Discussion On Financial Restatement Based On The Perspective Of Internal Control

Financial report as a record to reflect the financial position of the company at a fiscal period,the accounting information it represents can not only effectively record the information of the company's production and management,provides data for the company management as measurement tools,but also provide reference information to investors.In this age of increasing prosperity of our capital market,financial reports,as carrier of the corporate management information,its authenticity and integrity is critical to users of financial reporting information.Restatement is a direct consequence of financial information quality standards,analysis on causes of financial restatements in recent years,from the point of view of the company,on the one hand due to the subjective awareness of the management on earnings management motivations,on the other hand is the result of imperfect corporate governance;from a market perspective,mainly due to imperfection of supervision on information disclosure.For example,laws and regulations,improving operability,punishment is not enough or lack of reality.The frequently occurrence of financial restatement reduce the quality of information disclosure of listed companies,not only affect investors' interests,but also impede the normal functioning of the capital market.Financial restatement is closely related to the quality of financial reporting,ensuring fair financial reporting reflects financial and operating conditions are very important,that is closely related to the occurrence of financial restatements and management,company's operators have an obligation to design and implement and maintain adequate internal control procedures to ensure that financial reports are free of material misstatement due to fraud or misleading statements.To ensure the authenticity and reliability of the financial report is one of the objectives of internal control of the company,internal control over financial reporting results of the implementation of a performance vehicle,the disclosed information is authentic and reliable financial reports,internal control reasonable and effective implementation plays a key role.A company must have the complete and effective implementation of internal control,only which can ensure a long-term fair and reliable financial reporting.For the construction of system of financial restatements related,because of China's system of financial restatements later established,now still in the stage of development and exploration,compared to the present frequency of financial restatements,our related regulations still exist many imperfections and immature;foreign scholar study for financial restatements started early,so literature is richer than China,the study in China is still in early stages,but with the frequency of financial restatements increased,experts who increasingly focus on the issues,related research is gradually deeper.Current financial restatements related research focuses on the causes of financial restatements and the influencing factors of financial restatements and the market reaction after repeated,study on the relationship between internal control and financial restatements,but no in-depth studies,and thus have a great deal of research space.This article take the method of combining theoretical analysis and case study choose the Sinovel's financial restatement case,through the analysis of the its causes,contents and the consequences of the financial restatements,and the internal control of Sinovel,the influence of corporate governance structure upon internal control.From the angle of internal control on financial restatements,consequences and prevention studies focus on the effect of internal control on financial restatements,and discussed the relationship between internal control and financial restatement.The first chapter is an introduction of the background and signification of the research,literature review and research ideas and methods,as well as the overall framework.The second chapter is an overview of the basic theory of internal control and financial restatements,including internal control of the connotation,connotation of financial restatements.The third chapter gives a brief introduction about the background of Sinovel's financial restatement event,firstly introduces the profiles as well as the development of Sinovel;secondly introduces the company's organizational structure,including corporate governance structure and supervision mechanism,then the Sinovel internal control was introduced,finally introduced the Sinovel financial restatement related situation of events,including the content and quality of restatement announcement.The fourth chapter gives an in-depth analysis of financial restatement case,mainly from the cause of financial restatements,consequences and affects several aspects of internal control of financial restatements,shows that invalid internal controls can cause financial restatements.The fifth chapter is the conclusion and enlightenment.Describes the financial restatement impact of information quality and internal control over financial reporting effects on important financial restatements,further demonstrates the importance of internal control.The case studies reveal that we should create a good internal control execution environment,establishing mechanisms for early warning,risk assessment and control,external regulatory oversight role into sufficiently exert,and standard system of financial restatements from several aspects to reduce the frequency of financial restatements.The main significance of this paper as follows: First of all,stand the point of financial restatements of internal control problems,enriches the study of financial restatements and internal control.What's more,through the case studies about internal controls and financial restatements,and then provides some suggestions on how to avoid the financial restatement.Of course,there are still many problems in this paper.The data is collected by hand,because there no financial restatements the establishment of specialized databases,there may be some omissions and errors.