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A Research On The Monitoring Mode

Posted on:2012-07-04Degree:DoctorType:Dissertation
Country:ChinaCandidate:S J SongFull Text:PDF
GTID:1119330368478296Subject:Financial management
Abstract/Summary:PDF Full Text Request
Effective internal control system can reasonably assure that the normal operation of enterprises, eliminate the adverse effects of potential issues to a certain extent, and control risk not to exceed the corresponding risk tolerance. Empirical studies have shown that a continuously effective system of internal control can help to raise performance. In recent years, domestic and foreign companies which caused huge losses and even bankruptcy due to internal control failure are often seen. Currently, internal control report and relevant laws which released by foreign research institutions and government organizations, and "the basic norms of internal control" and the supporting guidance regulations which released by China Ministry of Finance and other ministries, put forward specific demands for maintaining the effectiveness of internal control system.Eighties 20th century, a new round of financial fraud forced the American Institute of Certified Public Accountants (AICPA) and other agencies co-founded the National Commission of Fraudulent Financial Reporting (Treadway Commission), then based on the recommendations of the Committee, the Committee sponsor establish the Committee of Sponsoring Organizations (COSO)that specializes in internal control issues. September 1992, COSO issued its first report:"Internal Control-Integrated Framework", the report explicitly firstly put forward the elements of monitoring that can be reasonably ensuring the effective operation of the internal control system. In the following published Internal Control Report:"Enterprise Risk Management-Integrated Framework", "Internal Control over Financial Reporting-Guidance for smaller public companies", COSO re-emphasized the implementation of monitoring elements are conducive to maintaining internal control and risk management effectiveness. Then COSO found that many organizations do not have full use of the monitoring element; Although effective in specific areas of monitoring, but they do not take full advantage of the results of monitoring to support their conclusions about the effectiveness of internal control; or not fully the continued use of its current monitoring procedures, or complete lack of the necessary monitoring procedures, leading to at the end of the year assessment of the implementation of inefficient activities to support their conclusions about the effectiveness of internal control. So COSO issued Guidance on Monitoring Internal Control System in February 4, 2009.From the eighties of the last century, China began to study the internal control issues and achieved fruitful results. In May 2008, Ministry of Finance, Securities Regulatory Commission, National Audit Office, Banking Regulatory Commission, Insurance Regulatory Commission jointly issued the "basic norms of internal control", and in April 2010 issued the "Guidance Internal Control Practice Note 1-18", " Guidance of Internal Control Evaluation "and" Guidance of Internal Control Audit", marking that the standard system of internal control in China of advanced international experience has been basically completed.In the five elements of internal control, monitoring is to control the internal control, provide reasonable assurance for internal control system capable of continued effective operation. The establishment of monitoring model will help to clear the monitoring objectives, the implementation of the main, clients and key principles, construct monitoring processes based on the principle of risk-oriented and cost-effectiveness, make full use of elements of monitoring to ensure that internal control system of continuous and effective operation, improve employees of the monitoring to participate actively, effectively avoid the interference in the management control behavior resulting alienation and prevent management override risks, improve corporate governance.mechanism, enhance the effectiveness of internal controls, address and mitigate the asymmetric information and the problem of insider control, further enrich the theory of internal controls, promote internal control to become an effective tool to prevent risk, reasonable assure to achieve the control objectives, reflecting the value of internal control in the enterprise, so create a continuous and effective operation of internal control system to adapt to changing environment.This article is divided into eight parts, the specific structure as follows:Part I which describes the background, significance, main content, and main research methods of the article, is the primer of full text. Partâ…¡reviewed the domestic and foreign research literature. Firstly, I introduce the internal control report released by COSO, CoCo, ICAEW. Then I sorts out research results in China. Lastly, I make evaluations and obtain enlightenmentPartâ…¢introduces the theory of monitoring; the theory of risk-oriented; the theory of cost-effective; the theory of integration. In the part of monitoring theory, I first describe interaction between the effectiveness of internal control and monitoring, then introduce the motivation of monitoring, lastly describe the general process of monitoring. In the part of risk-oriented theory, I overview risk-oriented of the content, then analyze the risk-oriented theory in the application field of auditing and internal control. In the part of the cost-effectiveness theory, I overview of the theory, then analyze the challenge of monitoring achieving the cost-effectiveness, finally proposed the general methods about monitoring cost-effectiveness analysis.Part IV discusses the formation of monitoring model. This section first describes the content of internal oversight model, including specifying the meaning, characteristics and effectiveness of the monitoring model; then analyzes generation mechanism of monitoring model, including basic assumptions, the generation elements of monitoring model; finally the generation framework of monitoring model-Integration systematic.Part V designs the monitoring model. I describe the goal of monitoring mode, the subject which implementation and serve to, construct and deeply analyze the monitoring processes-creating a monitoring environment, clearing monitoring focus and implementing monitoring procedures. In the process of creating monitoring environment, the paper designs organizational structure and responsibilities allocation, internal audit, corporate culture and human resource policy, etc., for the enterprises to create a good environment for t monitoring. In the process of clearing monitoring focus, the supervisors divide the control point into critical control points, sub-critical control point and the general control point in accordance with the risks associated with the control points; focus on the effectiveness of critical control points, taking into account the second critical control point and the general control point. In the course of the implementation of monitoring procedures, I introduce the daily supervision and oversight of the implementation of special measures; through cost-benefit analysis select the appropriate monitoring procedures to improve the efficiency of monitoring. After the implementation of monitoring procedures, defects may be found. The internal control system can be corrective or re-verify. This chapter concludes with how to evaluate the effectiveness and efficiency of monitoring.Partâ…¥discusses the mechanisms and strategies that ensure the effective operation of monitoring. Mechanisms, including contingency management, accountability mechanisms, staff incentives and idea management mechanism; strategies including raising the standard and level of documentation, build and continually improve the effective standards of internal control, build the weakness standards of internal control and strengthen the application of information technology.Partâ…§analyzes typical cases. This paper first briefly introduces the company Y, including background information and status review of internal control; then analyzes the company's monitoring model to verify the proposed ideas; other targeted improvements made to further.improve the effectiveness and efficiency of monitoring.Partâ…§comes to paper's conclusion. Based on the analysis in the previous chapter, I obtain conclusions and put forward policy recommendations as follows: advise the government issued guidelines or explanation on monitoring; proposes to carry out publicity and education work about monitoring, emphasis on the effectiveness and efficiency of monitoring; recommend enterprises to strengthen their own building, to further ensure the effective implementation of monitoring.The main innovations include:defining the connotation of the monitoring mode; proposed the generating framework of the monitoring mode-integration of systematic; build the monitoring process. Inadequacies of this article are:the monitoring mode can only be reasonable to ensure the effectiveness of internal control; the achievement of monitoring mode's goal is impacted by of the inherent limitations within the process of all the management; restricted by the author's philosophical culture, theoretical capacity.
Keywords/Search Tags:Internal control, Monitoring, Monitoring processes, Risk-oriented, Cost-effectiveness
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