Research On Enhancing The Effectiveness Of Internal Control System In Enterprises

External and internal risk of enterprises has been increasing in the world economy which is now suffering the sub-prime mortgage crisis. And therefore more and more enterprises expose financial scandals. Under the circumstance, the effectiveness of internal control system and its evaluation system becomes the key point again. After the publishing of'Sarbanes-Oxley Act', the regulations on listed companies internal control all over the world have been enhanced ,new rules on compelled disclosure have been published continuously. However, from the analysis of causes of sub-prime mortgage crisis, we can see that one of the reasons that influence the economy is the failure of internal control. The internal control system must be improved to make sure that the listed companies can keep stable and low-risk. But the truth is the ability to control the risk of internal control system doesn't reach the level that people expect. The subject on the efficiency and the evaluation of internal control needs further research.For the enterprises in China, The level of internal control is still a great gap compared with developed countries; information on the disclosure of internal control is still not complete. Complicated circumstances of market needs Chinese enterprises improve their abilities of risk management. In order to avoid the same tragedy occurring in China, it is necessary to make deep research on efficiency and evaluation of internal control system. Focus in the risk-managing factor, this paper reviews the development of basic theories of internal control, describing the impact of'Sarbanes-Oxley Act'on internal control research, then analyzes the real conditions of economy and enterprises operation. It is can be seen that theoretical study of internal control starts late in China and most of cutting-edge theories of internal control are put forward by American scholars. Recalling the internal control system of the United States, we can see the body set up is complete and the level of research is also high. In 1985, by the AICPA,AAA,FEI,IIA and IMA co-sponsored the creation of the National Commission on Fraudulent Financial Reporting, that is, Treadway Commission. The committee discussed the causes of fraud financial report 2 including the issue of inadequate internal control. Two years later, Treadway Commission reported and put forward many valuable suggestions. Although the Treadway Commission did not make the conclusion of internal control, its report immediately had a lot of response. Based on the Treadway Commission's recommendations, the sponsoring agencies also set up a special research committee of internal control, that is, COSO Committee (Committee of Sponsoring Organizations of the Treadway Commission). In 1992, COSO Committee put forward the report "the overall framework of internal control ", updated in 1994. Under the economic globalization, the dependence of world's economy entity has grown and therefore it is necessary for Chinese enterprise to act in accordance with international practices, to learn foreign advanced management experience. The main objective of this paper is that analyzes through research in the latest results of foreign experts and scholars in internal control and the implementation of Chinese recent enactment of relevant laws and regulations, combined with the real external environment of our country's enterprises. It is hope that there is a theoretical expectation development, and put forward some specific countermeasures to improve the internal control system.In order to achieve the objectives, the paper has chosen the appropriate research methods. Methods in the study mainly used a combination of induction and deduction. Analyzing the issues of internal control in Chinese enterprises, the author selects listed companies that implement internal control system early, from special to general, summed up in common. The inductive method is used. The final conclusion is used to guide the future practice of internal control activities, which the use of deductive research method. The qualitative and standard research methods are used in many of the conceptual issues. The view of the paper is strengthen risk management, promote the effectiveness of internal controls and use the combination of internal audit and external audit to achieve optimal regulatory. The structure of the paper is divided into three levels according to ask questions, analyze problems and solve problems, as follow:The first part is introduction including research background, practical significance, technical line and the structural arrangement of the article.The second part is theory recall mainly for domestic and international relevant literature. It introduces the history of internal control, the latest research results and the theory of internal control effectiveness evaluation. The third part is the issues of listed companies'information disclosure of internal control system. It focuses on the information disclosure problem of internal controls in Chinese listed companies in order to reveal the main problems of internal controls construction in listed companies.The fourth part is the performance and reasons of failure of internal controls. This chapter analyzes the performance of internal control system failure and its manifestations in different companies, different times are different, but some consistency things can be got. This section also analyzes its own inherent defects of enterprise internal control system and discusses the deep-seated failure of the system of internal control system and non-institutional reasons.The fifth part is about measures to enhance the effectiveness of internal controls. This chapter focuses on improving the business environment of internal controls, the establishment and improvement of enterprise internal control system and the actual analysis of the case, hoping to come to specific methods and measures.Last part is conclusion part, summing up the results of this study, and research limitations.The innovation of this paper is that by studying the latest foreign research results of internal control system to come to the breakthrough of internal control system. This paper introduces the concept of risk management and analyzes the reason of failure of internal control in listed companies or small and medium-sized business companies, hoping to get constructive and helpful suggestions.