Research On Ericsson’s Internal Control Based On Compliance Perspective

In the context of globalization,multinational enterprises are facing more and more compliance challenges.To develop cross-border business,the enterprises need to face the legal and regulatory requirements of different countries,as well as the differences of different cultures,languages,and moral standard.Therefore,for cross-border enterprises,internal control construction is very difficult.However,it is particularly important for enterprises to establish a sound internal control and compliance management mechanism,especially in the context of the long-arm jurisdiction of the United States.When it is impossible to avoid being "compliant",strengthening internal control is a beneficial measure to address it effectively and accurately.From a compliance perspective,based on the COSO internal control theory,this thesis analyzes the construction and improvement of Ericsson’s internal control before and after the 2019 event,in which Ericsson was fined $1 billion by the United States for violating the FCPA.The analysis found that before the event was disclosed,the company emphasized economic benefits,and compliance controls were ineffective.The main performance is that the company’s processes and frameworks are mere formality;Lack of control thinking at the senior level and ineffective control activities;The prevalence of fraud and the absence of anti-fraud channels;The supervision responsibilities are unclear and the supervision activities fail to work effectively.After the event was disclosed,the company invested heavily in the construction of internal control,and the improvement was significant.This is reflected in the company’s values and strategies beginning to emphasize compliance;improving the risk management process;increasing compliance related control activities;establishing a speak up culture,and information communication channels starting to take effect.However,there are still some shortcomings,such as insufficient high-level competence,lack of internal and external disclosure of compliance issues,which is not conducive to the construction of compliance effectiveness,and insufficient risk assessment dimensions that weaken the consistency of compliance objectives.Finally,this thesis puts forward corresponding optimization suggestions for the above issues,such as using the quality grading method to establish a competency model related to compliance,using the quality requirements derived from the model to help the company better cultivate and recruit qualified management talents,improve the performance appraisal system,and improve the company’s overall compliance control ability.The case of Ericsson showing us building sound internal control is very important.It reminds multinational companies of the same type to strengthen internal controls,enhance employee compliance awareness and ability,and regularly conduct risk assessments and self-reviews to ensure the compliance and sustainable development of the enterprise.At the same time,this article believes that in the context of globalization,strengthening internal control is a solid guarantee for the sustainable development of enterprises.Multinational enterprises of the same type should learn experience and lessons from the case of Ericsson to improve their internal control.