Internal Control Construction Based On Value Chain Management

In the traditional enterprises operating environment, the design or operation of internal control have many deficiencies. For example, theft of Handan Agricultural Bank of China, Sichuan Changhong financial scandal, Fosugufen "foreign garbage" door incident, Kan'en related party transactions, a lot of frauds or violations must be reported or be exposed by media to find after a long period of time.2007 outbreak of the U.S. subprime mortgage crisis, triggering the financial crisis and global economic turmoil, a domino effect appears. As an important component of risk management, internal control is tested once again. These facts indicate that, although the internal control has been a popular academic and research practitioners, and has also been far-reaching development, there are still many defects in the internal control.However, as an important area of business management, internal control is an important corporate institutional arrangement to achieve its objectives. With knowledge economy and economic globalization as the main characteristics of the market economy, business integration of different industry, size, culture, objectives, regional, how to build a more effective internal control system is an urgent problem.Based on value chain management, this paper attempts to construct internal control which adapts to current professional, economic integration, and enterprise information management environment. Making up to the level of strategic management, internal control plays a more effective role on business operations to help companies achieve strategic goals.This paper uses standard research methods, combining with the internal value chain management theory and internal control theory, grasping their essence of nature. Thinking value chain management into the internal control, this paper analyses the construction of internal control in order to achieve sustainable competitive advantage for strategic objectives for the enterprise under value chain management. The study mainly focused on the following aspects.First, from the enterprise value management and strategic management perspective, this paper discusses how to integrate value chain management and internal control. Different nature of enterprises in different periods has different goals. Summing up the view of all the enterprise theory parties, enterprise value maximization is undoubtedly the most appropriate goal. This objective considers shareholders, creditors, government, public, suppliers, customers, employees and other stakeholders' interests. Theory of value chain management takes full account of the interests of upstream suppliers, downstream channels and end users. Value chain management is value-based management.The enterprise value maximization goal needs the support of internal control. In this paper, based on the value management background, analyses how to obtain a sustainable competitive advantage. The analysis relates to value creation, internal control object, design of internal control, improvement of internal control.Second, starting from the elements of internal control, this paper analyses the construction of internal control based on value chain management. COSO internal control theory-based, this paper analyses the five elements of internal control environment, risk assessment, control activities, information and communication, monitoring. This paper make points about value-oriented corporate culture, organizational structure, business process optimization and restructuring, risk-based risk management, "value stream"-based control activities, coordination mechanisms and synergistic effect-based information and communication systems, continuous monitoring of internal control and so on.Third, this paper discusses the measures how to improve the effectiveness of value chain management-based internal control. From the application point, this paper raises three measures:institutional building, organizational development, application of information technology. We expect to start business from these three dimensions to improve internal control effectiveness.This paper presents idea that, based on value chain management, internal control is to obtain a competitive advantage as a strategic goal, and value-oriented, built on top of information and value chain.This involves the views, including competitive advantage and competitive strategy, value management, synergy, information, risk and overall risk chain management, process management, business process restructuring.