Study On Internal Control Evaluation From The Perspective Of Corporate Governance

History is like a mirror, combing with the evolution of the internal control andcorporate governance, but the information which is frequently hit the newspapers isthat many corporate financial scandals or cases of fraud. Throughout the world, evenif it is the USA who leads the trend of internal control, it can never survive, there werea large number of corporations which broke out financial scandals that shocked theworld or bankrupted in the financial crisis, ranging from Enron and WorldCom toLehman Brothers and Merrill Lynch. In China, a lot of well-known enterprises thatwere once all-powerful and crowded among the most outstanding, such as TuopuSoftware and Yinguangxia, also experienced a fall from heaven. The above-mentionedenterprises usually have the so-called "sound internal control system", but stillexperience the situation that become the losers from the winners, the reason, perhapscannot be generalized, but may be related to the internal control failure, that is therelatively weak corporate governance and internal control, if corporate governancehave flaws, it is easier for internal control as a dead letter, and companies often useaudit perspective to limit the evaluation of internal control systems to itself withoutfocusing on the effective interface between corporate governance and internal controlevaluation, also did not notice the impact of internal main responsibility on theinternal control evaluation. With the establishment of modern enterprise system andthe transformation of the business model, it seems a bit thin to study internal controlevaluation just from the audit perspective, and the failure reasons of the above case isthat there is something wrong with the checks and balances mechanism in thecorporate governance, which leads to significant deficiencies in the internal control.In addition, COSO Committee also expects the stakeholders to participate in theinternal control and corporate governance in the2012Exposure Draft, to evaluateinternal control from the perspective of corporate governance seems to be betterchoice.This paper not only use the perspective of corporate governance as its core, butbased on case studies, combines method of comparative analysis, statistical analysis,Analytic Hierarchy Process (AHP), fuzzy comprehensive evaluation method andcombination of qualitative and quantitative indicators, focusing on the relatedconstruction internal control evaluation system as well as the choice of thequantitative indicators and intending to design an internal control evaluation systemabided by general applicability and cost-effectiveness, in order to enhance the level ofinternal control, to improve the core competitiveness and value of the enterprises, tolay a solid foundation for the enterprises to be bigger, stronger and longer. First of all,through the analysis of internal control evaluation among corporate governanceperspective and other perspective, recognize the necessity and importance of theformer, and then make a brief description of its basic elements. Secondly, build theinternal control evaluation system of corporate governance perspective, whichincludes internal control objectives dimension, internal control main responsibilitydimension and internal control process dimension, and each dimension has two levels of subdivision, then use AHP and fuzzy comprehensive evaluation method to obtainthe score of internal control evaluation based on perspective of corporate governance.Finally, put the designed system to practice, while the effectiveness of the practice,that is to measure the level of the internal control design and implementation of theSH company.After the study, the conclusions are obvious. First, the necessity of internalcontrol evaluation from the perspective of corporate governance determines itsappearance, thus the internal control system is placed in a broader space, embedded inthe day-to-day business operations, fund management, asset management andauxiliary activities, and at the same time, the enterprises can pay more attention to themain responsibility, except focusing on the process and results with thePrincipal-Agent Theory. Second, the construction of the internal control evaluationsystem from the corporate governance perspective is a long-term and difficult project,including the dimensions of the internal control objectives, internal control mainresponsibility and internal control processes, and during evaluation, the evaluationindex of each dimension can continue to expand the coverage area and strive to fullyand accurately presents the most realistic internal control evaluation level. So thethree dimensions, from different angles, analyze the design and implementation ofinternal control in a comprehensive way, and in the meanwhile, the evaluation indexform a close contact with the overall. Third, the theory needs to guide practice, andpractice can in turn guide the direction of theoretical development. The internalcontrol evaluation system built based on a corporate governance perspective, can testthe level of evaluation of the company’s internal control of the SH company, help itrecognize its own internal control current situation, and can make appropriatesuggestions for improvements based on the results of the evaluation, so as to promotethe level of enterprise internal control and corporate governance.