A Study Of Listed Companies On Internal Control Problems

In the context of economic globalization, countries are accelerating the development of capital markets.At the same time, a series of fraud and corruption cases in result of internal control failure exploded one after another, from WorldCom and Enron in America to CAO and CITIC Fu Tai in our country. Because these cases made people aware of the importance of internal control, many countries released acts about internal control of enterprise.The internal control systems are becoming matured at home and abroad. Ministry of Finance, China Securities Regulatory Commission, National Audit Office, China Banking Regulatory Commission, and China Insurance Regulatory Commission jointly issued China's Basic Standard for Enterprise Internal Control in Beijing on June 28, 2008.Also these five ministries issued China's Supporting Guidelines for Enterprise Internal Control on April 26,2010. Supporting Guidelines are composed by 21 Application Guidelines, Evaluation Guidelines and Audit Guidelines. They provide guidance on the internal control specific implementation of listed companies, marking the internal control system in our country basically completed. According to Supporting Guidelines'practice schedule, they will be initially implemented within the scope of companies simultaneous listing inside and outside as of January 1,2011,expanded to companies listing on the main board in Shanghai Stock Exchange and Shenzhen Stock Exchange since January 1, 2012.So, establishing a sound internal control is putting on the agenda of listed companies.This paper took Shandong Jiufa Edible Fungus Co.,Ltd as a case, researched the problems which existed in listed companies at present. Firstly, based on the case of Jiufa Company, this paper generally analyzed its internal control problems in terms of internal environment, risk assessment, control activities and supervision. Secondly, from special case to ordinary situation, this article summarized and analyzed the problems in listed companies of our country from internal environment, risk assessment, control activities and supervision in and outside companies.Finally, I put forward some advices on how to improve and perfect internal control of listed companies integrating China's Basic Standard and Supporting Guidelines for Enterprise Internal Control, so that the listed economy can adapt to market economy better and contribute greater force in the national economy.The main contribution of this paper is analyzing the internal control problems in listed companies of our country based on the case of Jiufa Company, providing suggestions integrating China's Basic Standard and Supporting Guidelines for Enterprise Internal Control.