Analysis Of The Comprehensive Evaluation Of Internal Control In Chinese SME Board Listed Companies

Comprehensive evaluation of internal control is the comprehensive evaluation on effectiveness of internal controls related to financial reporting, operational efficiency and compliance by the enterprise managements. After promulgation of <Sarbanes-Oxley Act2002>, the reporting and evaluation of internal control has become a focus. Along with the establishment of Chinese Internal control guidelines, the reporting and evaluation of the internal control will be put into practice ultimately. However, the studies of Chinese Listed Companies in SME Board about internal control are not enough. In view of this, this article aims to learn the experience of U.S and British models about evaluation of internal control, give some suggestions to smooth development of internal control in Chinese Listed Companies in SME Board. The article consists of five parts.Chapter one illustrated the background of the research and summarized the international and domestic research situation. And the basic framework, writing ideas and research methods were also described in this part.In chapter two, Study the characteristics of the Listed Companies in SME Board, the COSO internal control of overall framework and Internal control evaluation guidelines issued in2010, and then explain comprehensive internal control and comprehensive evaluation of internal control. Defined the concept of a comprehensive internal control evaluation, determine the objectives, principles and scope of the analysis of the several methods of evaluation. Using principal-agent theory, asymmetric information theory and signal transmission theory to explain the author how to understand comprehensive evaluation of internal control.In chapter three, the problems that occurred in our country about comprehensive evaluation of internal control have been analyzed. The development of internal control started late in our country, there are still problems:lack of motivation about evaluation of internal control; blindly copying internal control evaluation guide lines; the content is not comprehensive; the method is unscientific and the format and content of reports is irregularity. At the same time the root causes of problems in evaluation of internal control have been analyzed from seven aspects which are insufficient understanding; lack of experience and guidance; the legal system is not fully established; the special circumstances about SME board listed companies; objectivity of the defect; the lack of demand of the public and inadequate levels of the enterprise’s evaluators. In chapter four it has introduced the latest developments in evaluation of internal control of the United States and Britain, and use the experience of them for reference.It has also described the SOX Act about assessment of internal control over financial reporting, then compared the difference between the U.S. and British and the risk management evaluation in the UK Turnbull Report. With the theoretical basis, some experiences are obtained from four aspects such as mandatory requirement; cost-effective; principles-based design and management perspective.Chapter five discussed on the specific problems of the evaluation of internal control in Listed Companies in SME Board, combining experiences from the United States and Britain, making some suggestions on how to carry out the comprehensive evaluation of internal control in Listed Companies in SME Board in China from several aspects which are improve the regulatory system; strengthen the guidance and theoretical studies; use risk-based evaluation methods; improve the business skills of evaluators and improve public awareness about comprehensive evaluation.The comprehensive evaluation of internal control is not only the Simple draw of the COSO report, but also a thought about practical situation in Chinese listed companies. Under Current Condition, Chinese capital market has several problems, the comprehensive evaluation of internal control can help securities regulator to supervise listed companies and protect investors. The research on internal control by China’s theory horizon has a long period, however, as a whole domestic research was mostly limited in the construction of the systems of internal control, the implementation of effective internal control study is less. Evaluation of internal control placed much focus on the needs of the business management, while the comprehensive evaluation of internal control is rarely seen. The research about evaluation of internal control usually focus on all capital market, individual research about the Listed Companies in SME Board is rarely seen. Promulgation of relevant laws and regulations has made comprehensive evaluation of internal control has become an important area. China has explored positively and usefully in this area. How to carry out the comprehensive evaluation of internal control is a worthy of in-depth study which is also theoretical and practical.