Research On The Internal Control Of Fixed Assets In XX Company

Since entering the new century,cases such as the Enron fraud,WorldCom bankruptcy,China Aviation Oil losses,CITIC Pacific option contract have successively broke out and these cases fully exposed companies’ loopholes and deficiency in internal control.Thus,the domestic and foreign enterprises and scholars pay more attention to the research development of internal control.In April 2004,The Committee of Sponsoring Organizations of the Treadway Commission published Enterprise Risk Management Framework which is based on Internal Control-Integrated Framework.ln May 2013,this committee revised internal control framework in order to make it more flexible,less expensive and more in line with the development of the times.Our country is also working with international practice.In May 2008,Ministry of Finance and other four ministries jointly promulgated the basic norms of enterprises internal control.In April 2010,five ministries promulgated enterprises internal control supporting guidelines,which consisted of application guidelines,audit guidelines and evaluation guidelines.Considering our country’s conditions such as the high proportion of state-owned enterprises and serious loss of state-owned assets,five ministries defined safety and integrity of assets as an important goal of enterprises internal control.I have studied twelfth five-year plan for national economic and social development of the people’s Republic of China and twelfth five-year plan of Jiangsu Province and got information from the Internet.It can be seen that our government attaches great importance to the construction of infrastructure and the transportation industry is developing rapidly in recent years.The amount of transport infrastructure investment is rather large and it is still increasing.In Jiangsu,the highway network has already basically formed and its density ranks first in our country.From the data collected,the toll revenue of highway management enterprises is increasing year byyear.Unfortunately,the operating cost is growing rapidly at the same time.That is why our government calls for the improvement of the technical level and the way of sustainable development.In a word,to reduce operating cost and improve operating efficiency has become an important goal for highway managemententerprises.Internal control of fixed assets is one of the keys to achieve this goal.And it is also a necessary guarantee for the stable development of highway management enterprises in the complex and changing market environment.XX company is a highway management enterprise in Jiangsu Province.The amount of investment in fixed assets is quite large.By the end of 2014,the book value of fixed assets is up to 640 million.According to the company’s fanancial system,fixed assets are divided into eight categories such as buildings,security facilities,three systems,transport equipment machines and electronic equipment.The quantity is large and fixed assets are widely distributed in sevice areas and toll gates.A lot of equipment for charge,communication,maintenance and monitoring have such features as great value,high technology and strong specificity which make it more difficult to manage them well.Therefore,to establish and improve the internal control of XX company’s fixed assets as well as to enhance the level of risk management has important practical significance for proctecting the sucurity and integrity of XX company’s fixed assets.It can also reduce operating cost,improve the quality of road and bridge and provide strong support for the company’s good operation.And this will enhance the hard power of XX company in the long run.From the perspective of internal control and fixed assets management,this paper first reviews and discusses the domestic and foreign literatures related to internal control,fixed assets,fixed assets of highway management enterprises and light assets.Then,the paper carries out theoretical analysis and case analysis and absorbs thought from the classical theory and experience from various cases,which deepens the research depth of this paper to a certain extent.In the third part,this paper researches XX company’s current situation and system and process of fixed assets by interviewing leaders and employees,analysising system and distributing questionnaires.On this basis,this paper points out problems about internal control of fixed assets,such as weak consciousness of internal control and assets management,lack of risk assessment,unclear responsibilities,inaccurate budget,procurement and bidding control not in place,inaccurate accounting,overlook about maintenance work of equipment and lack of fixed assets management system.According to the problems found,on the basis of the COSO internal control theory,this paper focuses on important links and major risks of fixed assets’ procurement,maintenance,accounting and reduction and tries to optimize XX company’s internal control system and process.This paper makes corresponding suggestions such as enhancing all staff’s consciousness of internal control and light assets,making process and standards for risk assessment,clearing division of responsibilities,improving budget accuracy,standarding procurement and bidding process,improving timeliness and accuracy of accounting,strengthening maintenance work of equipment and constructing fixed assets management system.This paper is a case study and the contribution of this paper is mainly reflected in practice.The contribution includes the following aspects.First of all,internal control throughouts the entire life cycle of fixed assets and covers five elements.This paper combs business processes of XX’s fixed assets and refines to the various aspects of the process.Second,by the system review and personnel interview,I try to get more information about group control,XX’s interior environment,internal control,fixed assets and so on,then put forward suggestions which is very close to the actual situation of XX company.In addition,I also hope to provide a way of thinking and model for enterprises in the same industry.Thirdly,through looking up various related matericals,I successfully collect and study six related cases,including internal check,self-evaluation,accounting of fixed assets,classification management of mechanical and electrical equipment,bar code technology and so on.I sum up previous experience and methods and then enrich the case study of this paper.Last but not least,this paper exposes the process and method of risk assessment,establishes risk assessment form of XX company’s fixed assets and accordingly develops content and scoring criteria of fixed assets’ special inspection.However,I have to admit that this paper has a few shortcomings and need further discussion.First of all,due to numerous categories of XX’s fixed assets and several departments involved,this paper doesn’t describe fixed assets by category and points out fixed assets which have promblems and need attention in diffferent links.Second,risk evaluation of fixed assets mainly relies on the evaluation of the project team,which means that there is a certain degree of subjectivity.Of course,this can not be avoided in the process of risk management.We can only reduce subjectivity through detailed understanding,repeated discussions and other methods.In addition,this paper absorbs the basic concept of light assets and has used this thought in purchasing and revitalizing the idle assets.But limited to the research direction and article length,this article does not do a very detailed exposition about light assets.Hope to have the opportunity to do further study.