The Relationship Between Earnings Management And Quality Of Internal Control Based On Financial Assets

On February 15.2006, the Ministry of Finance issued the new set of accounting standards, Compared with the accounting system, the criteria for classification,recognition,measurement and impairment of financial assets change so many and has brought great influence on enterprises. As the same time this creates new internal control risk points, to some extent expend the means of earnings management. On April 26,2010, the Ministry of Finance,CSRC,audit office and CBRC issued《The enterprise internal control supporting guidelines》together, providing guidance on how to sound internal control construction.First, analyzes the major changes points in the new accounting standard about financial assets, and explore the earnings management tool on financial asset.Secondly, the paper analyzes the new internal risk existing in financial assets after revision of accounting criterion. Then establish internal control evaluation system of financial assets, according to the method and principle of internal control self assessment.Thirdly, analyze the relationship between the space of earnings management and internal control of financial assets using empirical method combining with regulating financial assets, relation between internal control quality first, using statistical and normative research methods. Due to the financial industry contains large financial assets and has flexible operating mode, this industry shows some special character. We eliminate the sample belong to the financial industry, then validate the linear relationship between internal control quality and earnings management level of financial assets using empirical research method based on the listed company experience data in 2009.Finally, provide some suggestions according to the existing problems finding in the listed companies about internal control system construction, such as refining and specifying accounting standards, perfect company regime related to the internal control system, clear internal control responsibility, strength the supervision and inspection mechanism, improve corporate governance structure etc.