A Study On The Influence Of Internal Control Effectiveness On Financial Risk In Enterprises

The effectiveness of internal control refers to the design of a reasonable internal control system that serves the business objectives of the company and effectively operates the system,thus providing a reasonable guarantee for the realization of the company's business objectives.The evaluation of the effectiveness of internal control measures the rationality and degree of improvement of the internal control system and the effect of internal control.Financial risks accompany the occurrence of corporate financial activities and permeate all financial links of the company.They are a practical issue that companies must face in financial management and make financial decisions.From the perspective of corporate financial activities,they include: funding risks,investment risks,business risks,and other specific risks.In recent years,with the continuous development of the market economy,after the financial crisis in 2008,the number of financial risks,financial frauds,and huge losses have increased year after year.It is important that the internal control of enterprises is effectively implemented factor.Therefore,exploring the relationship between the effectiveness of internal control of China's listed real estate companies and their financial risks has important theoretical and practical significance for improving internal corporate governance,improving the effectiveness of internal control,and reducing corporate financial risk.This paper uses literature analysis methods,empirical research methods,and other research methods to decompose the specific indicators of corporate internal control effectiveness evaluation through deductive reasoning on the basis of theories of principal-agent theory,bounded rationality theory,and incomplete contract theory,and build enterprise management.The legal compliance indicators,asset safety indicators,operational efficiency indicators,development strategy indicators,andfinancial report true and reliable indicators as well as corporate internal control comprehensive evaluation indicators;comprehensive consideration of the types of financial risks and influencing factors selected to reflect the level of corporate profitability,14 indicators including six levels of operational capability,solvency level,development ability level,risk level and cash flow level,build a financial risk index;based on the background of the new normal economy,the 120 listed real estate companies selected for 2012-2016 The empirical data shows that the evaluation index of the internal control effectiveness of real estate listed companies is positively correlated with the Z value of financial risks.That is,companies with higher levels of internal control effectiveness have higher Z-values of financial risks and correspondingly smaller financial risks.Companies with lower levels of internal control effectiveness face greater financial risks.Among them,the corporate performance efficiency target index(BO)and the development strategic target index(SO)are significantly positively correlated with the financial risk Z value(FR).It shows that enhancing the effectiveness of internal control of an enterprise is of great significance to reducing the financial risk of the enterprise.Based on this,it proposes specific measures to strengthen financial risk awareness and improve the internal control system.Strengthen the awareness of financial risks,pay attention to and improve the internal control system of real estate listed companies,strengthen the internal control culture of real estate listed companies,improve the quality of employees,optimize the strategic objectives of real estate bosses,improve the company's development strategy,and improve the operating efficiency and effectiveness of real estate bosses.Pay attention to supervision and self-evaluation and raise awareness of prevention.