Study On The Inner-control System In Chinese Enterprises

In recent years, the scandals concerning the internationally famous enterprises have been revealed one after another; such as Enron company, Worldcom company and the bankruptcy of French Industrial Bank etc. And these have activated a series of reactions and caused serious consequences. Our Chinese enterprises also have paid great cost in the inner-control and risk management. The bankruptcy of China National Aviation Fuel Holding Co. and the false loans and missing of large amount of funds in China Bank, Agriculture Bank, Industrial Bank and Pudong Development bank have shown the same problem.The exact cause is the loose control and weaknesses in the inner-control, which prevents the company from finding out the problem at early time and controlling the running risks of the companies. Then the failure of operation finally resulted in their taking the risk to fool the public and the investors.After we reflect on these failures and misdoings, we come to realize the fact of " stronger with control, weak if out of control and disorder if without control.'" Only the proper control can make a company stand long and keep moving forward. So, establishing and perfecting the inner-control system within enterprises has become one of the most frequently mentioned topic in today's circles of theories and practices.With the development of market economy and the establishment of modern enterprise system the inner-control attracts the attention from people .Establishing a perfect inner-control system is considered to be an effective tool to strengthen the economic management, enhance profits, safeguard a trusted financial information and protect the capital. The research of inner-control abroad began in the 1930s, and a comparatively perfect system called COSO. Many countries strengthen the inner-control through legal procedures and the inner-control has become a pass for enterprises entering the capital market.While in China, the carrying out of inner-control began from the later time of 1990s, so it is still at the beginning stage. The definition and contents of it has been changed a lot and some rules and stipulations appear in the legal paper but none is like the COSO which is widely accepted and much perfect.There is a big gap between us and developed countries like America in the aspects of setting the rules and practicing level of inner-control. The development of the enterprises hit the neck of the bottle. In recent years, there still exist the problems of disunity of various departments in a company, imperfect supervising system, weak supervising and overlooking of the operating purposes of companies due to the ideology, basic conditions and limitations in cultural outlook. And the lack of qualified employees also hinders the effective control. Chinese enterprises should further the understanding of inner-control and make it a major problem in the development of the enterprises. Each supervisor section should pay more attention to the inner-control and strengthen the supervising measures which refer to improve supervising environment, perfect the legal person governing structure, set risk awareness, whole staff risk management, better risk control etc.In the environment of tense market competition reflecting the inner-control system should be put at the first place. In order to adjust to the new economic environment and make more profits for the company the inner-control should function to its full extent hence the continuous bettering and development of inner-control system. Research into the establishment of inner-control system for our enterprises is of great significance to the sustained development of the enterprises and the economic prosperity in China.The problem is that, inner-control is not a novel thing to the administrators in most enterprises, but they are at a loss when they proceed the inner-control. To some extent, the major problem now is not only to spread the knowledge concerning the inner-control ,strengthen the inner-control understanding but how to establish and carry it out in a real sense. How to establish a inner-control system which suits China is an urgent problem.Setting an inner-control system is a complex project, any enterprise or company, only upon the establishment of a strict and standard inner-control system and inter-restricted among responsibilities, can it prevent the false accounts from happening. And only through scientific management can the profits be enhanced.For this reason, this paper deals with the problems and methods of problems solving. The general research sequence of this paper is :theoretical basis---putting forward problems---analyzing problems---solving problems. The research methods are case study and generalization. First, it analyzes the background and meaningfulness of this research as well as the present situations home and abroad. Second, it gives the definition of inner-control , classification and the development. The relation between the major components of inner-control system and relevance is illustrated. What follows is the detailed analysis of present situations of inner-control within Chinese enterprises about their problems and ways for improvement. And last, this paper puts its focus on the establishing of inner-control system of our country including its importance, general principles, and framework analysis. Through case study, the problems in our enterprises are analyzed and measures for solving the problems are provided.The major research method of this paper is case study. Through analyzing the workflow, the key points and control methods in work circulation the establishment of inner-control system. The standard research method mainly answers the question" what should be done?" this paper not only states the problems and causes of our inner-control system but how to take measures to solve the problem. This paper abides by the principle of combining theory and practice together and suggests well how to establish our own inner-control system with an aim to bring some weight and advice to our enterprises.