Research On Accountability-Oriented Internal Control Evaluation Of ZS Group

With the release of Introduction to Application of Internal Control and Introduction to Evaluation of Internal Control by the five departments including the Ministry of Finance, there has been a burst of internal control self-evaluation in enterprises, as well as academic research on internal control evaluation. As a typical state-owned enterprise, ZS group has been engaging in the research and manufacture of rail transportation equipment industry for more than 50 years. With the support of national industry policies, ZS group has developed rapidly for the past ten years, having grown into a group with many subsidiaries and three listed companies. Under these circumstances, ZS group needs to keep abreast of its subsidiaries’ internal control effects, which is required not only by the management need of subsidiaries, but also by relative state regulations and the supervision need of external organizations. However, due to the current state of initial imitating and administrative characteristics of stated owned enterprises, there still exist some deficiencies in internal control evaluation.This paper firstly introduces the internal control evaluation and the meaning of developing internal control through incorporating relevant theories, such as bucket theory, principal-agent theory and accountability theory. Then, through a case analysis of internal control, findings about problems in internal control evaluation were put forward, such as ineffective implementation of provisional accreditation; the ambiguous responsibility; non-standard evaluation process; the ineffective rectification or negligence for main deficiencies of main appraiser and etc. Finally, the paper proposes suggestions on how to establish accountability mechanism of internal control evaluation and identify accountable party for control deficiencies, and then rectify those with accountability mechanism. In addition, this paper also proposes the establishment of risk evaluation system to improve the internal control based on accountability system.The innovation of this paper lies in the building of internal control evaluation accountability mechanism, which is based on traditional internal control evaluation mechanism and can guarantee the effectiveness and completeness of internal control by implementing accountability.