A Study On Assessment And Solutions To Defects Of Internal Control Environment Of Listed Companies

With bankruptcy of China’s Sanlu Group as well as exposure of Japan Olympus financial fraud case, the effectiveness of internal control of listed companies caused the attention of capital market and academic circles once again. The paper, first of all, summarized the development process of China’s internal control theory and gave an overall evaluation on the current status of internal control implementation in listed companies, focusing on problems sorting in terms of internal control. And then, the paper analyzed the current authoritative internal control theory-COSO internal control framework of five elements theory, and concluded that the internal control environment is the basis of listed company’s internal control system, as well as a key factor for the effectiveness of internal control, whereas, the current internal control assessment focuses on the business operation level, and there is no complete system to assess the internal control environment.Therefore, the paper aimed to build a complete set of the internal control environment assessment system, which is significant in terms of practice and guidance for listed companies to implement and assess their internal control system.Based on the above analysis of the status quo, the paper designed a series of targeted and operational assessment indicators in accordance with certain principles, and built a complete set of internal control assessment system, which indicated the specific operation methods and evidences needed, and also assign different weights based on their importance.The paper then applied the assessment system to listed company ABC, assessed and analyzed its internal control environment, and also worked out some solutions based on the assessment results. Finally, based on the above assessment and analysis, the paper made some recommendations to the internal control environment’s construction of China’s listed companies at three levels, which is expected to help China’s listed companies to assess and build their internal control environment.