Research On Earnings Management And Internal Control Self-assessment Of Government Subsidy Of Listed Companies

Government subsidy is a common method to deploy resources, either in China or abroad. The main purpose is to encourage or support the development of particular industry, area and realms. In the old rule of 2001, subsidy income is included in current profits and losses. Many listed companies use government subsidy to improve the profit and prettify report forms and this makes the quality of financial reports debased. One of purpose of Basis Norm of Enterprise Internal Control is to guarantee the integrity of financial report and related information. The appearance of Government Subsidy Rule in 2006 weakens the functions of using the government subsidy as methods of earnings management to a certain degree, but there's still some room for earnings management and the provision of government subsidy didn't reach the relevant goals. The failure and morbidity of internal control system in the listed companies is an important reason. Internal control is the basis for normal production and operation activities of enterprises and plays an important role in the management of enterprise and reliability of accountant information. Therefore, it is meaningful for accounting theory and practice to implement the internal control self-assessment of government subsidy. It can help the authority find the internal control deficiencies and improve the internal control to reach the management objectives.Firstly, the article analyzed the changes of Government Subsidy Rule, the purpose of government subsidy and the related management, then used the data of listed companies with government subsidy in 2009 to analyze if the government subsidy reached the primary goals and put forward the main problems occurred during the implementing of government subsidy. Secondly, combing the problems, the analyzed the purpose of internal control self-assessment for government subsidy and put forward the frame and content of internal control self-assessment for government subsidy. Thirdly, using the data in 2009 government subsidy listed companies of Shanghai Stock, the paper analyzed the influence of internal control self-assessment for achieving internal control targets. Finally, based on the research, the paper educes the conclusion and put forward some theoretical suggestions to consummate internal control self-assessment for government subsidy in Chinese listed companies.