On Internal Control Of Enterprises

Utilizing internal control theories and five components in COSO internal control framework, including internal control environment, risk assessment, control activities, regulation, information and communication, and combined with the internal control system of China Telecom, this article discusses internal control in enterprises. The development of enterprises and the demand of capital market regulation pose an important and pressing problem for an enterprise to enhance the construction of internal control system. An internal control process comprises: to assess risks on the base of tasks and objectives needed to accomplish; to design an internal control system on the base of risk assessment; to implement the control system by relative sectors and personnel; to test and appraise the propriety and validity of internal control in line with standards; to analyze differences and the catalogue of exceptions; to adopt appropriate improvement measures. Beginning with internal control theories of enterprises, this article analyzes the current conditions of internal controls in telecommunication enterprises, points out the existent problems of internal control system in telecommunication enterprises and analyzes current control environment of enterprises. In the light of internal control theories, this article comes out with the principles, basic requirement, steps, methods and train of thought in the construction of internal control systems. The train of thought in the construction of internal control systems is: to stick to the idea of people oriented, to enhance corporate culture construction and to better internal control environment; to build and improve the structure of internal corporate management; to authorize appropriately; to divide duties; to test the correctness; to have clear contents of internal control and key contents; to optimize assessment target systems; and to strengthen internal supervision and control and strengthen the construction of internal audit systems. Also on how to guarantee the propriety of internal control, this article discusses the implementation and assessment of internal control and relative external audit. China Telecom is a corporation listed in the U.S. The appropriate internal control is key to the information disclosure of annual financial statements. So, based on the discussion of internal control theories, this article expounds the practice of the construction of internal control system in China Telecom. Following this, this article discusses the necessity of internal control and how to construct appropriate internal control systems and guarantee the propriety of internal control systems.