The Study On Internal Control Of XY Company

Energy is an important foundation of modern economic and social development,and its sustainable development concerns the sustainable development of economy andsociety. Compared with traditional energy sources, new energy can better address suchproblems as energy consumption and environmental damage arising in the process ofeconomic and social development, so it is the main direction of future energydevelopment. Photovoltaic power generation, as the main form of new energy sources,has been rapidly developed in China in recent years, and enjoyed the prioritized supportin the course of national economic development. As to the new energy industry, due tothe economic and technical characteristics, its operational risks and management risksare higher than traditional industries. The internal control system serves as an importantmeasure for enterprises to prevent and control risks, and improve operations, andrelates to the long-term survival and development of enterprises. Therefore, establishingand implementing an effective internal control system in the photovoltaic enterpriseswill have greater significance. Based on the survey of a PV enterprise, this article, bymeans of the COSO internal control framework, analyzes the elements and mechanismsof its internal control system, and gives the enterprise suggestions on optimization ofthe internal control system and improvement of the implementation. The main researchwork and achievements include the following aspects:1. Analyzing the business environment and internal control system ofcase-involved enterprises. Through statistical data analysis of the industry and researchinto the current development of China’s PV industry, it is found that China’s PVindustry has good prospects for development, but some enterprises are experiencingdifficulties in business operation for two reasons: rapider growth of production capacityand slower expansion of market size. Establishment and implementation of internalcontrol systems help PV companies to avoid major operational risks. The case-involvedenterprises have established comparatively sound internal control systems byreference to COSO s Internal Control－Integrated Framework, and in accordance withthe requirements of the Internal Control Standards for Enterprises and Guidelines forthe Internal Control of Listed Companies.2. Analyzing the implementation of internal control in case-involved enterprises.In combination of case studies with questionnaires, this article analyzes the cognition ofXY Company’s staff of internal control system and its implementation. First, based onfield practice and research, it is found that XY Company’s internal control system hasn’t been put into implementation for a long time, with insufficient human resources,and there still exist many defects in the construction of the internal control system.Second, a questionnaire survey is conducted among XY Company’s staff to furtheranalyze the implementation of internal controls in the company. The factor analysis isperformed to examine the rationality of questionnaire design and the integrity ofvarious elements in the internal control system. Besides, SPSS software is adopted toverify the staff’s cognitive differences because of different ages or differentdepartments where they are engaged. It is found that XY Company’s employees ofdifferent ages or in different departments, have different sensitivity to risks, and thusdiffer in their cognition of the internal control system. The difference in satisfaction ofthe employees in different department can reflect the characteristics of the departmentthey represent. Third, the analytic hierarchy process (AHP) and the fuzzy evaluationmethod are adopted to quantitatively analyze the implementation of the internal controlsystem in XY Company. The results show that XY Company’s employees are satisfiedwith the implementation of the internal control system on the whole, and there existdifferences in significance and the situation of implementation as to different elements.3. Giving XY Company suggestions on perfecting the internal control system andimproving the implementation. XY Company is recommended to establish bettergovernance system and management system to select proper personnel to create afavorable internal control environment; set up the Risk Management Committee, inorder to obtain a more professional and reliable risk assessment; strengthen themanagement over control activities through process design of performance evaluation,budget control, procurement control and authorization&approval control, etc.; focuson internal communication and information construction in order to reduce the risk ofinformation communication; set up an independent internal audit department withspecific responsibilities to ensure the implementation of internal supervision andeffective performance of the risk-oriented internal audit.The innovation of this article lies in giving birth to the factor analysis methoddedicated for internal controls of PV enterprises with COSO systems as the analysisframework through field case studies; studying the factors that affect the cognition ofemployees of different ages or in different departments of various internal controlelements through a questionnaire survey, and building a multi-layered internal controlevaluation system via AHP. The findings in this article will help the enterprisesstrengthen the improvement of the internal control system and its implementation, and provide some reference to other scientific and technological enterprises with greaterrisks in terms of the construction of an internal control system.