Securities Company's Internal Control Establishment And Improvement Of Research

Securities company, which is the bridge between enterprises and capital market, plays an important role in the securities market. Its special role makes it undertake all kinds of risks. The existence and development of securities companies depend on whether or not the risks can be resisted and resolved efficiently. Establishing an effective internal control system is an important means of controlling risks. At the beginning of 2001, China issued the rule entitled "Guidance To the Internal Control of Securities Company". The rule definitely requires all the securities companies establish and improve their internal control system from two aspects: Internal Control Mechanism and Internal Control Regulations. Complying with the requirements of the "Guidance", the paper studies and designs the internal control of securities company from internal control mechanism (the important part of control environment), evaluation of risk, business control, and supervision by referring to the five elements of internal control integrated framework in the COSO Report.Chapter one introduces the basis theory of internal control. By analyzing the practical significance and disadvantage of COSO Report, it points out the enlightenment to establish the internal control of securities companies in China.By expounding the present condition of the internal control of Securities companies in China, Chapter two introduces the requirements and rules made by Chinese government on internal control of securities companies. It focuses on discussing about the definition, the goal, and the main content of internal control in securities companies. And it compares the characteristics of the "Guidance" with COSO Report.Chapter three is an important as well as novel one in this paper. By comparing the meaning of control environment in the COSO Report with the meaning of internal control mechanism in the "Guidance", Chapter three tells us the internal control mechanism and the control environment share an overlap in their meanings. The internal control mechanism standardizes the design, the operation of theinternal control in the perspective of corporate governance. Therefore, to establish and improve the internal control mechanism of securities companies need to analyze the condition of corporate governance of securities , and then find the coreof corporate governance structure--Board of Directors, which is to be furtherimproved.Chapter four is another important chapter in this paper. It expounds general condition of risk management in securities companies. Classifying its transactions as three main types, it designs the internal control by analyzing the links and risk points of each type of transactions.Chapter five focuses on the internal examination of securities companies, which is part of the content of internal control in the "Guidance". Furthermore, from the angle of COSO Report ,the internal examination also embodies "supervision"--the last one of the five elements in the internal control integrated framework. The last element interacts with other elements to form one whole internal control system.