Research On Improvement Of Financial Management In Independent Finance Accounting Branches Of Electric Power Construction Enterprises

With the development of reform in China in recent ten years, our government invests more funds in electricity construction and encourages private capital to invest the electric power industry as well. Such encouragement and strict administration on qualification certificate for the electric power industry as one special trade give rise to various types of electric power construction enterprises. Some of those electric power construction enterprises establish their branches across provinces or cities in order to gain the stable status and buck for survival and development. According to China’s Company Law, the branches should not obtain the status of legal person and the enterprises should bear the civil liability. However, many branches take independent financial accounting and the enterprises focus on the assessment of revenues and fixed profits, ignoring the financial risks from the branches lacking internal control might bring operating risks to themselves too. Recently, such administrative institution as SERC demands the branches together with their enterprises should go through the procedures of recordation and submit their respective financial statements if they go into installing, repairing or testing power facilities. The demands for internal control from the outside and inside definitely make the enterprises strengthen then-management on the branches in the whole process of financial activities.The independent finance accounting branch is an existing business organization of the electric power industry and is an indispensable part of internal financial control in corporate governance. Nowadays lots of researches pay attention to the internal control of legal person enterprises while few to the branches. And more studies are given to the project management of electric power construction enterprises than to independent finance accounting branches. What is worse, some take it that like the affiliation phenomena those independent finance accounting branches are illegal. Actually the branches attached to the enterprises are functional parts of them and have their own functional departments. Therefore, this paper intends to state the internal control in the branches is not only concerned with themselves but also with the enterprises. Furthermore, it takes Enterprise HS and Branch HSXN as an example to analyze their financial management and to propose some measures based on the principal-agent theory and internal financial control. I am expecting this effort may improve the internal control of my unit so as to reduce business risk and to provide reference for the enterprises of the same trade.This paper is divided into six chapters. Chapter One introduces research background, significance, research routes and methods, and potential contribution and weakness. Chapter Two reviews relative research fruits at home and abroad. Chapter Three discusses the theoretic basis including defining enterprises and branches and relating branches to enterprises. Chapter Four is the case study of Enterprise HS and Branch HSXN, presenting the financial management in terms of internal environment, risk assessment, control activities, information and communication, and internal oversight. Chapter Five proposes measures to improve internal financial control focusing on contracts, cash, accounts payable and accounts receivable etc. Chapter Six draws a conclusion and points out that the internal control of the independent finance accounting branches should be designed and carried out according to such principles as the cost benefit principle and materiality principle etc.The innovation lies in the point that this research is the combination of practical experience and theoretical studies, which may give reference to some other electric power construction enterprises with independent finance accounting branches. However, the case study comes from a single sample that may bring untypical and subjective views.