Research On The Implementation Of Financial Management And Control Systems Sichuan Business Group

Enterprise group is an inevitable outcome of the market economy development. It isalso an important organization model for enterprises to participate in marketcompetition. Enterprise group can promote to take advantages of its own capitalaccumulation, resource allocation, specialization and cooperation, managementefficiency, risk dispersion, and etc. It is one of the important ways for China’sState-Owned Enterprised (SOE) to reform through formation of enterprise groups toenhance the competitiveness.Group control capacity is an important factor to affect the development of enterprisegroups. The core of group control capacity is to balance between centralization anddecentralization. Based on the characteristics of centralization and decentralization, thegroup control mode can be divided into a number of different control modes. Thesemodes have different features and different practicalities. Main factors which influencethe selection of the control mode include the political and legal factors, marketeconomic factors, and humanity factors, from outside of companies. They also includefactors from company’s internals, such as the strategy, stages of development, levels ofmanagers, and organization structure. Different group control modes must havecomparable financial control modes which also have centralization and decentralization.Sichuan Commercial Group Co. Ltd.(SCG）is a typical enterprise group which wasincorporated through reform of SOE. Its group control mode has some problems such asdisordered governance structures, scattered resources, weak coordination, loosemanagement, and etc. This paper analyzed SCG’s market environment, developmentstrategy, management level, corporate culture, and history of control mode. It wasconcluded that relatively centralized control mode should be selected. Consequently, arelatively centralized financial control system should also be established.To build SCG’s financial control systems specifically, this paper first establishesthree principles of financial control systems. These principles include "mainlycentralization, moderate decentralization"; balance of responsibility, right, and benefit; coordination between parent and subsidiary company’s basic structure and its financialstructure. Secondly, this paper focuses on solving the configuration of financial power.On one side, the configuration of financial power should be defined among the board ofshareholders, the board of directors, the board of supervisors, management, subsidiarycompany’s board of directors, and subsidiary company’s management; On the other side,the configuration content should be defined for fund deployment right, investmentdecision right, assets management and disposal right, cost management right, financingdecision right, and income distribution right. Subsequently, it should be further definedof the roles and responsibilities of headquarter financial departments and branchfinancial departments. Finally, this paper describes the concrete measures ofimplementing relatively centralized financial management modes. The measures includeto unify group financial rules through building unified financial management systemsand methods; to guarantee independence of financial personnel through establishment ofa financial assignment system; to allocate the resources and implement controls throughestablishment of a comprehensive budget system; to ensure information transmissionand risk control through establishment of an information disclosure and warning system;to unify fund allocation and improve fund using efficiency through establishment of afund centralized management system; to implement internal financial supervisionthrough establishment of an internal audit system; to build a financial incentive andconstraint mechanism through establishment of a financial examination and evaluationsystem.