Research On Internal Control Of Credit Review Process Of Small Financing Guarantee Companies

The financing guarantee mechanism is a major choice adopted by countries around the world to solve the financing difficulties of SMEs.This industry is typically of high risk and low profit.Since the early 1990 s,China has been actively promoting the construction of a credit guarantee system.The financing guarantee industry has been facing the problems of insufficient industry supervision,a lack of risk sharing mechanism,and insufficient risk compensation.With China's economic transition and adjustment in recent years,this industry has seen a significant shrinkage,and the efficiency space of financing guarantee mechanism(which is represented by commercialized financing guarantee companies)is almost completely compressed.Because the financing guarantee industry has the function of quasi-public goods,the bankruptcy of each guarantee company would also bring negative externalities to a certain extent.Risk control ability is the key to the success or failure of financing guarantee companies,and internal control is an important mean of risk control.I carried out the research on the internal control of Chongqing XY Company's credit review process.Internal control is the main knowledge system used in this study.I have divided the domestic scholars' research on internal control into five main directions.Among them,the research about internal control economic consequences and the factors influencing the internal control are the highest.Those two research directions necessarily involve the selection of evaluation models for internal control;but the effective research results on internal control information disclosure behaviors and practical applications need to be further enriched in the future.The evaluation of internal control is also the focus and difficulty of this research.I systematically sorted out the rules and regulations of domestic internal control evaluation,summarized and analyzed the existing research on evaluation models,and I chose the appropriate internal control evaluation method according to the actual situation of Chongqing XY Company.Because the main problem of internal control of Chongqing XY Company is the insufficiency of soundness and effectiveness,rather than excessive internal control,it is suitable to evaluate internal control mainly from the perspective of five components of internal control.Meanwhile,based on the perspective of internal control objectives,the author carried out internal control analysis by combining with the actual situation of the enterprise.The internal control evaluation in this paper follows the principles of "importance" and "risk-oriented",and focuses on the main issues in the credit review process.With regard to the identification of internal control deficiencies,I first made a theoretical analysis,and then formulated the appropriate standards for the identification of deficiencies by considering the characteristics of the financing guarantee company comprehensively.This case study finds that there are many major deficiencies and important deficiencies in internal control of Chongqing XY Company's credit review process.Combined with the authoritative research results of the influencing factors of internal control,I analyzed the reasons for the internal control deficiencies of Chongqing XY Company.The main analysis angles include board of directors,shareholding structure,management characteristics,financial status,business characteristics,fluctuations in economic environment,regulatory level,media attention,corporate culture,ethics and values,risk control awareness,internal reward and punishment mechanisms,and employee competency.Finally,on the basis of comprehensive consideration of the evaluation results of internal control and analysis of the causes of internal control deficiencies,I put forward suggestions for improvement from the perspective of five components of internal control.The author explores the question of "why does the company fail" from the perspective of internal control in the credit review process.It expands the scope of application of internal control in the financing guarantee industry and enriches domestic research on the direction of "application of internal control in practice".The Chongqing XY company is typical and representative,and the failure of this case enterprise can bring alertness to the latecomers.This study has certain reference significance for companies in the continuous operation(such as financing guarantee companies,financial leasing companies,and commercial factoring business companies)that provide debt financing services for SMEs.