Panzhihua Iron And Steel (group), Parent-subsidiary Corporate Financial Management And Control Problems

As the globalization of the world economy and the China's entrance into WTO, the domestic market of China has to be opened gradually. However, it is generally a distinct problem for the state-owned enterprises as the main body in the national economy that the gains-to-scale is not striking and the competitive power is weak. Under the administrative intervention of the government, a series of enterprise groups have been established by state-owned enterprises based on the industries and regions to improve the competitiveness of state-owned enterprises in the market. But there still exists a big gap in innovation of products, creation of managements, quality of capital, ability of capital operation and coordination as integrity between these enterprise groups and the well-known companies in the world. Among which the outstanding problem is the weakness in management and control of the daughter companies by mother company, and of which the financial management and control is the most noticeable one.In this article one enterprise directly under the administration of State-owned Assets Supervision & Administration Commission of the State Council is selected as the objective for research on the financial management and control of the daughter companies by mother company. The combination of audit cases and theoretical analysis are applied for the research. There are totally five chapters in this article. Chapter one: Mainly the background and significancy of proposition of this article, method of research, data and information resources, the composition process of this article and system structure are stated.Chapter Two: First the historical root of the intrinsic defects which exist in state-owned enterprise groups– the mode of development under theadministrative drive is revealed through analysis of the development history of the state-owned enterprise groups and the various types of the conglomerates in the world. Then the basic theories for corporation governing, management and control of the daughter companies by mother company and the financial management and control are teased so that the transition to the research is done theoretically. Chapter Three: First the general introduction on Pangang (Group) Company is made. Then the brief description on the construction of the corporation governing structure, the mode of management and control of the daughter companies by mother company and the specific methods for financial management and control in Pangang (Group) Company is made so that the transition to the research is done in its background.Chapter Four: The typical cases in the enterprise internal audit in combination with the theories for enterprise management are comprehensively analyzed and the conclusion is reached that the impotence in supervision and control of the holding off-headquarter daughter companies, specially the new holding daughter companies through capital operation, is obvious, of which the investment and capital management and control is the weak chain link. The weakness in construction of corporation structure of the daughter companies and the unsuitability of the mode of management and control of the daughter companies by mother company are two macro environmental factors that impact on the effectiveness of the financial management and control for the management and control which in Pangang (Group) Company and the weakness in synergy of strategic management, deficiency in indemnification of information, impotence in budgetary restriction and unstrict in perormance evaluation are four projecting problems which affect the effectiveness of the financial management and control in Pangang (Group) Company.Chapter Five: Recommendation for further improvement of the financial management and control in Pangang (Group) Company is made based on Chapter Four: Optimization of the corporation governing structures both of mother and daughter companies and construction of powerful corporation culture of enterprise group to have an all-around improvement of the enviroment for management and control of the daughter companies by mother company; Implementation of market-oriented classified management and control to consummate the modes of management and control of the daughter companies by mother company continuously; Enforcement of the scientific and strict overall budgeting management and performance evaluation management to promote the financial management and control to be implemented effectively on the basis of construction of the integrated enterprise management information system; Enhancement of the synergy of strategic management and control to improve the level of management and control of investment and capital; Intensification of the construction of organization and system to realize the flat management and strengthen the normalized management and control; Further improvement of the function of internal audit and supervision to provide the safeguard in mechanism for effective financial management and control.