The Empirical Study On Influence Factors Of Internal Control Deficiencies

As a series of corporate major financial fraud happened, the internal control problems always stay within the sight of people, the corporate include Enron, WorldCom, China Aviation Oil, Wanfu Biotechnology and so on. The phenomenon of internal control ineffective takes the attention of people increasingly. Small internal control deficiencies may seem unremarkable initially, but they may ultimately lead the company to the road of bankruptcy. More and more financial frauds prompted the development of domestic and foreign internal control. Therefore, countries have enacted relevant laws and regulations one after another, such as "Financial Security Law" in France,"Basic Norms of Corporation Internal Control" in China and so on. Although China started late, but with the implementation of the relevant norms, the disclosure system of internal control information is more and more perfect, which provides the theoretical and data support for the research of internal control deficiencies in this paper.Based on the development of domestic and foreign literature, I find a research point on the influence factors of internal control deficiencies in SME board. Therefore, this paper firstly expounds the general situation of the SME board and the related concept of internal control deficiencies. Then, analyze the influence factors of internal control deficiencies in theory. In this part, we mainly analysis corporate characteristics, corporate governance structure, complexity of business and the risk of financial accounting. Finally, in order to analyze the internal control deficiencies influence factors from the above four aspects, This paper chose2011-2013Shenzhen’s SME board listed corporation as the research object. The study found that, the internal control deficiencies are negatively correlated to the company size, the listed number of years, and are positively related to the chairman and general manager unit together, stock concentration, the number of subsidiaries, merger and reorganization, sales revenue growth rate and whether occurring the loss. And they all through the significance test. The proportion of independent directors and inventory are consistent with the expected symbol, but they don’t through the test of significance. This maybe because of our independent directors also did not played their due role in corporate governance structure, and inventory will be affected by the nature of the industry.At last, I put forward three relevant recommendations to perfect the construction of internal control from the aspect of preventing the occurrence of the internal control deficiencies, perfecting the corporate governance structure and preventing blind expansion of SME board.