A Study On The Inner Control System Of DORIGHT CO

In China, private SMEs (small and medium-sized enterprises) play an important role ineconomic development and social life. However, many problems occurred, such asinadequate management, improper internal control, and even ineffective internal control,which, to a large extent, restrict the development of private enterprises. Under the social andeconomic circumstance of increasingly fierce competition, in order to survive and to grow, itis essential for a private SME to establish a complete internal control system. In this thesis,the author takes DORIGHT CO.,LTD., a private SME, as the object and studies the keyelements of its internal control system.First of all, the author analyzes the previous studies on internal control theories in bothforeign countries and China, and summarizes the theoretical achievements. Secondly, asregards of private SMEs in China, the author analyzes their current situations andmanagement problems in when they reach a certain stage and a certain scale. Thirdly, theauthor introduces DORIGHT CO., LTD., its current situation and problems, and analyzes thereasons. On this basis, the author emphasizes the significance of an internal control systemfor DORIGHT CO., LTD., proposes the principles for it to follow, and points out the way toimprove the key elements of internal control system and to perfect the control procedure formajor operations from five aspects, such as internal environment, risk assessment, controlactivities, information exchange and supervisory evaluation. Meanwhile, the author analyzesoperational risks and financial risks in risk control and puts forward preventative measures.Finally, centering on the two major stages of risk control, including control of materialprocurement and payment as well as internal control of inventory, the author establishes theinternal control procedure for DORIGHT. In the end, the author concludes that, it is a longprocess for a private SME to establish and to improve an internal control system, whichneeds unremitting efforts. At present, for private SMEs in China, their internal controlsituation is far from optimistic. The management of an enterprise, especially topmanagement, shall change the opinion of preferring operation over management and focuson internal control. Only if a good internal control system is established and implemented, anenterprise can grow healthily. While establishing the internal control system, a privateSME should neither pursue any impractical and overly ambitious goal nor copy experiences from others; instead, it shall take its actual needs and its particularity into consideration. Aninternal control system is changeable. As an enterprise grows, expands and its developmentenvironment changes, different problems will arise. Through solving these problems, theinternal control system will be improved constantly and implemented effectively all the time.This thesis aims to find the problems existing in internal control of SMEs and exploretheir solutions, thus providing reference for improvement and solutions of actual problems.In this thesis, literature analysis method, empirical method and other research methodsare adopted. With DORIGHT CO., LTD., as the object of study, starting from the internalcontrol system of private SMEs, the thesis is highly pertinent and helpful. Previous studieson SMEs mainly focused on theory, whereas this thesis combines theory and facts. Based ontheory analysis, the author studies the specific case of DORIGHT CO., LTD., points out thedefects in its internal control system, brings forward recommendations on improvement, andeventually, works out specific internal control measures.