Enterprise Establish And Perfect Effective Internal Control System Research

Internal control is a process documented by a series of policies and procedures, when implemented and carefully monitored, provides reasonable assurance that the organization’s assets are adequately protected; financial statements accurately reflect the results and status of the business; the actions of individuals within the organization are fully consistent with stated management polices, and with applicable government laws and regulations. In western countries, a mature internal control system has been established, and dominates the development of international internal Control. However, China started the internal control research comparatively late. From 1990s, the study of internal control has began to draw people’s attention. Thanks to the facilitation of government, a series of internal control regulation were published accordingly in 1996, which means a new start of exploratory study of internal control. But there is a big gap between our country and western countries in internal control research field. Chinese enterprises are facing many problems when deeply understand and establish an effective internal control system. With the development of our country, China has become a big economic country and will face more competitions. How to strengthen the power to face global competition? It’s badly needed to establish an effective internal control system to assure the adequate protect of asset and reliability of financial reporting. But how to establish an effective internal control system? The author has researched deeply for the problem occurred in establishing effective internal control system of our local companies based on the knowledge from EMBA learning and working experience concerning internal control in large state-owned company and joint venture. The internal control practice in the large Sino-US joint venture is quoted in this paper. The author analyzed deeply the internal control of the Sino-US joint venture from the company’s control environment, process establishment and management, full scale risk evaluation, internal module control review plan and comprehensive budget management control and explained the process of establishing effective internal control in the company. In conclusion:optimized control environment is the base of effective internal control. Conduct full scale risk evaluation and find out high risk point and key point of control. Develop process and arrange internal control audit plan based on it. Responsible business department check their own process firstly and then internal control team double check and audit them. The mode of combination of process audit and control by them self and other internal control team that ensures the internal control more effectively. Establishing process and process management is the key point of internal control. Conducting comprehensive budget management and establishing effective performance evaluation are the core points of internal control. We hope that other company can learn some experience from it. The experience of internal control management inⅩⅩCompany that can provide a reference and recommendations, particularly for vehicle manufacturing industry.