The Management Of Internal Control About Chinese Telecommunications Enterprises Listed In USA

After the issuance of The Sarbanes-Oxley Act of 2002 on 25th July,2002, Chinese telecommunication operators, such as China Telecom and China Mobile, whose stocks have been listed in the U. S.., started the construction of Internal Control System Related to Financial Reporting from the second half of 2003. For years, these companies formulated and implemented relevant internal control policies and measures based on the oversight rules of U.S. Securities and Exchange Commission (SEC) and the internal control framework of the Internal Control Framework of The Committee of Sponsoring Organizations of the National Commission of Fraudulent Financial Reporting (COSO).China enacted Enterprise Internal Control Basic Rules on 28th June,2008. On 26th April of the same year, Enterprise Internal Control Guidance was enacted accordingly. The construction of these internal control rules was the sign of the summit of importance of China's internal control. On the other hand, under the dual oversights of the U.S. and China, the telecommunication corporations listed in the U.S. stock market, required more detailed and higher standards for internal control management work.The stocks of telecommunication companies like China Telecom, China Mobile and China Unicom have been listed on the U. S, stock market since 1997. As these companies are the subsidiaries of State-owned Key Enterprises affiliated to the State Assets Administration Committee, these companies implemented their internal control governance reforms under the above-mentioned laws and regulations. However, as these companies are transformed from large Stated-owned Enterprises with plenty of historical issues and huge asset bases. It is difficult to complete the internal control governance work overnight.Through analysis, the author views the internal controls of these U.S. listed telecommunication companies still face the following problems: 1,The internal control environment is complicated. The understanding of management of internal control differs. Multi-layered dispersed group structure increases the degree of difficulty of internal control.2,The internal control evaluation system is incomplete. Huge asset base, complicated business type and staff with different competencies result in the difficulties in the establishment of the internal control evaluation standards.3,The formulation, implementation and eva I uat ion of the detailed internal control measures have not been in line with the enterprise actual business process and have not balanced with the risk, cost and efficiency.4,The construction of the internal information system is not completely advanced. The circulation of the internal information is not completely systematized with much information without effective system control and etc.The existence of the internal control deficiency results in certain risks faced to the companies. The Asian Financial Grisis in 1997, the Enron case at the beginning of the century and the 2008 f i nancia I crisis demand the U. S. listed telecommunication operators to implement risk controls fully and to reinforce the internal control governance work further. Facing the above internal control deficiencies, the author analyzed the U.S. and local relevant internal control laws and regulations. Consequently, the author suggests our U.S. listed telecommunication corporations reinforce and perfect enterprise internal control governance from the aspects as follows:1,cont inually improve internal control environment, improving the internal control awareness of both management and staff, establishing scientific and effective internal control group structure, stabling the specific internal control position, establishing scientific and highly effective internal control right and responsibility system and flat group structure, emphasizing the role of companies in the provincial level in the internal control work, implementing centralized and standardized management and etc. 2,Improve the effectiveness of the establishment and implementation of internal control, including proper authorizing, simplifying the process based on the risk level, focusing on the key control points, improving the efficiency of internal control evaluation and etc.3,Reinforcing centralized information system construction.4,Establishing internal control system based on all-rounded risk management and etc.