The Research Of Recognizing Material Weakness In Internal Control Over Financial Reporting Of Listed Company In Our Country

In the last ten years, in order to regulate the behavior of the listed companies in China, all levels of supervision departments have released many internal control rules. Among them, the most significant one is the "enterprise internal control the supporting guidelines ", promulgated jointly by five ministries including finance in April 2010. it has a pivotal role in the development of enterprise and capital markets in our country. But, According to the experience of the United States, the sarbanes-oxley act 404 terms of execution cost far more than the expected, the implementation of the high cost may increase the cost of the securities market to raise funds, that make some small companys having growth potential dismiss the idea of coming into the market, it may make the business activities of efficiency drops, affect the company's competitiveness, thus affect the entire national economy development. Whether accounting personnel quality of the listed companies in China or the professional level of certified public accountants have a far gap with their American counterparts, so we speculate reasonablely, the listed companies in China have the very high affirmation cost.In order to solve the problem of the high cost, on the basis of discussing the essence of internal control,this paper analyse the interactive relation among internal governance, management control and internal control over financial reporting, and we analyse the relations between the internal control over financial reporting and the other two. Finally we construct a listed company's internal control major defect recognition model by useing Logistic regression model.We think, internal control over financial reporting is an integral part of the enterprise internal control,it has inseparable relation with internal governance and management control. The deep reason of the defect of internal control over financial reporting is that the listed companies lack of effective internal governance and management control. Effective internal control over financial reporting cannot do without effective internal governance and management control. Only put internal governance and management control into consideration, can we find out the problems of internal control over financial reporting. In turn, internal governance and management control into consideration cannot leave effective internal control over financial reporting. three of them is the interactive process precondition and cause.The research samples is the companies on the main (not including the financial company listed) exposing the significant deficiencies between january 1,2008 and january 1,2010. Eventuanlly we get 146 listed companies which have exposed at least one significant deficiency, involving 170 annual report. we choose one control sample for each dificiency sample. At first,we make single variable analysis to find the feature index which have significant differences,to validate the proposed hypothesis. Finally we construct a listed company's internal control major defect recognition model by useing Logistic regression model.The empirical analysis verified the proposed hypothesis basically. Compared to the control company, the company having significant dificiencieshas worse corporate governance,solvency,profitability,operation ability and liquity. We have 8 feature index in the final recognition model, X2 and X4 reflect the characteristics of the board,X8 equity structure,X12 solvency,X17andX19 profitability,X20 and X22 operation ability. So we think,the characteristics of the board, equity structure, solvency, profitability, operation ability have better explanatory power than other feature indexes.