Discussion On Listed Company Internal Controls Of External Guaranty

Along with China market economy unceasing development,financing competition between banks grows fiercely.The introduction of guaranty system not just reduces corporation financing cost,but ensures transactions security and legal interest of stakeholders.In our country,external guaranty of listed company has developed rapidly in recent years.As a kind of contingent liability,potential debt crisis and lost would explode once the guaranteed parties' financial situation become worse,unable or unwilling to pay the debt.As a result,the guaranty provider would suffer a lot once the contingent liability become real debt.Under this situation,listed companies paid more and more efforts in internal control.By referring the COSO inner control framework theory,relative authorities released Basic Norms of Company Internal Control and Supporting Guidelines of Company Internal Control,which provide legal basis and guidelines for inner control activities and specific operations,and finally lower company finance risk and promote steady development for a company.Since public listed,Tianjin Teda Corporation Limited Company has enlarged its scale,quantities of subsidiaries rise,and distribute extensively.External guaranty happened as the company became more and more diversified,which require inner risk control.However the real situation is not so optimistic.High number of external guaranty,preference to subsidiaries' guaranty,long guaranty period etc.Besides these,in the last two years,Teda was issued by negative opinions by audit departments,and also been warmed by regulators.Obviously,there are numbers problems of inner control of external guaranty in TedaIn this article,based on five elements of inner control frameworks,illegal guaranties and internal control significant deficiencies in Teda Corporation limited company has been arranged and expounded.And relative suggestions have been carried out based upon inner environment,risk evaluation,control activities,information disclosure and internal regulation.For example,frequent changes of senior management,strategic perception deviations of management,unclear assignment of responsibilities,irregular human resources management,all of these are the constitution of unhealthy inner control environment.Risk identification ability or risk evaluation ability is low,and consciousness for inner control of external guaranty is not enough.Inner control system is weak,mechanism design has deficiencies,it results in inner system is hard to operate effectively and hard to be practicable.Exist in name only,the situation implied a lot of problems in different inner control levels.Moreover,mechanism of supervision is not perfect,the supervise forms are outdate,it lead to that it is hard to supervise inner control of external guaranty.In view of a series of problems in the company's internal control of external guarantees,several suggestions in perfection of external guaranty and internal control have been stated.Finally,efficiency enhancement in external guaranty in Teda Corporation has been discussed.