A Study In Internal Control And Its Evaluation Of Listed Real Estate Companies

The Ministry of Finance, the Securities and Futures Commission, the AuditCommission, the Banking Regulatory Commission, Insurance RegulatoryCommission jointly published the “Supporting guidelines for internal controlsupporting” on April26,2010. It totally included three parts, namely “the EnterpriseInternal Control Guidelines,"“the Enterprise Internal Control Assessment Guide,"Corporate Internal Control Audit Guidelines”. It also gave the listed companies theclear time schedule to implement internal control. First to implement in the domesticand foreign-listed company since January1,2011, then to extend to the ShanghaiStock Exchange, the Shenzhen Stock Exchange Main Board-listed companyimplemented since January1,2012.Listed companies need to standardize and improve the enterprise’s internalcontrol as soon as possible, to ensure the integrity and reasonable of the company’sinternal control system and the effectiveness of the internal control implementation.It’s not only to meet the compliance requirement for listed companies in theconstruction of internal control from five ministries, but also to meet the inherentobjective requirements that to strengthen the scientific management of enterprises,to improve the level of company management and the ability to prevent the risk, topromote the objective needs of the company’s strategic development goals andsustainable development in the conditions of market economy.The main works in this paper are as follows:First, to make the full review of internal control from the papers of domesticand foreign. Based on this, it detailed the five aspects of the framework establishedin the internal control system: control environment, risk management, informationand communication management, control activities, internal control. It introducedthe establishment and calculation method of internal control evaluation system, andthe standard to evaluate the internal control level.Second, to make the large-scale real estate listing company A as an example.Firstly, it introduced the basic situation of the establishment for its internal controlsystem. It focused on one of the five constitute elements in internal controlsystem---internal environment and analyzed major work, the responsible department,risk control points and the mail control activities for the various sub-processes. Secondly, it described the internal control evaluation procedures for Company A,assessed its internal environmental levels, and proposed the improvement programbased on evaluation results. Finally, it summarized the construction of internalcontrol system for Company A and puts forward improvement measures.Third, it proposed the weaknesses of the internal control system of listedcompanies based on the research, such as management override, collusion, humanerror or omission, the imbalance between costs and benefits, and other risk factorsthat can not be identified yet. The paper made some suggestions to improve theinternal control system based on the results.