosure of foreign literature

Raghunandan and Rama (1994 wealth (Fortune100 company's annual inspection found that 80 to provide some form of management reports related to internal control.

Dorothy A. McMullen and Ragahunandan (1996 1993 2221 Annual Report of the company's research shows that there are 742 to provide an internal control report, accounting for 33.4%, which contains the contents of the Audit Committee's activities (665, reasonable assurance concept (concept of reasonable assurance, 653 home, assets, security protection (600, internal audit (566, transaction authorization and records (452, internal control costs and benefit considerations (304), staff training and recruitment policies (298 home), etc.

McMullen, Dorothy and Ragahunandan (1996 empirical studies have shown that the selected sample of companies in 1989-1993, an average of 26.5% of the companies internal control report, and those companies that have financial reporting problems, only 10.5% provide an internal control report, small companies, internal control reports and financial reporting issues related to the relationship is more obvious, and thus concluded that the financial report the company in question is unlikely to provide an internal control report.

Margaret and Jaenieke (1997 through a questionnaire survey found that all of the auditors on internal control report will seriously affect the reliability of financial statements, investors and understanding of the effect of internal control; but the management of internal control self-assessment report does not affect the investment that the understanding, the results also show that the management report and auditor's report shall not affect investors' stock trading or holding company's credit risk understanding.

Hermanson (2000 in nine users of financial statements (a total of 363 valid questionnaires for the survey, analysis of their internal control reporting requirements. Found that respondents believe that the disclosure of voluntary disclosure and mandatory disclosure of internal control reports can promote the company's internal control, mandatory disclosure of voluntary disclosure than more in decision-making role.

Doyle, Ge and Mcvay (2006 selected from August 2002 to August 2005 disclosure of material internal control deficiencies of 779 sample companies, and these samples substantial defects in the company's internal control factors affecting the analysis confirmed a small-scale, set up a short time, the business complex, fast growing, poor financial situation are more likely to have serious shortcomings. and earnings quality by investigating the relationship between internal control and found that there is no internal control deficiencies and achieve substantial estimate of the cash flow surplus.


Third, the internal control disclosure of domestic literature

Liu Qiuming (2002 approval system implemented under the 2001 allotment of 34 A-share listed company's internal control disclosure of information to analyze the situation, that because of China's listed companies, disclosure of the contents of the internal control requirements of the lack of unity, leading to its listed companies to disclose as much as possible favorable information, the disclosure form is not uniform, resulting in increased costs of information users.

Li Minghui, where the sea, Ma Xi-Kui (2003 companies listed on China's 2001 annual report of the status of the internal control disclosure of information analysis, that: China's listed company's internal control information largely a formality, no substance, listed Company's voluntary disclosure of motivation is not strong enough, so they need to relevant provisions of the proposed improvements, the disclosure of internal control information operable to make specific provisions and to strengthen the disclosure of the audit of certified public accountants, in order to promote internal control information disclosure.

Zhang Limin, Qian Hua, Li Min, Miriam (2003 of our ST listed company's internal control disclosure of information for data analysis to China's four listed banks on the internal control disclosure of information as a framework for analysis of the 2001 and 2002, ST-A shares internal control disclosure of information made statistical analysis showed that: ST status in 2002 than in 2001, the disclosure has improved, but many among the company's annual report disclosed inconsistencies, and to say "good things" the main recommended that the ST's mandatory disclosure standards of internal control report, and need to go through an external audit of Certified Public Accountants, the relevant regulatory authorities should also strengthen the internal control report of the external supervision and management.

Caiji Fu (2005 to 2003 251 A-share listed companies, cross-sectional data for the study of the internal control disclosure regression analysis, that China's listed company's internal control disclosure of information by the Company's profitability, quality of financial reporting and financial situation is abnormal significant impact, that business performance is good, high quality financial reporting of listed companies tend to disclose internal control information, and financial condition of abnormal internal control information disclosure of listed companies the power is clearly insufficient.

