Construction Of Internal Control System Inside The Chain Enterprises

Internal control system is an important means of modern enterprises management. Internal control of enterprises is a series of policies and procedures used to guarantee the effective ongoing of transactions; safely guard the assets; prevent, discover and correct the misstatement and possible fraud. Now, internal control of our country is not perfect. In an era of knowledge economy, especially after our country joining WTO, the retail industry of our country is facing the challenges of foreign corporations. In addition, the imperfect operation of the enterprises heavies the pressures and the crisis faced. Therefore, if an enterprise wants to survive, compete, develop in such an economic situation, it must improve its own competitive capability. So setting up and improving the internal control system is the key point to improve enterprise's economic benefits and its own competitive capability. The guidance of internal control for the domestic listed company will be implemented soon. Whether the internal control is perfect or not has already become the important factor which influences enterprise's competitiveness. Now the capability of the whole domestic retail business is not good enough; especially when great disparity exists with foreign countries in the information system management. So how to use domestic riper experience of internal control to improve it and how to manage the information system have far-reaching meanings to promote the fast development of the retail business of our country. This article adopts the form of the survey report together with the theory. The author analyzed a large-scale chains store for home appliance, according to the five internal control elements of the COSO internal control report. They are: environment control, risk assessment, control of activity, information sharing, supervising. Based on this analysis, the author made some recommendations to improve internal control of the large-scale retailer.This author discussed the way to design the procedures and methods to construct internal control of the retailer, through the research on the classical cases. These are five parts in this article. Part one is introduction. Part two is a brief retrospect of internal control development. Part three is the Analysis of Internal Control's Current Conditions inside Domestic Retail Enterprises. Part four is the case and its analysis of the chain store's background. Brief introduction to this large-scale chain store of home appliances was given at first, then detailed analysis on the internal control cases was carried out in accordance with the benchmark and measurement of COSO report. Part five is the issue identification, including how to improve the internal control, and how to find out the effective experiences of internal control construction. Regarding to the analysis, five recommendations were made as follows: perfect the organizational structure, strengthen retailer's risk management, strengthen the internal audit and its performance, set up evaluatation system for internal control, and set up high-efficient information system.This article has more function of application, And it has some reference value. It has important significance in perfecting internal control system inside the retail enterprise.Chapter 1 IntroductionThe retail business of our country has been opened to the foreign capitals in an all-round way since 2004. Facing the new competition, It needs to change the idea of managing urgently, strengthen the consciousness of controlling, and improve the management capacity. There are still relatively few relevant discussions in practice of theory at present. It is necessary to combine the theory and practice. This article exactly proceeds from this thinking. According to the standard and assessment methods of American COSO internal control report, The author analyzed the internal control case in a domestic large-scale electrical home appliance of chain store. And then the author put forward some thoughts about internal control inside the chain enterprises of our country.Chapter 2: A Brief Retrospect of Internal Control DevelopmentThe development of the internal control theory has passed through a long period. It can roughly be divided into several different stages: internal curb, internal control system, internal control structure, internal control whole frame and risk management framework. In 1992, U.S.A. COSO committee proposed the report《Internal Control—Integrated Framework》, supplemented in 1994. Internal control guidance was proposed by Shanghai Stock Exchange in 2006. Chapter 3:Analysis of Internal Control's Current Conditions in Domestic Retail EnterprisesAt present, retail businesses generally have the risk between internal control and far-speed expanding, especially in the internal control area. Internal control is so weak for most domestic medium and small retailers. Following several characteristic can be identified: (1) company's administration structure is not perfect; (2) The basic business procedure designed is not standard; (3) the flexibility and control are not well balanced;(4) The staff's behavior is unregulated; (5).the internal control has not gain enough attention; (6) Internal control is weak; (7) The function of inside audits fails to play effectively; (8) The information system is not perfect.Chapter 4:The Home Appliances Chain Store's Background AnalysisAfter China joining WTO, the main trend of the chain store industry will be globalization and internationalization. Through a general survey of a great deal of chains, management has always been the bottleneck of its development. And management can't work well without a perfect internal control system. So this article combined the working practice to the control system, analyzed a large-scale home appliances of chain stores according to the five key internal control elements in COSO report and recommended the ripe aspects in internal control development. The company is a nationwide home appliance retailing chains in managing all kinds of household appliances. It expands rapidly. The number of shop has exceeded 800. This article analyzed the internal control within COSO five aspects. control environment includes the aspects of the enterprise's management theory, the construction of the corporate culture, the organization and management organization, authorization and objectection plan system , and personnel management. The risk assessment includes object establishing, risk discerning, setting up the basic procedure of risk management, and managing after the environment changes. The control activity includes management mode, management in the sales field , purchasing new mode, management to sell and enter , controlling fund turnover rate , and setting up strong logistics providing and delivering system. The information and communication includes brief introduction of ERP system, setting up the supplying chain administrative system, setting up network security system, and establishing the information management system; Monitoring includes internal control system inside enterprises characteristics and supervising system characteristic inside enterprises.Chapter 5:Case Recommendations: How to Improve the Internal ControlThrough the analysis of case , five suggestions were put forward to perfect internal control management: (1)it is necessary to strengthen the company's management;(2) The internal control and the internal auditing should be strengthened to prevent the commerce bribing;(3) the mechanism of risk management should be set up to control risks of enterprises' running ,funding, financial affairs, management, etc.;(4)the evaluating system for internal control should be established(;5) high-efficient information system should be set up so as to manage the uniform information platform of enterprises, quick the system of enterprise's information reaction and modernize business administration.