On Strengthening the Construction of the internal control system

Abstract: The enterprise's internal control system is the inevitable product of modern business management, strengthen internal control system is to establish a modern enterprise system, the inherent requirements of effective internal controls not only the rational allocation of resources to enable businesses to improve labor productivity, and better prevention and found that internal and external fraud. thereby helping to ensure the organization's normal operation of economic activities, protect corporate assets, security, integrity and effective use to improve the accuracy and reliability of financial accounting, business promotion and evaluation of policy , policy implementation, evaluation of economic efficiency of enterprises, improve enterprise management level.

Keywords: internal control, enterprise risk
Ministry of Finance, the Commission, the Audit Commission, CBRC, CIRC five ministries jointly issued a <<the basic norms of internal control>>, which marks our internal control has achieved significant development. <<Basic norms of internal control> > reasonable COSO report draws on the United States as the representative of the internal control framework, combined with China's specific conditions have been adjusted and improved, with the specific environment of China's enterprises in which to practice coordination and management, internal control for the enterprise to provide a unified standard , mainly by the overall structure of the internal environment, risk assessment, control activities, information and communication, the five elements constitute the internal supervision, strengthen and standardize internal controls, is to improve business management and risk prevention capacity, and promote sustainable development of enterprises This article on the internal control risk prevention and control of what the individual's knowledge.

First, to establish effective internal control system is an effective way to prevent corporate risk
Internal control refers to the enterprise in order to ensure the effective conduct of business activities, to protect the security and integrity of assets, to prevent, detect and correct errors and fraud to ensure that accounting data and related information is true, lawful, complete and develop and implement policies and procedures. good internal controls reasonably ensure corporate compliance management, accuracy and reliability of financial accounting information and business efficiency, and compliance management, financial reporting and the real effective enterprise risk management operations is what it should achieve the basic state from this perspective, risk management, internal control is an essential part of Internal Control is driven by business risk awareness and management. On the contrary, if there is no good internal control, are often lead to the production of a variety of errors and fraud and even the bankruptcy of the enterprise from the decline of the domestic giant group, Yinguangxia case of Barings Bank collapse abroad, not because of Enron and other non-defect or failure of its internal controls due, so the risk of internal control is to prevent corporate events occurrence of a long-term mechanism. a basic form of internal control are: organizational planning and control, authority to authorize the control, budget control, physical control.

1 organization planning and control. Means the control requirements, the unit in determining and improving the organizational structure
Process, should follow the principle of separation of incompatible duties. Unit of economic activity can generally be divided into five steps: authorization, issuance, approval, implementation and recording. Under normal circumstances, such as relatively independent of each of these steps by the staff (department) implementation , we can guarantee the separation of incompatible duties, easy to play the role of internal control.

(2) authority to authorize the control refers to the department or staff dealing with economic business access control. A department or staff in dealing with economic business, subject to authorization, otherwise it has no right to approve it with the general authority and specific authority: General authorization is for the power level when the general economic and business conditions of the approval, usually clear in the internal control, in particular, is authorized to handle special economic business conditions, the power level and approval requirements, such as when a business exceeds a department permission only by specific approval to be processed. basic requirements are: first clear general mandate and limits of authority and responsibility given, followed by each type of business to clear the authorization approval processes
Order, again to establish a checking system to ensure that authorized the processing quality of the economic business.

3 budgetary control. Is an important aspect of internal control, including financing, procurement, production, sales, management and other business activities of the entire process. Units prepare detailed budgets and plans, through the authorization by the relevant departments of the budget or the implementation of the plan control, the basic requirements are: a budget must reflect management objectives, and clear lines of responsibility, the second should be allowed in the implementation of the approved budget adjustments to make the budget more realistic; three budget should be timely and regular performance feedback.

4 control of physical assets mainly include the restriction of access and regular inventory, which is taken for the physical assets, security measures for restriction of access to strictly control access to physical assets such as cash, bank deposits, securities, and inventory, etc., in addition to the cashier and custody staff, other personnel to limit access in order to ensure the security of assets, regular asset inventory to ensure that there is relative to the number of records with book
Second, to ensure the effectiveness of internal control issues to be aware of the following
Internal control different purposes according to their control, can be divided into management control and accounting control the former in order to improve business effectiveness and efficiency, ensure business policy, decision-making and implementation of business goals for the purpose; the latter is based on the protection Enterprise security of property and materials to ensure the information is true and complete accounting and financial activities for the purpose of legitimacy.

The two are interlinked and affect each other, and some control measures can be used for accounting controls, management can also be used to control the internal control in the enterprise performance management practice is often the system or work processes, their effectiveness depends on two aspects: First, improvement of the system and reasonable; second implementation of the system. Specifically, to ensure effective internal control system must focus on the following aspects of the problem.

