A Research On The Effective Factors Of Internal Control Deficiencies Under The New System

In recent years, internal control and information disclosure has been a hot research issue. In the U.S., Sarbanes-Oxley Act sought by the introduction of mandatory information disclosure, to make the public place under the supervision of internal control, and it had achieved certain results. While in China, in recent years the internal control disclosure also made sustained efforts to keep the regulations to revise and perfect the construction of the internal control of listed companies, and information disclosure requirements became more and more clear. On June 28th,2008, the Ministry of Finance, Securities and Futures Commission, the Audit Commission, China Banking Regulatory Commission, China Insurance Regulatory Commission jointly issued the "basic norms of internal control" (referred to as the "new norms"), it's asked to implement within the scope of listed companies from July lth, 2009, and encourage other non-listed medium-sized enterprises to implement. This indicates that the construction of the internal control system have achieved a major breakthrough.The new norms promulgated all the provisions of the enterprise in its internal control self-assessment to report the internal control system disclosed flaws, and with no doubt it will open the door for us to study the internal control weaknesses. For businesses, an important objective of internal control is to ensure its reliability and validity of financial reports. If the company's internal control significant deficiencies, the reliability of financial reporting will be affected to some extent. So, what does the factors affect of internal control deficiencies exist? What are the motives for management to discover and disclosure these factors? This is clearly an empirical question.Therefore, this paper selected listed manufacturing companies in Shanghai Stock Exchange in 2009 as the research object, to conduct empirical research in the disclosure of its internal control deficiencies, analysis of the disclosure of internal control deficiencies and management of economic factors and the disclosure of internal control deficiencies found in the motivation. We found that, compared to those who did not disclose the information of internal control deficiencies, corporations disclosure internal control deficiencies experienced recent mergers and acquisitions or changes to the CPA and construct fewer resources into internal control. Also we found that disclosure the information of internal control deficiencies has experienced more financial restatements, and the quality of the appointed external auditors are lower. The aim of this paper is to provide the empirical evidence for the disclosure of internal control deficiencies system.