Research Of Invalidation Of Internal Control In Corporate Guarantee Behavior

With the development of capital market,the guarantee of listed companies has become an important part of corporate financing chain,and the guarantee business has developed rapidly.With the increasing scale of external guarantee,illegal guarantee and malicious guarantee are frequently reported.Although the guarantee mechanism is conducive to protecting bank claims and promoting the circulation of market funds.However,when the guaranteed company loses the ability to repay debts or there is malicious guarantee,the contingent liabilities formed by the external guarantee will be converted into the real liabilities of the enterprise,which will bring economic losses to the listed company.In order to standardize the guarantee business of listed companies,China has issued a series of laws and regulations related to internal control of guarantee in order to effectively control the risk of external guarantee.At the same time,effective prevention of guarantee risk also requires listed companies to play their subjective initiative,establish and improve the internal control system of the company's guarantee business,and prevent the guarantee risk from the root.In recent years,the scale of external guarantee of Fujian Zhonghe Co.,Ltd.(hereinafter referred to as “* ST Zhonghe”)is large,with high risk.All guarantees are overdue,and a large number of estimated liabilities are accrued.Its guarantee business is typical.This paper is a case study to explore the failure of internal control of external guarantee.Firstly,it summarizes the causes of the guarantee business and the economic consequences caused by the failure of the guarantee business.Then,based on the five elements of internal control,this paper deeply analyzes the causes of the failure of internal control of external guarantee,and finds out that the internal environment of *ST Zhonghe is not perfect due to the concentration of equity and the complexity of operation.The risk assessment of specific guarantee object is not in place,and it's difficult to identify potential risks.The design of internal control system is lack of practicality and the approval of specific object is loose,causing the risk of external control increased.The internal information communication is not smooth and the external disclosure is not timely,which reduces the transparency of the external guarantee information.The internal supervision is not balanced and the internal auditors are short for a long time,so they cannot evaluate the guarantee business.These five defects lead to the internal control of the company's external guarantee has not been effectively supervised,and major defects appear.Internal control has been denied for three consecutive years.From the perspective of internal control,this paper analyzes the causes of the failure of external guarantee,exploring how the internal mechanism will affect the amount,object and risk of external guarantee,providing suggestions for the risk management of external guarantee business,further promoting the development of internal control system construction of external guarantee.It also has the function of warning if other listed companies want to strengthen internal control of external guarantee.