Trading Company Internal Control Application Research

Establishing and Improving internal control system is not only a legal requirement butalso a need of company development. The real value of internal control is applying incompany practice, helping company to control risk, enhance management, and achieveobjectives. The purpose of this thesis is applying internal control theory and method inactual business environment and operating practice.This thesis took a typical trading company of chemical industry as research object.Base on COSO internal control framework, according to its five components theory andrelevant concepts, this thesis analysed the operation process of trading company,researched the detailed situation of actual practice, and considered the special cases ofchemical industry. After that the thesis focused on four parts of operating processes of thiscompany: inventory management; revenue and account receivable management;purchasing and account payable management; general ledger and closing management. Theinternal control procedures have been designed by using risk analysis and control methodin this thesis. After applying these internal control procedures, the accuracy of financereport has been increased and the operating efficiency has been enhanced in the company.It has been proven that internal control provided a reasonable assurance on achieving thecompany’s objectives.The research and analysis of this thesis provided reference on setting up internalcontrol system, especially regarding petroleum chemical industry and the entity which is asub company of an international group; also it provided some solutions on applyinginternal control in a company which is using ERP system.