1. Focusing on prevention, investigation, supplemented. Enterprises to establish internal control system is mainly to prevent the occurrence of non-management unit efficiency and illegal acts that occurred and to prevent Cuobi illegal events have occurred to expose and deal with the situation, investigate and deal with just to maintain seriousness of the internal control system rather than a means of internal control.

2. Focusing on selected critical control points. The efficiency of internal control and cost-effective managers should be decided only to focus on business processes play a role, affecting the wider scope of business activities to ensure control of the entire Goals of the critical control point, can not pray for everything.

3. Be properly controlled. That control the scope, extent and frequency to be just right. To this end, the control process should pay attention to both the business and management activities to meet the supervision and inspection requirements, but also to prevent the occurrence of a strong and corporate members of the conflict. Moderate control should be also reflect these two requirements: on the one hand too much control to note that enterprises will kill members of the enthusiasm, initiative and creativity, thus affecting the ability of individuals to improve play and work ethic, ultimately affect the unit's efficiency; another should also be noted that the control will not be too small to enterprise management activities in an orderly manner. Links to free download http://www.hi138.com 4. Enterprise system to create a good cultural atmosphere, the formation of a compliance system and the consciousness of acting according to the workflow, create a good internal control environment for an enterprise, internal control is not the most difficult to design a system, but rather how to ensure system implementation. the true meaning of internal control and value lies in execution. WorldCom, Enron, the oil company's bankruptcy in Singapore shows all the company's risk from the failure and ineffective internal control system of these companies in internal control systems are more perfect, some are a specialist design and development agency. Therefore, the company is simply the internal control system authorization and supervision of the company all rights are in this organization has been granted, and to effectively supervise. No one is above the above the system, otherwise the system can only be a dead letter, without enterprise risk prevention role only when every employee in the enterprise targeted, the concept of convergence, the internal control was more effective. Good corporate culture for the implementation of internal control procedures to create a good cultural environment.

Third, building enterprise risk management and early warning system and do the business risk of the early warning and prevention work
Although internal controls can prevent the enterprise risk, and constitute an essential part of risk management, but can not replace the internal control risk management, so enterprises must be integrated with enterprise risk management and early warning to actually build institutions and strengthen risk management. Only in this way, when the company generates and the risk of threat to the survival and development, in order to promptly resolve the risk of each company because of its size, and other industries in which the different risk factors and prevention and control of their corresponding means are different, so should be a result of enterprise risk management and governance, but in general to that shall prepare the basic procedures of risk management risk identification, risk assessment and risk control, in accordance with the internal environment, objective setting, risk identification, risk assessment, risk response, control activities, information and communication, monitoring and other basic elements of building risk management framework.

1. Develop a clear business goals, establishing control of the risk prevention mechanism in the business enterprise must have a strategic vision, business objectives, targets and compliance reporting goals, only to establish clear goals to guide, to guide and encourage enterprises to move up and down a clear direction.

2. Full charge of risk prevention and control business risk prevention and control of not a few people, a few departments, but full of tasks, it can be said, everyone is the main risk control, every department, every positions are the main risk prevention and control.

3. Improve the formulation of major internal control decision-making process, improve the formulation of major decisions of the internal control processes of the enterprise risk prevention and control of key management to establish internal control for the enterprise system of checks and balances, must be designed to control processes associated with supporting key .

4. Strengthen the key aspects of risk control in the system and process optimization, the critical control points no matter what happens to quantify the risk of bias, will result in final decision-making shifted, so it is necessary to strengthen the key areas of risk prevention and control.


In short, internal control is a dynamic process, is to make business management activities follow the established goal of the process is a "find the problem - to solve the problem - and then found the problem - and then solve the problem," the cycle of the process, it is the enterprise itself a means of risk prevention rather than a goal. to build the internal control system, the human factor is very important. internal control within the enterprise will be the impact of staff at all levels, internal control should be full control, in a business center, and implementing the management always, encourage enterprises to standardize their operations and sustainable development. Strengthen and improve our internal controls, effective prevention and control of enterprise risk, has become the consensus of the theory and practice community, it is for the status quo to improve our internal controls to ensure the effective operation of business has very important significance.

References:
[1] Tang Mao Yushi: cutting-edge feature of modern economics [M]. Beijing: Commercial Press, 2002
[2] Lian-up: Internal Control: a difficult task [J]. Finance and Accounting, 2004, (6)
[3] Caoting Requirements: corporate governance theory faces three major challenges [J]. Industrial Management, 2004, (2)
[4] Hao Yang: modern theory and operation of [M]. Shanghai: Shanghai Finance University Press, 2004 Links to free download http://www.hi138.com