Internal Control On The Issue Of Financing Platform Of Local Government

Since2008, the local government financing platform have been developed rapidly, the financing platform have stimulated economic growth through government investment, and promoted the project for people's well-being effectively. However, the variety of the financing platform and its excessive debt induced a large amount of financial risk, weaken the macro-control effects. Therefore, the rectification and standardization of local government financing platform have been included in Wen's Report on the Work of Government. As to the local government financing platform, establishing and perfecting the internal control system can enhance its operation efficiency and reduce its operation risk, avoiding the mistakes of the investment and financing decisions, and preventing rent-seeking behavior, thus promoting steady and healthy development of the financing platform.This article use the specification research and literature study method, reference to internal controls and a comprehensive risk management theory, and control of the comparative method to find the reasons of internal control issues and put forward a corresponding improvement countermeasures. The first section is an overview of local government financing platform, introducing its background and the financing situation. The second section introduced relative theories including the new public management theory, the internal control theory and the risk management theory. On this basis, the financing platform of internal control is discussed that the financing platform is not fully in accordance with internal control practices in investment and financing decisions, projects, outsourcing day-to-day operations project. This has led to some problems like irrational financing structure, inefficiency investment and the phenomenon of financial risk which caused by overfinancing. These internal control problems arise from the micro to reduce the operational efficiency of the financing platform, increase the risk of daily operation; the macro level to influence the efficiency of financial resource allocation, increasing the systemic risk of financial markets.This article draws on western public management theory, using the internal control theory and its associated risk management theory to analyze the causes of the internal control of the financing platform. Analysis of this part of the reason starts from the four aspects including the poor internal control environment, risk management mechanism and the poor enforcement of the internal control system as well as internal and external supervision. The current form of local government financing platform is independent on legal entity in formal, but because of the close ties to the local governments, the platform there is in chaos, the main responsibility is not clear, increasing corporate governance deficiencies the financing platform in the operation and management aspects of the problem. Poor internal control environment is also reflected in the lack of post separation mechanism and the lack of internal audit and supervision. In addition, the financing platform for the risk management system and risk warning mechanism is not perfect. Because of its governance structure and staffing, financing platform leads to ineffective implementation of the internal control system within the platform company. Budgetary control is often a mere formality due to poor implementation of internal control in the process of investment and financing decision-making errors that result in huge losses in some projects.The fourth chapter proposes to improve the internal control of local government financing platform countermeasures. First to optimize the financing platform for the internal control environment, specific performance to improve the governance structure of the financing platform, separate government from enterprises, making the platform the main truly become a separate entity, and optimize the governance structure of the platform within the Board of Supervisors; sound financing platform, staff reward and punishment mechanism; enhance the platform to the main level of the internal audit; purification platform enterprise culture to root out bureaucracy. Secondly, to improve the risk of an early warning mechanism of the platform, a sound platform for the risk management organization system to enhance the level of risk management, internal control subject. Again, top management should set an example for greater respect for the financing platform for the system of internal control, budget control, accounting control and personnel control implemented. This article from the perspective of internal control countermeasures to solve the problem of financing platform company, this is also the writing of this article the significance and highlights.