Establish Internal Control System Based On Corporate Governance

In recent years, with the development of the securities market, the illegal activities of the domestic public company presented the increasingly fierce potential, and the scandal was also more and more under the benefit actuation. Through the investigation we found that there are significant deficiency and material weakness in the internal control system of most of companies. Some companies' internal control system were perfect, but their operation were invalid. A serial of cases shown that the corporate governance could not effectively constrained internal control such as the bankruptcy of the Enron, financial scandal of the WorldCom company, the financial fraud of the Hubei LanTian and GuangXia Industry, as well as the foreign exchange contract debt of Citic Pacific Ltd.The article discusses that how to establish the internal control system based on the corporate governance. Firstly, the article describes the theories of the corporate governance and the internal control and their relationship. They have a kind of relationship that complement each other and promote mutually. They link mutually on the objection, their controls means are alike, their contents are relevant, and their control mean bodies are intersection. On one hand, the corporate governance will contribute to establish internal control system; on another hand, if the internal control system was design reasonably and operate effectively, it would be helpful to perfect corporate governance structure and establish modern business enterprise system. Secondly, it analyzes the present situation of the domestic public companies' corporate governance and the establishment and perfection of the internal control system. In the treatment of the corporate governance, the status of the corporate governance is not optimistic because of the present ownership structure. The shareholders' general function can't be properly; The system of voting executive is imperfect; there is not strict relationship among the governances; The effective incentive system is lack. In the internal control sides, the internal control environment is imperfect; the awareness of risk management is poor; the control measures are limited; the system of monitor is ineffective. On this basis, I researched for the inefficient reason of the internal control practice.Thirdly, on the foundation of the theories and the present status, taking the YXHX Corporation internal control's construction as the example, the article provides the way to establish internal control system and the measure of operation effectively based on the corporate governance. The way include that the selection of objectives, principle, key element, the format of the design. The establishment should include the two levels, one is corporate level, another is business levels. Finally, in order to ensure effective operation of the internal control system, we must have the specialized agencies to inspect and monitor, and the system of incentive.Through designing the idea to establish the internal control system based on the corporate governance, the article tries to achieve the objection that improving the Business process, strengthening the internal control, raising the company operation risk awareness, improving the corporate governance structure, perfecting the quality of the company's practice, and provided a alternative for the public companies which need to establish internal control system.