Case Study On Internal Control Of Purchasing Process In Iron And Steel Corporation S

In recent years,the steel industry has begun to reduce production capacity,the elimination rate of the industry market has been rising,and the international trade situation has changed rapidly.These problems have aggravated the risks faced by steel companies.In general,raw material costs account for more than 60% of the production costs of steel companies,and raw material procurement is an important part of the production and operation of steel companies.The raw material procurement activities of iron and steel enterprises also have the characteristics of more complicated business,more risk points and significant amount of investment.Once the procurement problems occur,it will have a very serious impact on the enterprise.Establishing a sound internal control system can help steel enterprises to effectively prevent and respond to the risks faced in procurement activities,thus helping companies to operate healthier and more stable.S Steel Company is a state-owned steel company with a long history and employs professional organizations to assist in the construction of internal control.This paper takes S Steel Company as the research object and systematically studies the internal control of its procurement business.The author summarizes the main experiences of internal control of the company’s procurement business:(1)develop a clear internal control project construction plan;(2)hire a professional third-party organization to comprehensively sort out the internal control;(3)conduct risk assessment work on the procurement business on a regular basis;(4)establish a separation matrix of procurement responsibilities to clarify the responsibilities of relevant personnel;(5)establish a sound control test system and conduct regular control tests;(6)establish a system to ensure the status of the internal audit department in the company and its independence.At the same time,it also puts forward the main defects of the internal control of S steel company’s procurement business:(1)some employees have weak awareness of risk prevention;(2)the performance appraisal of purchasing personnel did not play its due role(3)communication with suppliers is waiting for information perfection;(4)dealing with sudden increases in raw material prices and other emergencies are prone to risks;(5)insufficient supervision of the procurement of secondary units.In order to help S Steel Company improve its internal control of its procurement business,and make its internal control better help enterprises to prevent risks and achieve strategic goals,the author believes that S Steel Company can improve from the following aspects.First,the company should improve its risk control training system and raise the awareness of risk for all employees.Second,the company’s performance appraisal should be implemented and fully utilized.Third,in-depth strategic cooperation with suppliers can be carried out in a targeted manner.Fourth,the company needs to establish a sound emergency response mechanism and related internal controls.Finally,the company needs to further strengthen supervision of secondary units.