Research On Internal Control Defects Of Gold Listed Companies

Effective internal control can help an enterprise to improve its own operation effect and management efficiency from the inside.To a certain extent,it can ensure that the enterprise complies with relevant laws and regulations and its financial report is authentic.From 2006 to 2017,the scope of application of China’s internal control system has been continuously expanded and the system construction has been continuously improved.However,it cannot be ignored that in recent years,the domestic financial fraud has become more and more serious.A series of financial fraud and illegal disclosure incidents have caused all parties to pay attention to the various financial problems of listed companies which are often related to the effectiveness of internal control.If an enterprise wants to achieve good development,it is not enough to rely solely on external supervision.Effective internal control must be added to ensure the stability and continuous growth of the enterprise.Since 1993,the domestic gold industry has entered a market-oriented era and has become a world leader after years of growth.However,it also means facing more risks and a more complicated control environment,which makes the internal control of listed gold companies special.In the past,extensive enterprise management is difficult to face the challenges in the new environment,so at this stage,China’s gold listed companies urgently need to improve and strengthen their own internal control and further improve their governance capabilities.Gangtai Holding Company is a listed enterprise integrating gold jewelry and entertainment industry,covering the whole industrial chain of gold jewelry upstream and downstream.On April 10,2019,Gangtai Holding "blew itself up" saying that the company had 16 external guarantees without decision-making procedures,involving an amount of about 4.2billion.As a result,internal control was exposed to many major defects.The internal control problem of Gangtai Holdings is the first case involving such a large amount of money in the gold industry,and the exposed internal control defects have their own problems,as well as common and special problems in different industries compared with other industries,with certain typicality.This paper first explains the definition of internal control and internal control defects,and introduces the relevant theoretical basis,and then analyzes the industry status quo and difficulties of gold listed companies,finding out the particularity of internal control of gold listed companies.Taking Gangtai Holdings as an example,this paper introduces the basic situation of the enterprise,studies and analyzes the internal control of *ST Gangtai from two aspects: the current construction situation and the necessity of strengthening internal control,and then analyzes the internal control defects of *ST Gangtai with COSO framework.Finally,it puts forward suggestions to improve internal control from both internal and external perspectives.Through research,this paper finds that the gold listed companies are special in internal control over other industries: first,each enterprise in the industry carries out horizontal or vertical mergers and acquisitions,which become a phenomenon and make the control environment more complicated;Second,excessive reliance on bank loans and gold leasing;Third,the actual controller has a large proportion of equity pledge,which makes it difficult for enterprises to implement control activities.Fourth,the assets of gold listed companies are special and so on.This article takes the typical example as the research object,analyzes and studies the internal control problems exposed by Gangtai Holding and the special problems mentioned above.In recent years,there have been many researches on internal control,but there are few researches on internal control of gold listed companies.This paper studies the special features of the internal control industry of gold listed companies,and puts forward six suggestions for improvement in view of the defects of the industry’s internal control:optimizing the corporate governance structure and clarifying the management authority at all levels;Establishing risk control institutions to prevent key risks;Strengthen control activities and internal supervision mechanism;Mobilize the subjective initiative of listed companies;Perfecting internal control laws and policies and strengthening supervision;Improve the status quo of internal control information disclosure and disclose effective information.In order to help gold listed companies to improve the construction of internal control,from the internal optimization of enterprise management ability and level.