Research On Internal Control Of The Rent-Seeking Behaviors In State-Owned Enterprises’ Procurement Business

The effective management of rent-seeking is a critical problem that not only is the focus of theChinese government and the community, but also the difficulties faced by other countries in theworld. In China, state-owned enterprises are the core of the national economy. The government isentrusted by all the people to manage the country’s economic affairs and specifically, COMSP isentrusted by the government to manage state-owned enterprises. The operating condition ofstate-owned enterprises has close connections to the national life and the degree of public trust ingovernment. As a high-incidence area of rent-seeking activities of state-owned enterprises,procurement will naturally become the core of the senior corporate management. Researching theunderlying causes and coping strategies of the rent-seeking behaviors during the procurement ofstate-owned enterprises have important theoretical value and profound practical significance. Basedon this, the author conducted a systematic analysis and in-depth study.This paper mainly adopts literature review and case analysis method. Researched on China’sstate-owned enterprises procurement business and based on rent-seeking activities in procurementoperations, with the basic theory of COSO internal control as instruction, the paper raise effectiveinternal control strategy for inhibiting procurement rent-seeking from control environment, riskassessment, control activities, information and communication, and inner supervision. Aim at theinvalid control environment about rent-seeking, the paper points that it should construct corporateexecutives, the staff integrity and ethics, the allotment of power and responsibility, and humanresource policy. Aim at the widespread lack of risk evaluates, enterprise should highly value riskmanagement and improve the ability to prevent and respond to risk. Aim at ineffectiveimplementation of control activities, the paper points out that enterprises should strengthen thebudget management, authorization, approval, separation of incompatible duties, suppliermanagement, in order to ensure the effective operation. Aim at poor communication, the paperproposes that enterprises should promote the construction of information systems and enhanceinformation interactions. Enterprises should establish the daily continuous oversight andindependent reporting mechanism for oversight failure to strengthen the procurement internaloversight. Continuing to strengthen and promote the building of procurement internal control is afundamental approach to govern state-owned enterprises procurement rent-seeking.