| To study internal control is very important, because it will improve our enterprise management and guarantee the quality of accounting information, furthermore, it will do good to improve corporate governance and information disclosure system, to protect investors' illegal right, and to guarantee effective running of the capital market.From the beginning of studying development process of internal control concept, this paper defined its inherent definition. Then, it applied principle agent theory to analyze the necessity and importance of internal control. It told enterprises how to construct internal control targets based on inherent relation between modern enterprise system and internal control system. In the meantime, it tried to discuss how to construct internal control integrated framework in our enterprises according to American COSO report. Afterwards, this paper studied empirically the internal control system of ZhenZhou Yaxiya Group, pointing out some causes that make its internal control ineffective. From this on, the paper thought over the present status of the internal control in our country, listing a few defects and suggesting some improvement policies. In the end, it foresaw illogically internal control development in the future.This paper consists of nine parts.1.Introduction. In this part, the author briefly illustrated the present internal control recognition status in the field of theory and practice in our country, emphasizing on the necessity and importance of internal control.2. The development process of internal control and its indication. This part looked back in brief four major internalcontrol development processes which are internal check, internal control, internal control structure and internal control integrated framework. Through studying the internal control development process, it draw three conclusions: To protect assets safety and to guarantee accounting information truth is major route in process of internal control growing; internal control targets indicates multi-unit trend; accounting control, including finance control, is the core of internal control.3.Understanding of internal control intrinsic definition. Starting from control general theory, this part defined internal control based on its emphasis and basic principle, especially emphasizing the importance of control spirit or mention and the cost-effect principle that internal control should follow on.4. The principle agent analysis of internal control. This part first introduced the principle agent theory and created one simple model, then it applied this theory to analyze mentally the necessity of internal control. It pointed out that it is natural choice for modern enterprises to construct internal control, because those two great system defects leading to market ineffective under condition of principle agent can only be settled by non-market system, in other words, the managers should be monitored after they are authorized to run capital by the owners.5. To construct the targets of enterprise internal control. Property management in term of principle agent is mutual fundament of internal control system and modern enterprise system, there is deep intrinsic relation between these two systems. Should be there suitable effective internal control system, one enterprise is run effectively. Therefore, we should construct internal control targets in demand of enterprise system. In relation to that those two groups of the enterprise owners and managers take core part among multi-unit beneficiaries in enterprises, internal controltargets can be divided into two big different groups.6. To construct internal control integrated framework. COSO report, which was made in 1992 and modified in 1994 in America, is one big mile stone in process of internal control development. It suggests that internal control is consisted of five structure elements, which are control environment, risk appraisal, control activity, information communication and monitoring. To be compared to previous internal control the...
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