| The 4~thh plenary meeting of CPC 18~thh conference proposed that“For departments and positions with a concentration of powers,such as financial allocation and use,State-owned asset supervision,government investment,government procurement,transfer of public resources,public progect construction,etc.,affairs are to be separated in the exercise of power,positions are to be separated in the establishment of power,and there must be a hierarchy for the authorization fo power,there must be regular rotations,strengthen control over internal workflows,and prevent the abuse of power.”The report of the 19~thh National Congress of CPC stressed that"we will improve mechanism for law-based decision-making,and put in place mechanisms for the exercise of power that ensure sound decision-making,resolute execution,and effective oversight."and"we will improve risk prevention and control mechanism in all areas,skillfully handle various complex issues,overcome all difficulties and obstacles that we meet on our way,and keep a firm hold on the initiative in our work.”The mechanism has made a greater demand for the internal control of financial management,and pointed out the direction to improve and optimize internal control of financial management.At the same time,“to improve the standardized system of the internal control”and“to strengthen the implementation of internal control norms”are listed as the key tasks of the“13~thh Five-Year Plan for Accounting Reform and Development”,and the construction and development of the internal control system of financial management has entered the fast lane.Since 2013,the Ministry of Finance has intensively issued the"Regulations on Internal Control of Administrative Institutions(Trial)","Guiding Opinions on Comprehensively Promoting Internal Control of Financial Management","Basic System of Internal Control of the Ministry of Finance",and it has formulated relevant internal control measures in terms of formulation of laws and policies,budget preparation and implementation,public relations,departmental operations,post conflicts of interest,and information system management.The“four beams and eight pillars”to strengthen fiscal risk management,and the internal control system of financial management have been initially established.There is a difference between the internal control of financial management and the internal control of enterprises.The demand for publicity and security in financial management are higher than those in enterprise management.While drawing on the experience of internal control of enterprises,it is necessary to form an internal control system that conforms to the law of financial operation according to the characteristics of financial management and local conditions."There exist many problems in China’s financial management system,such as the imbalance between financial management powers and responsibilities,overlapping functions or“missing”;relatively larger differences in budget and final accounts,the weak binding force on budgeting and execution of the final accounts;the low efficiency of fiscal funds,weak financial supervision,and poor supervision effect.The cause is that there is a lack of strong and sustainable internal control mechanism in the financial management process of all levels of government,leading to failure in financial management control.The construction of the internal control system of financial management is a complex system project involving multiple levels and multiple departments.From the vertical perspective,a unified internal control system for financial management from the central government to the local government and the local governments at different levels needs to establish.From a horizontal perspective,a coordinated internal management system for financial management should be established between the financial departments and various budget units.A financial management internal control pattern of“horizontal to the edge and vertical to the bottom”should be formed.However,with analysis,there exist some prominent problems in the current internal control system of fiscal management,such as slow progress of policy implementation in grassroots government,low efficiency in early risk warning and evaluation,unclear information sharing channels,“static”internal control implementation and management,and internal supervision.The promotion and implementation of internal control of financial management has entered the“bottleneck”,but“good governance”could undoubtedly provide a good idea and solution for the system to optimize the internal control of financial management.“Good governance”emphasizes systematic coordination and co-movement.To introduce the concept and method of"good governance"into the internal control of financial management will effectively prevent and reduce systemic fiscal risks,improve the efficiency in the use of fiscal funds,the ability and level of financial management;It will also improve“Soft constraints"”in budget preparation,budget execution,state-owned assets management,and government procurement,but strengthen the"hard constraints"of fiscal funds,and effectively prevent the“running and leaking”of financial funds and so on ensure a financial sustainable development.Based on existing research,the paper takes the internal control of financial management as the research topic,employing theories of public governance、internal control,performance evaluation and motivation theories to explore the development status,existing problems and solutions to China’s financial management internal control system.The key breakthrough point of the problem is to optimize the internal control system of financial management with the concept of good governance.Through designing theoretical models and empirical models,we can identify key players,construct a“good governance”index for internal control of financial management,and empirically analyze the internal impact of financial management and the influencing factors of the Good Governance Index,as to design an internal control incentive plan for financial management,and finally propose corresponding policy recommendations.The main contents and chapters of this paper are organized as follows:Chapter One mainly expounds the research background,significance of the thesis,and the related literature review at home and abroad,the main research content and research methods of the thesis,the innovation points of this paper and the connotation and definition of the basic concepts.Chapter Two mainly summarizes revelant theoretical basis such as public governance,the internal control,performance evaluation and motivation theories.Chapter Three analyzes the development status of China’s financial management internal control from the perspective of good governance.Firstly,it expounds the