The Study On Internal Control Of Financing Activities In MCCN

MCCN is a joint venture between foreign partner who own 60% share of MCCN and Chinese partner. Foreign partner provides production technology and management support to MCCN. MCCN started its production officially in June 2003 with capacity of 8 million filter elements to abroad and domestics market.MCCN passed the certification of ISO/TS16949 with the foreign partner's advanced technology and know-how. Now annual turnover of MCCN are about RMB 130Million.Nevertheless, based on the rolling three year's planning, MCCN will increase about 40%-50% per year in the next two years. So MCCN will get RMB 300 million sales per year in three years.As the fast growth of MCCN, we need to enhance its basis for the future growth and overcome the weakness in the current management. In the meanwhile, MCCN need a large amount of money to support its growth. But the basic management in MCCN is not very strong to meet the needs of internal control especially in controlling of cost of financing and risk. In order to improve the management level of MCCN and reduce the operating risk, MCCN must enhance the internal control of financing activities as it operates.Strict internal control is not only to control the every process of daily management but also to control the operation and emphasize the key point of management with the overall management to find the important point and key process. Through the overall analysis of the factors and process of financing activities in MCCN, we try to find the key problems in key control points to define the real key problems then design the solution to the key problems with the COSO theory which will be benefit for MCCN to solve the current problem and summarize the solutions to the financing activities for MCCN.The solution is not only for MCCN but also for other similar FIE in China.Through the analysis of current situation of business in MCCN, we can find the several weak points and then implement the framework of COSO to discuss the comprehensive reason in current situation. To introduce the final solution for MCCN to the above-mentioned problems which are discussed through the key points control methods.This paper is aim to solve current problem in reality of MCCN based on internal control theory which are mainly for key internal control points for financing activities.The problem of financing activities will be solved through the analysis of financing activities in MCCN.Then provide the efficient methods consist of:Firstly, find the weak points of internal control of financing activities with the analysis of current situation in MCCN. In the intensive competitive market, to enhance the internal management level is an important way to keep the advantage of competition and keep sustainable growth in modern society.Secondly, define the target and principle of internal control for financing activities in MCCN to protect the assets and insurance the accuracy of accounting information and make sure that all business activities follow the laws Thirdly, improve the internal control of financing activities in solving the high risk and high cost in financing activities.The detailed structure of this paper includes:First chapter: the brief introduction of MCCN includes 1.The introduction of the background, industry, product line and organization of MCCN. 2. The current situation of MCCN in financing activities with its financing way for next step's discussion.Second chapter: the analysis of internal control of financing activities. After the analysis, we can expand our discussion for next chapter which includes 1.Current situation of internal control of financing activities 2.The study on the related theory of internal control of financing activities.3. The reasoning analysis of current problemThird chapter: define the detail target and principle of internal control of financing s which includes the clear targets to do the internal control for financing s in MCCN and then come to the discussion of four basic principles for internal control. Such as lawful, cost on return, overall and gradualism. The most important is focusing key points for internal control.Fourth chapter: the detail solution to the internal control of financing s in MCCN. Through the overall solution and come to the detail solutions which include position separation for the sensitive position, set up approval matrix and set up decision making procedure of financing activities.After the overall solution, we can come to the detail solution to the internal control of financing activities from bank which is solved by the two aspects: design new process to standardize the current business and combine the financing activities with budgeting. Even MCCN passed the ISO/TS 16949 certification and made a lot of procedure in daily management in MCCN. But there are no any procedures for the internal control of banking and to be even worse, the responsible person just deal with the business with their own experience without any official regulations of MCCN which result in some bad result. Therefore, we should reengineer the management process of the banking and then set up the key control points, control target and control measurement.As for the financing activities from commercial credit, the key solution to MCCN is to set up the policy of accounts payable, notes payable and pay on accounts. Consideration of current situation in north China, MCCN negotiate with local bank and treat the bank acceptance draft to local bank and separate into several small amount notes to suppliers which is very convenient.After the above-mentioned discussion, this paper completes the analysis of MCCN case and provides the detail methods for the internal control of financing activities which is also valuable for other similar enterprise in China.