Design And Study Of Internal Control System Of Small-sized Enterprise

Since1980s, the joint, mergers and acquisitions of enterprises boosted like storm in the world, which makes the international corporations, giant group got much development during these days. But the increasing complexity of enterprise management made these big companies be caught off guard, there occurred many various scandals, accounting fraud kinds things during these days. The public didn’t believe these big companies anymore. This had caused the extremely big direct losses and the long-term influence to the big enterprises. Under such background, as the main reason and the only solution way of this crisis, the internal control was highly recognized by these big companies. This makes the internal control system has been fully developed among the big companies and obtained very good effect. But, after long term investigation and study, we found that internal control system does not get the enough concerns among the small-sized enterprises in our country. This surely will cause a lot of problems on their current and future development.Since the reform and opening of our country, small-sized enterprises showed their advantages in the creative market by their flexibility. They played very important role in the national economy.The relevant data shows the small-sized enterprises occupied the absolute superiority in quantity, they achieve above90%of total number of enterprises in our country. As the small-sized company expands ceaselessly, it will be more and more important for national economy development. But it will be very difficult for small-sized company to persistently develop in future in front of their brilliant achievements. According to the record of government, the life circle of the small-sized enterprise in our country is much shorter compare to other developed countries. A typical example is the Zhe Jiang province closures in2011. In fact, not only in Zhe Jiang province but also many provinces in our country there were many small-size enterprises disappeared. The important reason of this phenomenon is just the backwardness of internal control among these small-sized enterprises. Even though there are some of the small-sized enterprise designed internal control system in order to strength the management, most of small-sized enterprises didn’t carry out these policies. And the worse thing is there are more small-sized enterprises have no internal control idea at all.So, we believe, the small-size enterprises’continuous development is very important for our country. And the most important thing is to highly acknowledge the importance of internal control, set up complete internal control system and implement it with high quality.This paper is divided into the following parts to study the design of internal control:The first chapter is mainly to introduce research background, purpose and meaning, to display main content and the frame of this paper, and to point out the main contribution and deficiencies.The second chapter is review of literature about internal control. The author firstly defined what internal control is and then introduced the basic theory of internal control, which are the System Theory, Control Theory and the Principal-agent Theory. Then the author reviews the foreign literature about internal control of small enterprises and domestic literature about law criterion on internal control.The third chapter focuses on the analysis about internal control of domestic small enterprises. The author firstly clarifies the identification criterion of small enterprise, whose feature is detailed in this chapter. Then the author paid more attention to the present status of domestic small business and got the conclusion that there is still much weakness on internal control. It is less respect on internal control and lack of sound set of principle that restrict the development of internal control. And then this chapter mainly to introduce the design of internal control system. The theoretical basis and the process of design are what make constitutes the system. The theoretical basis includes the COSO report and Inner Accountancy Controlling Norms:Basic Norms (on trial)".The design follows the process of defining the purpose、discerning the control point and working out measures for controlling.The fourth chapter introduces the general information about BF Company. The author focuses on the problems of production and management. Taking the five elements of internal control as the breakthrough point, the author analyzes the present status of BF Company.The fifth chapter tells the design of internal control for BF Company. It is daily supervision of budget execution that is emphasized in the design. The system of internal control assessment is also what the author paid much attention.Through the redesign of the system the author takes the following measures as the important factors of consideration for a better internal control.(1) Attach weight to the integration of elements on the internal controlThere is common view gotten from the scholars that five elements on internal control are not needed for the small company because of their size. But in the author’s opinion, five elements on internal control are vital for the development of small company. As a small company, it cannot give mature consideration to all aspects of five elements on internal control for a corporation. What is important for a small company is the organization setting、human resource management and corporate culture. The management of small company should also pay attention to the system of information communication and the system of internal control assessment.(2) Make clear the responsibility and strengthen the executionThe system cannot function properly if it cannot be executed by the worker. It is the execution that makes system work. When implementing the system, the work should know clearly about each step of internal control and strengthen supervision and management of the execution.(3) Internal control integrated into daily managementInternal control system is important part of enterprise management, it supervise and control the whole operation and management process, complement with the daily management work. So small-sized enterprise should integrate the internal control into the daily management, make them as whole.Certainly, due to the limitation of the time and the ability, and the domestic scholars is not very ripe for this issue, so there must be many imperfections in this paper need further research and discuss, such as:(1) In this paper, there still are many issues need further research, such as risk control problems of small-sized enterprise, this paper only discuss about the control process but can’t analyze the research methods.(2) Due to the size limitation, this paper can only redesign for the most important part of the internal control system:cash control and business control process.