standards of good governance and the connotation of each standard.Secondly,it analyzes the development status of internal control of financial management in China with the standard of good governance.Chapter Three is a deep analysis on the problems existing in the internal control of China’s fiscal management in terms of five criteria:responsiveness,efficiency,transparency,effectiveness and accountability,and finally it identifies the key breakthrough points to solve the problem:to optimize the internal control system of fiscal management with the concept of good governance.Chapter Four selects the developed countries such as the United States,UK,Australia,France as samples to draw on advanced experience and practices to promote the internal control construction and development of China’s fiscal management.Chapter Five is about"good governance"index construction of financial management internal control and analysis of influencing factors.Firstly,the index system of the“good governance”index of internal control of financial management is constructed.The complexity of the construction of“good governance”index is analyzed.The criteria for selecting the standards and indicators for the construction of“good governance”index are clarified,and the revision and pre-evaluation procedures of the indicator system are expounded,in order to determine the weight tool and the weight of each indicator.Secondly,an empirical analysis of the influencing factors of the“good governance”index of internal control of financial management is conducted with GMM model.Chapter Six is about the research on the optimizing the internal control system of financial management from the perspective of good governance.Firstly,it analyzes the necessity to optimize the internal control system of financial management,and the content of the adjustment and upgrading of the Committee of sponsoring organizations of the Treadway Commission(hereinafter referred to as“COSO”)new risk management framework.From the perspective of good governance,it draws on the new COSO risk management framework and combines the reality of China’s financial management to optimize.The internal control system of financial management is constructed based on good governance in four aspects:principle,core elements,system operation mechanism and internal mechanism analysis of each element.Chapter Seven is an internal control incentive project design about the"good governance"financial management.Firstly,by constructing a theoretical model,the mechanism of the internal control incentive mechanism of fiscal management is clarified,and the incentive factor is the key to the effective implementation of the internal control system of financial management based on good governance.Secondly,it analyzes the principle of the Financial Incentive Program(hereinafter referred to as“FIP Mechanism”)and the typical practice of developed countries.Finally,drawing on the practice and typical practices of Organization for Economic Co-operation and Development(OECD)countries,combined with the“good governance”target and operation of China’s fiscal management internal control,to design the FIP Mechanism.It from the aspects of mechanism,guides the internal control of financial management to form a self-restraint and competiton-incentive mechanism,and creates a good atmosphere.Chapter Eight puts forward targeted policy recommendations for improving internal control of financial management.The innovation points of this paper lie in:1.The index system of“good governance”index of internal control of financial management is constructed in terms of index standard,selection principle,index revision,evaluation procedure,and weight determination.The influencing factors of“good governance”index of internal control of financial management are studied with GMM model.The empirical analysis shows that incentive mechanism has a negative inhibitory effect on the deviation degree between budget revenue and expenditure and fiscal risk of local government.The greater the fiscal incentive,the easier to reduce the deviation degree between budget revenue and expenditure,the easier to lower fiscal risk of local government,which shows that incentive mechanism has a positive effect on the internal control of financial management.Fiscal transparency has a negative inhibitory effect on fiscal risk of local government.The higher the fiscal transparency,the easier to lower fiscal risk of local government.However,the optimization of governance structure has a a positive effect on the deviation degree between budget revenue and expenditure of local government,and then has a negative inhibitory effect on the internal control of financial management.It is analyzed that the overall reform of China’s administrative system,which is dominated by“powerful county government”and“county under provincial direct management”,is not sufficient.Taking“county under provincial direct management”as an example,due to the lack of administrative compatible reforms,the overall financial system reform is not fully promoted,and county under provincial direct management is only shown as the change of way of the government finances revenues and expenditures.There are not many changes in terms of relevant policy preferences,transfer payments,and financial capital operations at the county-level government finances.The implementation of relevant reform measures faces many difficulties and problems.Therefore,the advantages of China’s administrative institutional reform have not been fully released,and the promotion of financial management systems such as internal control has been hindered to a certain extent.From the empirical results,this“single soldier rush”management system reform can not promote the implementation of internal control of financial management,and instead,it will inhibit the implementation of relevant institutional norms.2.From the perspective of good governance,the paper fully draws on the new version of COSO risk management framework,combined with the reality of China’s financial management,to construct a financial management internal control system based on good governance,and uses the management PDCA dynamic cycle model to theoretically study the system operation mechanism analysis.3.As for the study on the mechanism of incentive factors to promote the internal control of financial management,the paper uses the OECD countries practice and typical practices as references,combined with the“good governance”target and operation of China’s fiscal management internal control,to design the FIP mechanism.It,from the aspects of mechanism,guides the internal control of financial management to form a self-restraint and competiton-incentive mechanism,and creates a good atmosphere. |
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