X Company's Internal Control Program And Application

This paper, on the basis of the requirement of existing internal control and achievements of relevant theoretical researches at home and abroad and in combination with the actual working experience, discusses the measures and transformations about internal control carried out by rapidly-developed domestic private enterprises for the purpose of meeting the requirements of internal control and supervision after being listed in the U.S.. Researches about design and application of the internal control mentioned above are carried out thereof in enterprises, with an expectation to the application of internal control management with cost efficiency in more medium-sized and small-sized enterprisesFirst, this paper reviews the main developmental phases of the internal control theory, compares the status of internal control of several countries and discusses about theories of research about the internal control of our country. Greater importance has been attached to the goal and five factors of internal in "Internal Control—Comprehensive Framework" issued by Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 1992, Public Company Accounting and Investor Protection Act of 2002 (Sarbanes Act) and COSO framework model aiming at risk management triggered by the two references mentioned above, which contributes to the clear expatiation of the definition and concept of internal control.Second, this paper, based on the special background of X private enterprise listed in the U.S. that is engaged into the practical work, analyzes the general characteristics of management in the early stage of rapid development:1) judge a person in traditional values:in accordance with his achievements rather than the sense of what is right and just; 2) stick to the official standards and execute the order of leaders without considering whether the order is right; 3) conduct people's behaviors in accordance with the ideas of those in power rather than the systems, which converts the loyalty to career into the loyalty to those in power. This paper, in combination with the factors of internal control, analyses the status of internal control of X company, relevant problems and reasons in a deeper sense, holds that the emphases of application of internal control are not the same in different backgrounds of enterprise cultures and he emphases of internal control management are also not the same in different developmental phases of an enterprises and points out the specific methods about design and implementation, which contributes to the establishment of internal control system closely connected to the success of enterprises.Third, this paper summarizes the lessons drawn from the process of designing and implementing the internal control system of X company: in-depth understanding to business processes and accurate evaluation to the status of internal control are the bases to the establishment of effective internal control system; maximum supports gained from the administrative authorities are the premise of success, effective communications with relevant sectors and personnel about the processes of internal control and trainings are the foundations for the effective execution of the internal control system; regular review to policies and systems about internal control and proper adjustments conducted in accordance with the change of environments are the long-term and effective guarantee of executing the internal control system.Finally, this paper comes up with the expectation that the internal control system can also be popularized applied in the non-public listed companies and points out that the design and application of the internal control system with cost efficiency must be carried out in accordance with the characteristics of medium-sized and small-sized enterprises. Despite strengthening the internal control can bring about substantial profits, the characteristics of smaller public companies determine that the internal control conforming to the principle of cost efficiency is an important challenge. In other words, the internal control can enhance the company's ability to enter into the capital market, which further gives an impetus to the reform and economic growth. With a view to guiding the smaller public companies to execute the requirements of article 404, Committee of Sponsoring Organizations of the Treadway Commission (COSO) of the U.S. issued "Internal control over financial reporting guidance for smaller public companies" in 2006. This paper expresses the opinions of the author about the implementation of internal control system in domestic smaller public companies by combining the suggestions in the above guidance with characteristics of small-sized enterprises in China for the purpose of promoting the development of medium-sized and small-sized enterprises and economic growth of the whole society. Restricted by the author's knowledge and time limit of writing, comments and guidance made on any deficiency and mistake by the experts, scholars and professors are appreciated.