Side Red Star, Sun Hao (2007 to 2006, the Shanghai Stock Exchange issued <<Shanghai Stock Exchange listed company's internal control guidelines>> as an opportunity, using 2006 annual report on the Shanghai Stock Exchange listed non-financial information disclosure of internal control behavior and motivation to conduct empirical research study found that the vast majority of Shanghai-listed company is not in accordance with <<guidelines>> request disclosure of internal control information, the Board of Supervisors, major corporate governance issues and internal control information disclosure of listed companies are more detailed internal controls information disclosure that fewer firms in the overseas market, the total assets of the larger listed companies, the external auditors issued an unqualified opinion on the standard, control and scale man-made top-ranking state-owned listed companies have a strong motive to disclose its internal control information.

Yang Yufeng, Wang fire Yan, Cao Joan (2010 to June 2008, the Ministry of Finance in conjunction with the Commission, the Audit Commission, CBRC, CIRC issued <<Internal Control specification>> based on the design of internal control evaluation of the quality of information disclosure index system, to build the internal control disclosure index (ICIDI, and internal control disclosure index and the correlation between agency costs have been tested, results showed that the internal control disclosure of information and explicit agency costs index was not significant negative correlation , and total asset turnover hidden agency cost variable was significantly positively correlated with the disclosure of information as an internal control of financial performance variables can be observed ROA and ROE are significantly positively related to internal control disclosure of information that the agency costs of the dominant inhibitory effect is not significantly, the cost of hidden agents significantly inhibited, the explicit and implicit agency costs and agency costs with comprehensive inhibition.

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Fourth, the literature review analysis

Based on the above literature, we can draw the following research:
1 foreign literature
(1) abroad earlier empirical studies, mainly on the internal control report and management report for the sum plus a simple statistical analysis of the proportion, find the regularity conclusions of the range of annual management reports and internal control related subjects.

(2 abroad late 1990s the main way to take the questionnaire, the use of econometric methods of descriptive statistics statistical analysis of research areas is the reliability of financial statements, internal control and understanding of the effect of voluntary disclosure and mandatory disclosure of internal control effects.

(3 past 10 years, study abroad, mainly related to material defects in the internal control factors affecting the quality of earnings and the relationship between internal control and so on.

(2) Domestic Literature
Domestic research started late, mainly after 2000 began to take on the internal control and research.

(12,000 early years, the main research direction is the system of internal control disclosure of information, mechanisms and effectiveness of research starting point is often to start from the shortcomings of institutional mechanisms.

(22005 years later, the internal control disclosure of listed companies turning to the study, research methodology was changed to a large sample regression analysis approach. Major research direction for internal control disclosure of information will, behavior and motivation, and the introduction of an external audit factor.

(3) Recently, the internal control disclosure of the gradual quantitative research, especially in the internal control disclosure index and other indicators of the proposed innovative.

April 26, 2010, the Ministry of Finance, the Commission, the Audit Commission, CBRC, CIRC jointly issued a <<matching internal control guidelines>> I believe there will be new research highlights and directions to wait for our research.

Main references
[1] K Raghunandan, DV Rama. Management Reports after COSO: Committee of Sponsoring Organizations of the National Commission on Fraudulent Financial Reporting [J]. Internal Auditor, August, 1994.

[2] D A McMullen, K Reghunandan, and D V Rama. Internal Control Reports and Financial Reporting Problems [J]. Accounting Horizons, 1996,10 (4:67-75.

[3] Heather M Hermanson. An Analysis of the Demand for Reporting on Internal Control [J]. Accounting Horizons, 2000,14 (3:325-341.

[4] Li Minghui, where the sea, Ma Xi-Kui. China's listed companies disclosure of internal control analysis of the situation [J]. Audit Research, 2003 (1: 38-43.

[5] Zhang Limin, Qian Hua, Li Min instrument. Disclosure of internal control and improvement of the status quo - from our ST analysis of the data of listed companies [J]. Audit Research, 2003 (5.

[6] Cai Jifu. China's listed company's internal control disclosure of empirical research [J], Audit and Economic Research, 2005 (2: 85-88.

[7] side Red Star, Sun Hao. Mandatory disclosure under the rules of the internal control disclosure of information - based on the Shanghai-listed company's 2006 annual report of empirical research [J], Financial Studies, 2007 (12.

[8] Yang Yufeng, Wang fire Yan, Cao Joan internal control quality of information disclosure and agency costs related to research - based on the Shanghai Stock Exchange listed companies in 2007, empirical data [J], Audit Research, 2010 (1.

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