Study Of The Enterprises Internal Control Innovation Based On Contemporary Systems Thinking

As is known to all, scientific theory can direct practice, wrong theory interfere in practice activities, it can lead practice to wrong path. It's no exception for enterprises internal control theory. Currently, internal control has become hot research problem for theory, political and business circle. On the contrary, in our country'public company itself has a lower degree knowledge for internal control'and there is not any improvement due to'Accounting Law','internal accounting controlling regulations'(Yang Xiongsheng,2007); The SOX Law has passed 5years, there is a lot of dispute about it . This article attempts to use varied new systems thinking methods based on systems thinking, according to new paradigm related theory crossing over some subjects as premises to research the innovation for a series problems of enterprise internal control, my purpose aimed at clarifying, supplement and refining current internal control theory, to serve the practice of enterprise internal control better.First, this paper reviews and comments on the relevant domestic and international internal control research documents throughout this area, points out traditional business enterprise internal control theories based on the theoretical premises and research methods were so influenced by ages deeply that limits innovation and development of contemporary internal control theories, and puts forward the necessary nature to innovate internal control theory. The paper uses the new paradigm of management, organization hypothesis, human hypothesis and make use of the new development of the modern systems thinking theories and methods conceive the theory foundation on the enterprise internal control systems to overcome the weakness of traditional single visual angle and single research method of the business enterprise internal control, this removes internal control theories research obstacle. Thus, this will have certain innovation value to enterprise internal control theories foundation and method.Secondly, By using the new development of relevant academics theories I afresh define the concept of enterprise internal control system and system boundary, put forward the concept of the internal control social system, and points out the scope of the enterprise internal control must make a breakthrough about the area of the enterprise'internal'. Enterprise internal control system is an open system. Based on new management paradigm, the scope of enterprise internal control should break the premise of traditional internal scope. From the early stage of management to learn,'all the traditional assumptions led to one conclusion: The inside of organization is the domain of management.'"When the large organization first arose—with the business enterprise , around 1870, this assumption that management's domain is the inside of organization originally made sense—or at least can be explained—its continuation makes no sense whatever."new management paradigm is"management'concern and management'responsibility are everything that affects the performance of the institution's and its results—whether inside or outside, whether under the institution's control or totally beyond it."from this point we can infer the following conclusion: Regardless the enterprise can control or have no control , as long as everything that affects the performance of the institution's and its results—whether inside or outside, whether under the institution's control or totally beyond it is the scope of the enterprise internal control. Furthermore, after this paper abandon dated of management assumption and the organization assumption, it puts forward the new business enterprise internal control boundary, characteristic, and expands the connotation of the internal control concept, Puts forward an internal control system shouldn't only focus on cost, activity and process, it should pay more attention to the softer side of human ethical value and various relationship under extensive environment, puts forward the view of establishment the internal control social system governed by enterprise and government together.The third, after analyzing current domestic and international internal control framework, the paper put forward an enterprise internal control framework based on contemporary systems thinking. The paper puts forward the two additional objectives of internal control systems, which are the sustainability of enterprise and behavior for all stakeholders responsibly from the point on interaction of enterprise, government and audit profession, this three main interest group as the premises. This enriches traditional internal control objectives within framework, and links enterprise internal control systems to the business success indirectly.On the other hand the paper puts forward human factors neglected by hard systems thinking in long term in the established internal control framework in the past to see personnel as one of the important factors in the new framework. Replaced COSO's internal environment by environment under the new framework, this builds up a good foundation to clarify the relationship between internal control and enterprise risk management and strategic management.Enterprise internal control systems based on contemporary systems thinking should have a whole nature. To Judge a whole nature have a very important principle: it should studies on relevant factors which related to those problem to be resolved, it is not from the starting points on the man-made boundary due to function in our organizations or the systems, the new framework should have certain positive effect to build up the enterprise internal control standards.The fourth, According to complex theories of contemporary systems thinking