Research On Implementation Of "Enterprise Internal Controlling Basic Norms"

Series of financial scandals, such as "Enron" and "WorldCom", revealed that the international capital market suffered a serious blow. The truth verified that the defect of internal control is the important reason which caused the enterprise management failure, taking a risk to deceive its investors and social publics. With the bandwagon sweeping across the country, Internal Control has become the hottest topic in the theory and practice field of public management, and many countries have established corresponding laws and regulations to provide Internal Control recommendations for enterprises. Our country kept in step with International Capital Market, establishing "Inner Accountancy Controlling Norms: Basic Norms (on trial)" and 17 standards of interior accounting control issued by. the State Ministry of Finance from the year of 2003.The Ministry of Finance in conjunetion with the Commission, the Audit Commission, the SASAC, China Banking Regulatory Commission, China Insurance Regulatory Commission and other departments issued a "basic norms of internal control" in June 2008.This norms will take effect in companies listed both abroad and domestic from 1 January 2011, then will have been in effect in Shanghai Stock Exchange and Shenzhen Stock Exchange since 1 January 2012; On this condition, these norms take effect in companies listed both small and medium-sized enterprises (SMEs) on board and carve out board market; At the meantime, medium-sized non-listed enterprises are encouraged to execute the norms in advance. Although according to the schedule formulated for the enterprises about Internal Control by the ministries and commissions enterprises don't have to carry on enforcement of "Basic Norms" immediately, more and more excellent companies voluntarily disclose some information. Actually, "Basic Norms" is in the stage of partial compulsory. Therefore, establishing and completing the Internal Control System following the request of "Basic Norms" and the schedule must be enforced. I was lucky that I participated in the project of "Evaluation and Construction of Internal Control Law System in Economic Development in Liaoning". In this paper, I studied present situation of Internal Control in a deep-going way and found that it was looking gloomy. What's more, the thing brooks no delay. This paper combined theory with practice, and firstly explained the background of research, and pointed out that the implementation of "Basic Norms" was a priority in current society. In addition, the integral design, important standpoints and research methods were also touched. Secondly, this paper used the method of literature research introducing the relevant contents of "Basic Norms" and gave a brief summary of the weak sense of Internal Control and impact factors. Thirdly, this paper designed questionnaires about the implementation of "Basic Norms" based on our national conditions, and identified respondents, made all-round investigation, collected data by means of the statistical method, and then researched the implementation of "Basic Norms" and analysis of Obstacles in the Implementation of by means of descriptive statistic analysis. Lastly, put forward measures to solve above-mentioned problems. The research of application of "Basic Norms" is not only a realistic requirement of " Basic Norms", but also an urgent requirement of social and economic development.Through the discussion about the implementation of "Basic Norms", hereinafter conclusion is obtained:On one hand, Enterprise Internal Control has six problems as follows:1. The phenomenon of honorary director or shadow director exists widely in enterprises. Policy should be formulated to limit the power of executive director and managers.2. The power of the board of Censors and Audit committee needs development. It is of vital importance to perfect the legislation of supervisor qualifications and enterprises should take over the fund while board of supervisors exercising the above-mentioned powers and functions.3. Assessment of the related risks procedures is not carried out well. The system of risk evaluation which is based on internal control should be established. To ensure on-time delivering the result of risk identification to decision-making sectors.4. The general information of Risk Early-warning isn't revealed well. A proper standard of Risk Early-warning must be established. Enterprises should take monitoring and precautionary measures.5. It is not enough for companies to attach weight to the professional morals of the accountant. New moral values, practice of corporate-culture training and successive education should be highlighted.6. Public tip-offs line doesn't give full scope to supervisory functions. Hidden perils of information communication exist in a few enterprises. Multi-faceted Information Network which covers a variety of communication channels should be established.On the other hand, it was also found that obstacles to the implementation of "Basic Norms" still existed:1. The implementation of "Basic Norms" needs transitional period.2. Relation taking place of system obstructed the implementation of "Basic Norms".3. Identification criterion of Internal Control is unclear.4. Enterprise managers have a weak sense of their internal control systems.5. Cost and benefit problems exist in the implementation of "Basic Norms".