Research On Risk-based Internal Accounting Supervision

As the world's economy is growing more and more slowly, the credit crisis and the system crisis have exposed more evidently. U.S. Enron Corporation, Union Bank of Ireland and other fraud cases force the entire society's supervision system think about the solution deeply. Recently, there are many serious distortions of accounting information and chaos of accounting procedures, such as those in YinGuangxia Company, Hongguang Company cases, existing in China's economic life. The occurrences of these have revealed accounting supervision-related problems and impeded the healthy development of socialist market economy. The importance of accounting supervision gradually emerged. And the company's decision-makers and managements have a new awareness of the necessity of it. This paper is expecting to improve the theory of internal accounting supervision and the efficiency of corporate governance by advancing risk-based internal accounting supervision concepts.The first part of the thesis is introduction, which presents the background and the significance of the research and introduces the development of internal accounting supervision, its method and the whole structure of the thesis. The second part is the overview of theoretical basis of accounting supervision, including both economics-related and accounting supervision-related theories. These theories are the basis of the whole text. The third part analyzes the current situation of the internal accounting supervision based on current regulations and current models of our country firstly, then investigates the problems of the internal accounting supervision on a management level and finally tries to find the origins out. Then the thesis constructs the risk-based internal accounting supervision procedures according to the Board of Supervisors, Audit Committee and Internal audit department, which are the main components of the risk-based internal accounting supervision, and suggests reasonably positioning different departments'responsibilities. The fourth part analyzes the implementation of risk-based internal accounting supervision in a specific company which reflects its function in practice.Finally comes to the conclusion: the risk-based internal accounting supervision is in order to reduce the risk of the organization and to achieve the purpose of adding value to it. The organizational risk analysis and evaluation are throughout the whole process. Board of Supervisors, Audit Committee and Internal audit department are the main departments in charge of risk-based internal accounting supervision and it is necessary to coordinate between various departments to maximize the effectiveness of supervision. Even though the implementation of risk-based internal accounting supervision will depends on each company's situation, the core concern is to pay attention to the risk of the organization and ultimately to fulfill the purpose of adding value to the organization.