A Study Of Internal Control Environment And Control Mode Of Private-owned Enterprises

Recently, the theory researchers concentrate on the internal control.The scholars in China focus a lot on the concepts,the frameworks and the pratices of the internal control,but they rarely pay close attention to the internal control of private-owned enterprises,the relationship between the control enviroment,control mode and control objectives.The empirical study documents in this spectrum are rarely seen.Many internal control problems of the private-owned enterprises are not fully demonstrated.Nowadays, the enviroment enterprises faced is more uncertained and full of risks. One of the most important reasons of being short-lived is the ineffectiveness of internal control which has correlations with the bad control enviroment.That will restrict the going-concern of the privar-ownde enterprises and the establishment of a harmonious society.In this point of view, it's quite neccesarry to do some research on the internal control enviroment and rellated subjects for those objects of study.The dissertation reviews the literature of the internal control from the angle of the internal control regulations and framnworks, organ-izatioanal management, individual behavior, control enviroment,control objective and control mode which provide the theory support for the internal control questionnaire.In the literature review,we summarize the theory of systems, new institutional economics,contingency theory,enterprises life-cycle theory,stakeholders theory, and the relationship between those theories and internal control.Then this paper designs a theory framnwork for this research..According to this paper,the interior control enviroment can be divided into the culture and ethics enviroment and the institutional enviroment.The particular contingency enviroment elements are the leadershipstyle,the enterprise culture,ethical valuess,board of directors, internal audit institution, organizational structure,human resource policies, etc.The exterior control enviroment can be divided into the humanities and marketing enviroment and the laws and regulations enviroment. The particular contingency enviroment elements are the uncertainty of the market,culture of the nation,differrence of the laws and regulations of various destricts,etc.Then the contingency control enviroment model in this paper which integrate the interior and the exterior control enviroment is set up.Based on the interview of enterprises,the literature review and the referrence of theory,the paper designs a questionnaire with good reliability and validity by using Likert 5 scale,surveying the control enviroment,the control objective and the control mode.We investigated more than 400 private-owned enterprises in Wenzhou, Jinhua, Huzhou, Taizhou, Hangzhou of Zhejiang Province.The empirical research conclusions are as follows:The accomplishment extent of the internal control in private-owned enterprises in Zhejiang Province is not so satisfied.There are some differences in the mean of accomplishment extent between various industries,various organizational structures, various life-styles,various family control degree,etc,but the variation is not significant.To the various preparers of the questionnaire,they are the stakeholders of the enterprises and have differrent cognitives of the internal control accomplishment extent,though the sequences of the control objectives are almost the same.The internal control modes of the private-owned enterprises in Zhejiang Province consist of institutional-controlling mode,culture and ethics-controlling mode,and family-controlling mode.There is some differences in the accomplishment extent of various control modes between various industries, various organizational structures, various life-styles,various family control degree,etc.But in general,the accomplishment extent of culture and ethics-controlling mode is the highest,and the extent of family-controlling mode is the lowest.The ethical values,enterprises culture,authority and responsibility, exterior control enviroment variable have a significant positive correl-ation with the internal control objective accomplishment extent, while the other control enviroment variables are not.Some of the control enviroment variables can explain the differrences of validity of the institutional-controlling mode,culture and ethics-controlling mode,and family-controlling mode.But not all the control enviroment variables in the regression model significantly correlated.The validity of the various control modes can explain the differrences of accomplishment extent of internal control ovjective,and have a significantly impact on it.In the regression model, both the institutional-controlling mode variable,and the culture and ethics-controlling mode variable are signicantly positive correlated with the accomplishment extent of internal control ovjective,while the family-controlling mode variable is significantly negative with it.At the same time, the validity of the various control modes has a significant impact on the differrences of internal control enviroment. In the regression model, both the institutional-controlling mode variable,and the culture and ethics-controlling mode variable are signicantly positive correlated with the internal control enviroment,while the family-controlling mode variable is not signicantly correlated with it.On the basis of the empirical conclusions above,we suggest the optimization of the internal control environment to improve the validity of the control system.For the improvement of control objective,it's a very important guarantee to optimize the control environment,specially the soft environment elements like the ethical valuess,the management philosophy and the leadership-style.