Internal Control Environment And The Cultivation Of A Culture Of Compliance

On June 23,2008, five Ministries and Commissions including the Ministry of Finance, China Securities Regulatory Commission, National Audit Office, China Banking Regulatory Commission and China Insurance Regulatory Commission jointly distributed the Basic Standard for Enterprise Internal Control. On April 26,2010, the Basic Standard for Enterprise Internal Control Guidelines distributed. Since then, China had formed its own internal control system and been the third country in the world of require its enterprises implying comprehensive internal control, which follows the United States and Japan. However, financial fraud, cheating and dubbed events are still frequently occurring, the practical implement status are unsatisfied:according to the statistics, our enterprises suffer losses from lacking credit up to 600 billion yuan every year, including direct and indirect losses. Obviously, adjustments on relevant regulations and structures are not enough, which can't cover the reality of weak internal environment and lack of compliance culture. On the one hand, it will cause many enterprises care about the bottom line of legal, but not bottom lines of industry and moral; On the other hand, it will also cause social credit crisis. In a word, standard completion is only the first step, good basic internal environment and the popularity with compliance culture would finally guarantee the internal control system to be effective, which would also prevent moral events in listed companies and ensure accounting information quality. China is in the transitional age, rapidly economic development with moral deterioration have made the situation of internal control more seriously. Whether the Basic Standard for Enterprise Internal Control is well complied directly relates to the developing quality of economic entity. We must catch present opportunity of policy formulating, rationalizing the relation between the supervision of departments and enterprise management, accelerating modern corporate governance structure improvement, completing the internal control system, accelerating innovation on theory and practice, combining with the reality of our country through advanced information technology and analysis methods, and eventually putting internal control into routine and at last forming a good compliance culture, which would reduce risks and make profits continuously. Meanwhile, the financial crisis aroused international attention to compliance culture. The newly published Basel AgreementⅢexplicitly requested enterprises to draw up a number of special funds for guarding against moral hazard. All in all, constructing an internal control system for the purpose of cultivating an compliance culture will not only make it in line with the international convergence, but also will consist to that in the future evolution.In view of above, this thesis focuses on the existing problems of internal environment and compliance culture of our enterprises, comparing situation between home and abroad in order to putting forward specific ideas: First, this thesis discusses the relationship between internal environment and compliance culture, emphatically analyses the influence between each other; Then, through the history of internal control and compliance culture at overseas and our country, it sums up the main exposed problems in the process of completing internal environment and cultivating compliance culture,such as defections on laws and regulations, the excessive concentrate mode of power control, unclear property problems and problems brought by marketing process such as lack of credit; Finally, it proposes specific ideas en internal environment and compliance culture. first is to speed up legislation so as to provide legal support, second is to strengthen compl iance culture guidance through establish effective supervision system, third is to reduce illegal behavior by optimizing the manage process, forth is to establish long-effect compliance culture mechanism through human resource policies and train the financial staff.