Study On Internal Control Deficiency Disclosure Of Listed Companies Based On2010～2011Annual Reports Of Shenzhen Pilot Companies

Since the beginning of this century, domestic and foreign companies haveundergone a series of false violations, such as the Enron event of USA and the GreenEarth event of China. Behind these events, these companies have been revealed theexistence of the problem of weak internal control, which means that companies cannotfind or prevent against the possible risks effectively and raises public’s concern boom ofinternal control deficiencies information.The disclosure of internal control deficiencies information is not only to helpimprove listed companies’ own internal control, but also to help protect investors’interests. Therefore, based on the internal control standard in implementing and internalcontrol guidelines in practicing, this paper selects83internal control pilot listedcompanies from the Shenzhen area as the study object. At the same time, after a reviewof the2010and2011annual reports of these companies, it tries to discuss the presentsituation of internal control deficiencies disclosure about the listed companies. Inaddition, on one hand, in terms of the current problems of internal control deficienciesdisclosure in our country, it further analyses the reasons from the perspectives of theenterprise itself and the external environment. On the other hand, for the reasons, it willput forward some relevant suggestions for improvement.On the basis of normative research, this paper uses file collation, descriptivestatistics and comparative analysis to do the study. On the basis of a large number ofdomestic and foreign literatures, this paper summarizes the study results at home andabroad on the internal control deficiencies disclosure. Firstly, after manual inspection of“Corporate Governance” section in2010~2011annual reports, the internal controlself-evaluation reports and the internal control audit reports of the83listed companies,it collates the situation of internal control deficiencies disclosure about these companies.Secondly, it analyzes the reasons of the problem existed in internal control deficienciesdisclosure of these pilot companies. Finally, it makes the relevant policy suggestions toimprove the internal control deficiencies disclosure of listed companies.This paper is divided into six parts, as follows:The first part is the introduction. This section describes the research backgroundand meaning of the topic, reviews the study results of the domestic and foreign researchliteratures of the internal control deficiencies disclosure and concludes the methods andframework of this paper. The second part is the theoretical analysis. This section elaborates the relatedtheories of internal control deficiencies disclosure, including the definition of internalcontrol deficiencies, identification of internal control deficiencies, the assessment of theseverity of internal control deficiencies and the theoretical basis of internal controldeficiencies disclosure.The third part is the present situation and problems analysis, using the83listedcompanies in Shenzhen area as the study object. This paper teases out the situations ofinternal control deficiencies disclosure from2010to2011by file collation and analyzesthe problems of the internal control deficiencies disclosure of listed companies in China,including the lack of illustration on internal control improvement situation, the lack ofsubstantive audit opinions about internal control situation, the unreadable of internalcontrol deficiencies disclosure and the phenomena of incomplete disclosure ornon-disclosure.The fourth part is the reason analysis. According to the problems of the internalcontrol deficiencies disclosure, this paper explores the reason from the perspectives ofthe enterprise itself and the external environment and analyzes the various reasons,which consist of listed companies, regulatory authorities, CPAs and investors. Theseinclude the lack of driving force on management to disclose internal control deficiencies,the lack of supervision from audit committee, the construction of enterprise’s owninternal control system started late, the influence degree and the standard of internalcontrol deficiencies is difficult to identify, the lack of legal construction and supervisioncontrol, CPAs do not exert their supervisory responsibilities and the lack of investors’demand for the internal control deficiency information.The fifth part is the policy suggestions. According to the problems and reasonsexisting in internal control deficiencies disclosure, the paper makes appropriaterecommendations to improve the conditions of internal control deficiencies disclosurefrom the perspectives of the enterprise itself and the external environment. Theseinclude enhancing the initiative of listed companies internal control deficienciesdisclosure, giving full play to the supervisory role of the audit committee, exerting theconstruction of enterprise’s own internal control system, speeding up the developmentof practices of internal control deficiencies identification, improving the legal status ofinternal control and strengthening the supervision and punishment, strengthening CPAs’internal audit function and increasing investors’ demand for the internal controldeficiencies information. The sixth part is the conclusion. On the basis of normative research and filecollation, the paper refines the conclusion of the full text, and at the same time pointsout the study limitations and future research direction.