A Case Study On Internal Control Of The Related Party Transaction Of Faw Fuwei Company

The related party transactions are indispensable to the listed companies because they can reduce the transaction cost,improve the efficiency of transaction and business operation,and promote effective communication and cooperation.However,thanks to the incompleteness of state-owned enterprise restructuring,a lot of enterprise internal management system and internal control system is not complete,coupled with a fair degree of the related party transactions itself is difficult to handle,a variety of reasons make the unfair related party transactions of listed companies in our country,often appears in a transmission medium of some listed companies are illegal interests,this behavior not only weaken the quality of accounting information and practical value,the more bad guide for policy makers,medium and small shareholders and the interests of investors and creditors in disregard,allows the company and a lack of impartiality of the stock market.Faw fuwei company related party transactions,the company’s image in a series of caused by the questioned events,this article from the internal control level analysis of the disadvantages of the related party transactions,on the basis of the COSO internal control framework theory,analyze the nature of reason,faw fuwei related party transactions d company internal control is put forward how to improve the proposal.The first part of the paper is a case description.The brief introduction to faw fuwei company illustrates the general situation of faw fuwei related party transactions and the current state of the internal control system.Related cases related to the company’s related transactions.Paper in the second part is the case analysis part,starting from the theoretical part,internal control related theory,this paper introduces the related transactions faw fuwei on the basis of the analysis related transactions related case about the internal control problems,including the general meeting of shareholders veto power failure,associated trade for examination and approval authority is unknown,loss of the audit committee responsibilities,profit sources of risk control does not reach the designated position,and communication problems caused by information asymmetry.The next part is the case analysis section,in the past part,on the basis of analyzing its causes,from the shareholders’ checks andbalances mechanism,the establishment of examination and approval system,the board of supervisors and the supervision of the internal audit department,risk assessment system incomplete and information and communication mechanism of five analyze faw fuwei company’s internal control is not perfect.Part in the third part is the countermeasures and suggestions,based on the theoretical basis of the COSO framework,the five elements of internal control are realized,for the internal control system are put forward on the normative validity and execution of improvement scheme,perfect the internal control system,strengthen the effectiveness of internal control,to achieve the purpose of further reduce the incidence of unfair related party transactions.