Research On The Evolution Of Internal Control

The strong convulsion, caused by a series of global financial scandals and the fraud event of domestic listed companies, arouses widespread attentions to internal control. As corporation governance becomes a hot topic of worldwide concern, internal control draws higher attentions of academic circles. Although the theory and practice of internal control gradually become perfect and plentiful in its long term of development, its theoretical basis is still weak, and theoretical research and practice are in a state of chaos all the time. With internal control being developing till today, it is much more necessary to explore the background and root causes of internal control, absorb the essence on the basis of the achievements before and make use of new theory and method to do research on the evolution of internal control.The thesis consists of seven chapters. The first chapter is an introduction of background, aim, significance, status quo of research, and innovation point, structure of the paper as well. Starting with the origin of internal control, the second chapter makes a historical review of its occurrence, and an analysis framework is constructed to analyze its occurrence. The third chapter lays a theoretical foundation for the analysis of internal control evolution, including Max's Evolution Theory, New Institutional Economics' Institutional Change theory and the Game Theory. The fourth chapter constructs a static game model with complete information to do research on the evolution of internal control. It is the core of this thesis paper. The fifth chapter analyzes the internal control evolution based on the model, involving causes, influence factor, types, historical and trend analysis. The sixth chapter, based on the game model, makes an analysis of our country's internal control according to the status quo of our own internal control evolution. It also presents some constructive suggestions on internal control evolution of our country. The seventh chapter is the conclusion.This paper, starting from the aspect of the two contradictive parties promoting the internal control evolution, focuses on how subjective strengths which promote the internal control evolution displays its initiative at the critical point of evolution. The main innovations and conclusions of the paper are as follows. It constructs a static game model with complete information to do research on the evolution of internal control. Then applying the model, it makes a historical and trend analysis on internal control evolution "from unconsciousness internal control, consciousness internal control, restriction internal control to consciousness internal control of higher level". Next, combining with the practical situation of our country's internal control system, it comes out that we have already entered into "restriction internal control". It requires strengthening the power of government regulation and supervision. Seeing from the model, it needs adding corporations' costs for social punishing to maintain the status quo of internal control, promoting the enterprises to take an active part in pushing forward the internal control evolution.