Research On The Effectiveness Of Internal Control Of SMEs In China Based On ERM Framework

Since the new century,with the rapid economic growth in the world,the internal mechanism cannot keep up with the pace of growth that will often bring about major financial fraud events.WorldCom and Enron incident eventually led to the United States authorities promulgated the Sarbanes Oxley act.The Ministry of Finance and other five ministries,respectively,have promulgated the basic norms of enterprise internal control and enterprise internal control supporting guidelines.Therefore,it is very necessary to evaluate the effectiveness of the internal control system according to the characteristics of the enterprise.Through the evaluation of the effectiveness of the internal control system,we can not only find the defects and problems of the internal control,but also improve the internal governance level and risk prevention capability.This paper intends to establish a comprehensive,scientific and practical evaluation index system of internal control effectiveness for SMEs,and verify it in the form of HL enterprises.Firstly,through the relevant domestic and foreign literature review of internal control,ERM framework theory,internal control theory,principal-agent theory and contract theory are as the theoretical support of small and medium-sized enterprises to implement internal control effectiveness evaluation.Secondly,based on the ERM framework,from two dimensions of integrity and effectiveness,we design the evaluation index system of small and medium-sized enterprise internal control,and construct the evaluation model of internal control.The results of this study show that: from the eight elements of ERM framework,with the construction of evaluation index system,using quantitative and qualitative evaluation model,according to the specific circumstances of internal control of HL enterprise,it will do the adjustment.According to the quantitative analysis of the form and the effect of internal control construction and the implementation of HL,it can help enterprises to achieve the internal control objectives and business goals and operable and comprehensive evaluation analysis of the effectiveness of internal control.The evaluation content combines qualitative problems with quantitative treatment,and changes the limited internal control effectiveness evaluation method,and enriches the internal control evaluation method system.Through the evaluation of the effectiveness of the internal control system of HL enterprises,we can not only find the defects and problems of the internal control,but also improve their internal governance and risk prevention capabilities.