Study On Value-Creat Oriented Internal Control Framework

With the theory and technical methods of value increasingly rich and mature, enterprise's continuing concern of value, enterprises have stepped into the new era of pursuiting value creation. Maximizing enterprise value and maintaining the competitive advantage in value creation have become the primary objectives of enterprises to survive and develop. Under such circumstances, a company's distribution activities of resources and power will be in the guidance of value creation. Internal control is the product of socio-economic' development to a certain stage which is also a self-examination, self-adjustment and self-constraints internal mechanism. It is generated and developed as a result of the intensive external competition and the need to strengthen management. Internal control is not only a strategic tool for effective internal management, but also a automatic warning and automatic maintenance system. As an important part of the modern enterprise management activities, internal control framework should be subject to the objectives of corporate for value creation. However, the current domestic and international research on the internal control framework focused on the perspective of the audit, the logic and the level of objective system is not clear, to some extent, neglect the essence of value creation. Therefore, it is necessary to further investigate, design and implemente the value-creat oriented internal control framework, give play to the functions of the internal control system for value creation, promote the goal of maximizing enterprise value to realize, which of great theoretical and realistic significance for riching theory of modern internal control and improving the competitiveness of enterprises.This article is based on reasonably absorbing and drawing the past research results and experience within the control theory, combined with advanced theory and technical methods of value, through analysising and evaluating the defects of financial reporting oriented internal control framework and risk control oriented internal control framework, attempts to design a internal control framework which is adapt to the requirements of today's value management, search and management value drivers, keep pace with the goal of maximizing enterprise value in theory, effectively serve for the value creation in practice. It is also a feature of this article. In addition, this paper uses standard methods of research, comprehensive use of induction, deduction, logical analysis. Througing the analysis on the basic principles of value creation and the effects of the value creation on the internal control framework in theory, combined with the limitations of the existing internal control framework, the design of new value-oriented internal control framework are discussed. This study not only pay attention to the integrated experience of theoretical and practical, but also pay attention to the dialectical relations between internal and external.It uses a variety of logical way to explore issues so that expand the idea of internal control theory.This article is divided into five chapters:The first chapter is the theoretical part of this article. This chapter introduced the theory which is closely related to means of research, such as the theory of Principal-agent, the theory of control and the theory of value management.It also expand the basic theories, such as the content of the internal control framework,so that laid a theoretical foundation for the design of value-creat oriented internal control framework.Chapterâ…¡sets out the necessity and feasibility of value-creat oriented internal control framework design. Firstly, analyzes the defects of financial reporting oriented internal control framework and risk control oriented internal control framework, explains the limitations of the two; Secondly, analyzes the advantages of value-creat oriented internal control framework, to clarify the need of innovation for value-creat oriented internal control framework; Finally, point out the favorable conditions and infrastructure which are available for value-creat oriented internal control framework.Chapterâ…¢describes the design principles and ideas of value-creat oriented internal control framework. According to the principle of comprehensiveness, the principle of effectiveness, the principle of checks and balances, the principle of adaptability and the principle of cost-benefit combined with step by step, it begins with overcoming the limitations of current internal control framework, on the basis of the search and management of value drivers, correctly handle the relationship between inheritance and development, then ultimately optimize the overall internal control framework.The fourth chapter is the focus of this article. This chapter introduces the specific elements of value-oriented internal control framework.First should be determine the objectives of intenal control framework based on the analysis and creation of control environment, formulate specific objectives and corresponding quantitative indicators according to and express it in the form of budget management budget management. Then we need to identify risk factors, assess risk level, take appropriate response in acceptable level of risk. Value-oriented internal framework should cover all the activities and method of internal control that related to value creation. Business process management is the most important control factor of value-creat oriented internal control framework.In order to ensure the quality of control activities, regular supervision must be given in the control process. Finally, evaluates and incentives the performance for the implementation of the internal control framework.In the meantime, relevant information will be negative feedback, so that adjust the objectives,specific targets and problems of budget management. In this framework, elements are interlocking, dynamic linked to jointly promote the goal of maximizing corporate value to realize.Chapter IV put forward some proposals about the implementation of the internal control framework based on value creation, combine the techniques of value management and elements of the internal control framework at the enterprise level, with a view from internal control of the theoretical level and operational level to achieve the goal of maximizing corporate value.