Research On Internal Control Mechanism Of Guarantee Enterprise Group

In order to solve the financing difficulties of SME, the common financial support mode employed by the countries all over the world is credit guarantee. Guarantee industry is high-risk, risk control is the first priority, and internal control of guarantee enterprise is one of the major means of risk control. More definition of the existing research literature for internal control concept considers how to understand and evaluate the internal control system from the supervision of audit and accounting, and seldom take organization management and behavior factors into the analysis framework. Furthermore, the existing research about internal control is mainly about individual legal-person enterprise, whereas the research on enterprise group is insufficient and lacks the support of economic theory.Comparing with the existing research, this paper regards the Internal Environment of ERM framework as analysis basis which puts forward by the COSO committee, and further studies the internal control mechanism of guarantee parent company and subsidiary company. Specifically, considering the distributed heterogeneity characteristics of credit risk, this paper expatiates on the two risk control principles based on the guarantee business scale and the matching between business scale and organization scale. And on this basis, this paper further studies the internal control mechanism of guarantee group from six aspects:the internal environment risk management concept, management structure and power balance, the organization structure, power and responsibility distribution, personnel management(human resources principles and policies), the profession moral risk, integrity and competence, and the above five elements’interact with each other as well. Among them, to the internal control mechanism of guarantee unit and its personnel’s moral risk, this paper engages in mathematical modeling analysis by Incentive Theory of Laffont who is French economist.To test validity and rationality of the research’s views and conclusions, according to relevant regulated procedure of case studies by Dr. Robert k. Yin and professor Eisenhardt, and the requirements of case study about typicality and representative to the research object, this do embedded single case study on China Orienwise Credit Guarantee Group Co.,Ltd. The research results verify or amend normative research part of internal control mechanism of guarantee group and its subsidiaries above in reality. For the rationality anc validity of organization and personnel moral risk internal control mechanism in the practice, this paper uses position studies taking statistics of Large sample as means to confirm or disprove.This paper not only enriches the theory of internal control system, bu also expands the scope of its application in guarantee industry, so it has important academic theoretical value. In addition, this paper has great realistic guiding significance to internal risk control practice of financing guarantee business group which is dominant in the guarantee system of our country.