Study On Construction Accounts Receivable Internal Controls

Due to the American subprime mortgage crisis and the European debt crisis, theincrease of the world economy entered the downturn. However, Chinese governmentwith a positive attitude put forward a rescue plan about4trillion Yuan. This act helpedthat not only Chinese economy was out of crisis, but also that GDP maintained8percent growth rate for3consecutive years. In addition, rapid economic developmentof China contributed to promote the world economy. A great part of the4trillionrescue plan focused on urban development and the construction of infrastructure.Therefore, Chinese urban construction had entered a high-speed developing period. Inthe meanwhile, the investment of engineering project displayed a gradually increasetrend yearly so that the construction enterprises had become one of the significantpillar industries in our national economy growth. Nevertheless, with the end ofstimulus funding project, the continuation of tight credit policies in China and theCosts Rise of construction enterprises after2011, which leaded to a dilemma thatmany small and medium construction enterprises faced risks of closure.In2006, SASAC issued the “Central enterprises comprehensive riskmanagement guidelines”. In2008and2010, Ministry of Finance and other CentralMinistries jointly issued the “Basic Norms of Internal Control” and “Supportingguidelines for enterprise internal control [18]”. These decrees formed two regulationssystem for Corporate Risk Prevention, the former focus on thoughts, methods andprocedure of enterprise risk management, the latter focus on internal control andconstruction of management system. In2012, SASAC proposed “Guidance on thecentral enterprises to carry out management promotion activities”, the theme of it is“The solid this strong base, control risk, transformation and upgrade, maintenance andappreciation of value, make enterprises stronger and finer and scientificdevelopment”. Under this economic and practical background, this essay summarizes the basictheories of receivable accounts and internal control primarily. Then, taking S companyfor example, the essay analyses the status of their internal control for accountsreceivable and existing problems. Specifically, the risk points what the S company’sinternal control for accounts receivable should focus on, are analyzed in five stages：the contract signing stage, the preliminary planning stage, the construction stage, thecompletion settlement stage and the project closure stage. Finally, it proposes thesolutions for the existing problems in S company’s internal control for accountsreceivable.