Research On Critical Internal Control Activity Evaluation Of M Rare Earth Permanent Magnet Company

In recent years,there has been many problems in the management of Chinese enterprises,such as Yili stock event,aviation oil incident,DeLong incident and so on.One of the main reasons for these problems is the failure of internal control system.The way of how to establish and improve the internal control may become one of the critical challenges that is faced by the companies.In the United States,Enron accounting fraud incident made the US government pay more attention to the failure of internal control,promoted the Sarbanes-Act and the COSO Committee's new report,such as "Enterprise risk Management-framework".With the rapid development of economy,only establishing a relatively perfect internal control system can ensure that the enterpirses can operate safely and effectively.In this thesis,the problems of the internal control activities of M rare Earth Permanent Magnet company(there after refer to as "the M Company")are analyzed and the related optimization is put forward.The research of this paper is of great significance to the improvement of management level,the implementation of company policy and management objectives,the quality of accounting information and the protection of investors' lawful rights and interests.Firstly,the thesis expounds the concept of internal control activities and relevant basic theory,With the decription of the actual business of M Company,the thesis will find out problems within critical control factors in order to use it as a benchmark for design of evaluation of internal control activity of the company.These issues are as following: the raw material purchase is of with no bargaining power,the evaluation system for post-purchase business has not been established,there are some problems in employee's operation,process flow and impection of inventory management system as well as missing of the inventory control.With the actual operation of the M Company,the paper has selected 28 indicators from four aspects,such as purchasing cycle and sale cycle to constitute the evaluation index system of internal control activities.The analytic hierarchy process and fuzzy comprehensive evaluation method are used to construct the evaluation model.Based on the comprehensive evaluation of the key internal control activities of M rare Earth permanent Magnet company,it is concluded that the M Company has no bargaining power in raw material porcurement,post-purchase evaluation system is not established for purchasing business.Some problems may hold back the M Company such as the issues of employee operation,process flow problem,inperfect inventory management system and inventory control deficiency,as well as ineffective sale team construction and unreasonable sale layout.Finally,the paper evaluates and optimizes the key internal control activities of company.These may include the evaluation and optimization of the procurement business process,procurement planning and approval control,production process optimization,strict product warehousing procedures,Inventory management system,Inventory process optimization,sales pricing strategy and sales plan management.This may help company to improve the internal control level,which can provide a reference for the company's internal Control evaluation index system.