Study On Risk Evaluation Of FH Company Internal Control

Since the reform and opening up, the outbreak of a series of listing Corporations financialfraud cases and the occurrence of a series of enterprise governance scandals that happened athome and abroad, make the investors, supervisors, managers and the public realize that acomplete, reasonable and effective inner-control system is necessary for the company with thevalue of the investment. But generally most of the domestic enterprises are lacking of unifiedknowing and understanding of internal control; their internal control system becomes a mereformality, and is not really embedded in the company’s operation; they neglect the internalrelations and integration between internal control and risk management.The key reason isineffectiveness of their risk identification and evaluation.Most of the enterprises focus just on risk’s "two-dimension": the probability of riskoccurrence and the degree of risk damage. In this paper, through the analysis of the basicspecification of enterprise internal control and its supporting guidelines, applying the “processapproach” of ISO9000quality management theory to combing the internal control process, afour-dimensional risk evaluation model, including the probability of risk occurrence, thedegree of risk damage, the manageability of risk and the detection of risk, is established on the"weighted average method" aiming at the uncertainty of risk. Risk identification andevaluation based on the enterprise internal control flow, makes the internal control riskevaluation more comprehensive, more accurate and operable. Thereby, it can reduce the errorand the subjectivity of internal control, and makes the risk assessment to quantify, intuitive.Studying on the quantitative risk evaluation model provide a useful reference for the work ofenterprise internal control risk assessment. At the same time, the evaluation result is conduciveto enterprise management on the optimization and improvement of internal control, integratingrisk management and business process, promoting the reform and continuously improvementof the enterprise process.Through literature collection, collation and research, this paper describes and summarizesthe status quo and development of the domestic and foreign internal control theory, riskassessment and ISO9000quality management process approach as a theoretical basis for the relative problems to be studied and solved. And through the empirical analysis of FH company,it applies the established evaluation model to calculate and analyze the risk of each processand the overall risk of its internal control system, and puts forward the countermeasures toimprove and optimize the processes.It proves that the four-dimensional risk evaluation modelis feasible and effective, and ensures that the study conclusions are reasonable and practical.