Internal Control's Defect Information Disclosure Research

There is no doubt that good internal control for an irreplaceable roleto enhance the business management level and risk prevention capacity,and promote the sustainable development of enterprises. Since the basicnorms of internal control issued in 2008, internal control disclosure ofinformation to enter the mandatory information disclosure stage. And theInternal control application, evaluation and auditing guidelines providemore policy guidance for enterprises. In the same time, there are moreRequirements for internal control information disclosure. In particular,the disclosure of internal control weaknesses in the information putforward specific requirements. This paper studied the development of theinternal control information disclosure regime, and the content of internalcontrol deficiencies, the disclosure of Shanghai and Shenzhen listedcompanies on the Main Board of the internal control deficiencies in year2010 , and which factors determined the disclose.This paper reviews the internal control disclosure of informationregime development in China and the U.S. in details, but also gives abrief introduction of Japan, the UK and other country’s internal controlinformation disclosure regime.Then, this paper discussed the necessity for disclosure of internalcontrol and the factors affecting disclosure the concept of internal controldeficiencies. Then, this paper discussed the necessity for disclosure ofinternal control and disclosure of factors affecting the concept of internalcontrol deficiencies. This paper argues that internal control deficienciesshould be excluded from the inherent limitations of internal control andevaluation and identified internal control deficiencies will have practicalsignificance only in the case of the control objectives set reasonable;Internal control disclosure of information will enhance the effectivenessof the capital markets, reduce information asymmetries andprincipal-agent costs; characteristics of the influencing factors of internalcontrol information disclosure such as corporate governance, corporateoperations and external audit.Finally, collect the internal control self-evaluation reports in Shanghai and Shenzhen main board listed companies in 2010, andstatistical analysis disclosed internal control deficiencies, regressionanalysis of influencing factors on the disclosure of internal controldeficiencies. The study found that the Shanghai and Shenzhen main boardlisted companies disclosed internal control deficiencies information ismainly concentrated in the system improvement, system implementation,internal control, monitoring and evaluation as well as subsidiarymanagement and control; Internal control deficiencies of information ofthe manufacturing sector is less than the non-manufacturing sectors in thesubsidiary management and control, information systems andcommunication and system implementation, In the risk management andcontrol, internal control evaluation and supervision of the manufacturingsector is larger than the non-manufacturing; Central and western regionsfor the ratio of defect information disclosure in Internal control systemimprovement is larger than the eastern region, western region in the riskmanagement and internal control monitoring and evaluation, and internalcontrol awareness and professional quality, the proportion of defectivedisclosure are larger than the central and eastern region, the central regionhave a larger proportion of the corporate governance disclosure; Smallerand non-standard audit opinion and recently experienced merger andreorganization companies were issued more disclosure of internal controldeficiencies information.