Jahwa's Internal Control Failure Case Study

With the development of the theory and practice of internal control, problems of enterprise's internal control caught more attention. Internal control also plays an increasingly important role in management, and many companies go bankrupt because of internal control. They deceived investors and the public, and ultimately went reorganizing or bankrupt. Since 2011, the failure of internal control issues are emerging, a number of companies, such as Shandong Xinhua Pharmaceutical, Western Mining, Tianjin magnetic cards, Shanghai Jahwa, were issued a negative opinion of the internal control.This paper used the case study method, and was based on the "Enterprise Risk Management- Integrated Framework", "Basic Standard for Enterprise Internal Control". And analyzed the existence of internal controls in Jahwa company, and made recommendations to improve the effectiveness of internal control.The thesis is divided into five parts, the first part introduces the background and significance of the research, and the condition of lack of innovation; the second part defines internal control failure, and give indexes of the internal control failure. According to China's listed companies' internal control failure performance, analyzes the internal and external causes of it; the third section describes the operation of Jahwa's internal control and the performance of its internal control failure. Then, it analyzes the causes of the internal control failure, including internal control poor execution, the management of contradictions and lacking of professional financial officers; the fourth part according to the foregoing analysis for Jahwa makes recommendations in four areas: First, to establish a comprehensive internal control system; second, to maintain a good internal control environment, expanding on two aspects: on one hand, to maintain a stable and harmonious relationship between management; on the other hand, pay attention to the operational capacity of the staff, training their awareness of internal controls; third, examine finance staff's ethical considerations level strictly and improve the examination system; finally,build a multi-level internal control oversight system by a combination of internal and external; the fifth part is the conclusion.This paper aims at analyzing Jahwa's internal control failure, studying how to improve the effectiveness of internal control and help companies to establish a good internal control system, then escorting business management.