A Research On The Construction Of Internal Reporting System Of Financial Risk Management And Control In Enterprise Group

With the increasingly fierce competition in the market, the increasing levels of corporate subsidiaries and increasing complexity of the management chain within the Group, how to prevent and control the risks especially the financial risks has become a core issues currently faced by the Group. Management needs to grasp and respond to the risks produced in the operating process, and to make appropriate decisions, which resulted in the need for information. As the resource of the information, accounting information system contains two subsystems:financial accounting and management accounting. Financial accounting provides the information for external users, while the internal reports provided by management accounting are designed based on the information needs of the management. The internal reports focus on predicting, deciding, planning, controlling, analyzing and evaluating the whole process of business activities, providing the financial and non-financial information to the management and every functional department. But compared with the external reporting, neither the theory nor the practical application of the internal reports has a scientific system. Both are unable to meet the information needs of management decisions. Based on this background, this paper corporates financial risk management and internal reporting system to do the research in order to improve internal reporting theory and provide an effective financial risk management tool for the management in the Enterprise Group.Through combing and analyzing the relevant basic theory of internal reports, organizational structure theory of enterprise groups and the theory of comprehensive budget management, and basing on the existing research results, this paper adopts theoretical analysis method combined with case study method to explore the defects of the existing internal reporting in the J Enterprise Group and then builds an internal reporting system of financial risk management and control for J Enterprise Group based on J Group’s actual situation and needs. According to the three aspects of financial risk management and the organizational levels in Enterprise Group, this paper establishes the financial risk identification internal report, the financial risk assessment internal report and the financial risk control internal report for J Group.This article has four main contributions. First, from the perspective of the financial risk management and control, this paper has a detailed research on the theoretical basis and basic theoretical issues of internal reports to improve the internal reporting theory. Second, this paper expands and improves the basic meaning and content of accounting reports. Based on the management concept of "Institutionalized management, processed institution, forms of processes, informationalized forms", this paper designs the internal reporting system of financial risk management and control for J Enterprise Group, reflecting the management accounting’s basic objectives of supporting internal management decision-making and risk management and control. Third, based on the PDCA cycle theory, this article builds internal reports of financial risk warning. This financial risk warning system combines PDCA theory with the internal reports, overcomes the flaws in warning methods and content of traditional financial warning system, protects the group from financial risks dynamically. Fourth, this paper improves the application of comprehensive budget management in the enterprise group. This article combines financial risk management with internal reports and budget control systems, discusses the specific use of internal reports in the budget control system, strengthens the control power of the comprehensive budget management in the enterprise group, thereby enhances the capabilities of preventing and controlling the financial risk in Enterprise Group.