The Study Of Improving K Corporation Internal Control System Based On ERM Framework

The concept of internal control is regarded as an effective measure to enterprises’ operation safety. The theory of internal control has been improving to meet the request of corporation development. The COSO issued the report of COSO-IC in1992which was the first authoritative internal control report in the word. The report described there goals and five elements and indicated a new step of internal control study. Then academic organizations of many countries were busy updating internal control report such as Canada’s Control Guidance and Britain’s Turnbull Guidance Report. Although their expressions of internal control are different, they approve that internal control play a key role in business management.Enterprises are faced more and more external risks under economic globalization. The descriptions of risk elements in COSO-IC have not been up to date. People challenge the truth and reliability of internal control report due to the financial fraud scandal of Enron, WorldCom and Xerox. And the theorists began to discuss the necessity of updating the report. The Sarbanes-Oxley Act of2002is not specialized in internal control, but the regulation about financial report’s truth provides a reference. COSO issued Enterprise Risk Management-Integrated Framework which is called ERM for short in Sep2004. The new report sets8internal control elements and many expressions of them. EMR proposes risk management concept and it has the strictest and most complete descriptions of internal control which is conductive to theory study.China’s enterprises face fierce global competitions after reform and opening up. So it is necessary for enterprises’healthy development to strengthen internal control and prevent risks. The event of CAO in2004urged people to consider the deficiencies and drawbacks of internal control. China’s enterprises realize that it’s time to formulate internal control guidance which meets China’s conditions. Enterprises Internal Control Basic Norms-2008and Internal Control Basic Supporting Guidance-2010represent that China’s internal control system has been established basically.The essay uses K Corporation as a case to analyze. Firstly, it introduces the development process of internal control concept. Then, it emphases the structure, elements and goals of Internal Control-Integrated Framework and ERM. This defines that risk management includes internal control. The thinking of the study is finding problems, analyzing problems and solving problems and focuses on control environment, risk management and supervision. In the first, the essay explains the current situation and problems of K Corporation internal control. And then, it puts forward improving principles and specific measures according to ERM. From the view of business management, the author makes improving suggestions and hopes to provide a reference for other corporations.