Study On Listed Companies' Annual Financial Report Supervision System

Preparing and releasing of annual financial reports are for the interests of shareholders (or investors), regulating public companies operation, and ensure the order in stock market. For the shareholders (investors), annual financial report is one of the essential information sources for decision-making. Where for the public company, it is not only one of the performance assessment methods on the executives of the company, but also a monitoring mechanism over the executives. To ensure the truthfulness, accuracy, completeness, and timeliness, an annual financial report supervision system shall be established under the principle of fairness, order, and efficiency.As one of the specialty committees under the Board of Directors, Auditing Committee is an important supervisory body over the preparing of annual financial reports of the company. For the independent directors– some of the main members of the Auditing Committee, are not involving in the company's daily operation, thus the Auditing Committee is endowed with higher independency. Internal auditing over the annual financial reports is the key function of the Committee.As the supervisory body paralleling with the Board of Directors inside the company, Supervisory Committee is also responsible to monitor the preparing of annual financial reports of the company. And as a permanent organization within the company, Supervisory Committee knows the company's daily operation very well. Monitoring over the relative data in the annual financial reports and providing the Auditing Committee with essential financial data are its duties.Stock exchange is the self-regulating body of the stock market. As the frontline supervisory organization, the stock exchange knows the operation of public companies better than the Securities Regulatory Commission. It is responsible to supervise over the disclosing of annual financial reports by public companies.As the regulatory body of the stock market, Securities Regulatory Commission performs centralized and comprehensive administration over the stock market. It is responsible to supervise over the public companies'financial reports as well. Different from the responsibilities of the stock exchange, Securities Regulatory Commission only performs supervision or investigation on the financial reports under certain circumstances. It usually cause loss of the list companiy or the thrid party when the supervisory institute fails to fulfil its responsibility or misuses it's supervisory right. In this way, the supervisory institute shall bear legal responsibility for its inappropriate behavior.