Effect Of Deficiencies In Internal Control On Quality Of Earnings

From the development process of domestic and foreign enterprises, non-profit organizations until the government agency, the management of internal control is to prevent external risks, improve enterprise management level, to achieve the effective path of sustainable development. 2010, five ministries issued Guidelines for Enterprise Internal Control, in accordance with the provisions of the company in 2011 inside and outside the system of internal control standards also listed purposes, 2012 in Shenzhen and Shanghai Stock Exchange main board listed company purposes, choose the small board and GEM Companies, this series marks the provisions of internal control to a new stage. As a business management system is an essential activity, on the one hand, he was able to guarantee a reasonable business activities operate to achieve self-regulation, self-feedback, self-correcting loop system; on the other hand, he will help ensure the safety of corporate assets complete, reliable and relevant information is true. Operating results mainly rely on financial reports disclosed,earnings information is an important basis for investors to investment decisions. Thus, the enterprises to improve and implement internal controls, the ability to improve the risk prevention play a decisive role, can reduce the incidence of fraud, improve earnings quality.From the perspective of internal control deficiencies, discusses the impact on earnings quality of internal control deficiencies. Firstly, the internal control relevant literature wil take off the learnings quality review were then put together, the impact on earnings quality and control elements from the agency theory and the theory of internal analysis of internal control; secondly, through the research status of internal controls and the quality of our earnings, proposed this study assumptions and conclusions are as follows: 1) The existence of internal control deficiencies will lead to lower earnings quality, earnings quality after correction has increased, but only slightly. 2) Different effects on different types of internal control deficiencies earnings quality. From the degree of influence of internal control deficiencies divided into general classes of defects and defect-specific classes, generally such defects do not affect the earnings quality of listed companies, but a greater impact on earnings of a particular class quality of internal control deficiencies; sub-type defects run from the nature of internal control deficiencies and design such defects, such defects run a greater impact on earnings than the design of such defects. 3) In the presence of internal defects, that is, whether the nature of property rights has little effect on the earnings quality of the state-owned holding company. Finally, the theoretical and empirical analysis of the results, from the perspective of the five elements of internal control how to manage internal control deficiencies, improve internal controls, and make policy recommendations to ensure the healthy and sustainable development.