by analyzing internal and external environment the paper puts forward enterprise internal control and enterprise risk management is the two different sides on the same thing, they are equal in system scope. The traditional internal control neglect the risk related people, Standard operating procedures is also only focus on internal process risk,while internal control from a risk-based perspective requires improving the sense of traditional internal control. Internal control's theory and practice demonstrate that strengthen the softer side of internal control. It becomes more and more important to control the risk focused on people.System is not only adaptive with environment simply according to the complex theory, while it is evolving and changing together by responding each other. Any a system environment includes many other systems that join the evolving process. Such as enterprise internal control system and social monitoring systems. Traditional internal control emphasize the passive adaptation side with environment, it dose not pay more attention environment with regard how to evolve together to carry on risk management positively. The complex theory requires that enterprise internal control system should intensify risk control. Thus, the paper's suggestions is to strengthen research on enterprise risk management theory and studies on the way to deal with risk control; and develop the culture of enterprise risk management in order to achieve the perfect effectiveness in internal control.The system is always existed in certain environment, so there is an adaptive relationship between system and environment, however because of system and environment both constant changing this often break system and environment a previous adaptive relationship. When system adapts to the environment, it can be exist in the environment, when system can't adapts to the environment force it to evolve continuously. The enterprise exists between the world, facing the environment can be divided into two major types, generally speaking internal environment and external environment. Work environment include physical environment and the relationship among the people. To improve internal environment is to improve corporation government first, and to focus on the risk based on people. As for enterprise external uncontrollable environment factors, enterprise must rely on enterprise risk management to dissolve risk and to obtain opportunities. Enterprise risk control for the interaction between internal and external environment must match or coordinate with mutually in corporation government, strategic management, organization structure and internal control.Last, the paper puts forward the viewpoint to establish and implement internal control system focused on people by designing a softer side of internal control to supplement current hard control, by improving Control Self-Assessment method to measure humanization internal control system, by focusing on people to broke traditional misunderstanding for internal control, this is necessary to supplement current internal control theories and rectify the system weak segment.Control is much more than internal check, it is not the more tighter the more better either, it doesn't solve problems by more punishment. Certainly it does not let things drift, while it should reserve the essence of a traditional internal control as foundation to rectify defects which is coherent to the system. :To stir up and release the person's aggressive which is neglected for long time, in the meanwhile to pay more attention to monitoring the person's opportunism, and to manage various risk relation with people.Humanized internal control systems is a useful complement for traditional internal control systems, its differences between traditional internal control systems lies in:1. It was thought that the employee is our properties. To promote communication between managers with employee by increasing in linking the manager up employee in order to stir up the employee's work enthusiasm and innovation spirit, and to encourage the existence of different standpoint, and to give employee development and improving the power of create new meanings. 2. It ensures all employees participate in enterprise internal control systems at all levels, and let the study become main melody. Don't let employee feel his "Class is so high" or "so important" that need not participate in.3. It focuses on encouraging employee by themselves seriously, stir up a wisdom, intelligent and ability , in the meantime carry out a soft control combine with Control Self-Assessment, lower internal control cost, raise the employee's master's sense of responsibility.4. It stresses on learning of organization, and pay attention to make use of employee collective intelligence, enterprise will gain all competition superiority.5. It focuses on the risks based on people though Designing and testing soft control.To improve internal control the system has no destination forever, only when established assumptions and premises in enterprise internal control theories are on the right basis, and in the meantime to use a various new systems thinking method can it break current predicament in internal control theories and practice. To implement overall risks control and to coordinate business enterprise system and social monitoring system together, then the internal control can come out misunderstanding, Furthermore this can realize the targets of enterprise internal control, the success of enterprise, and harmonization of the whole society, otherwise only emphasizing single method or single visual view or any party's interest alone will result lower effects in the whole society. This also has apocalyptic meaning to government section in establishment internal control rules and standards.