The Applied Research On Internal Control Evaluation Of Hydropower Development Projects Based On The ERM Framework

With the development of economy, environmental issues have become increasingly prominent, so the significance and the strategic of the new energy have elevated to a new height. To respond to the deterioration of climate, China has set a series of clear targets to reduce emission:the proportion of non-fossil fuels in primary energy consumption reaches to approximately15%in2020. Throughout China’s national conditions, hydropower will be bound not only as a significant strategic resource for a long period of time in the future, but also as the core of the energy consumption’s future development. In recent years, along with hydropower development promoting vigorously, the technology of exploitation and the mode of management gradually become mature, the comprehensive benefits become highlighted as well. However, certain problems have also been at heel, say, frequently-occurred secondary disasters such as dam flooding accident, drainage basin flooding accident go alarming. The reasons causing those problems are diverse, but the main one is that the internal controls of hydropower development are ineffective, slack and not in place.Referring to the development of theory about internal control from abroad, the "Enterprise Risk Management Integrated Framework"(ERM Framework), released in2004by the COSO Committee, is the latest achievement. It raises the internal control up to the level of comprehensive risk management. From the perspective of current situation of internal control in China, based on "Basic Norms of Internal Control" issued by the Ministry of Finance uniting other four commissions in June2008. stretched by "Supporting Guidelines of Internal Control" issued in2010, China’s normative system of internal control has gradually turned mature and perfect.In addition, in the modern enterprise internal control activities, risk management is becoming a key to determine the success or failure, so the focus of the internal control evaluation should be accordingly gradually transferred to the direction of risk-oriented. So the paper advocates learning from the latest ERM framework for the evaluation of internal control, and optimizing the evaluation index system on the basis of considering the characteristics of industry.The paper will start with the eight elements of ERM Framework, exploring the building of internal control evaluation index system about hydropower development projects, trying to compute the comprehensive evaluation value by using fuzzy comprehensive evaluation method, finally to search out the weaknesses of internal control and meanwhile to put forward some improvement measures.The paper will be divided into six parts:The first part, designs the idea and method and expectant contribution of research by introducing the social and theoretical backgrounds of the selected topic as well as summarizing the literatures at home and abroad.The second part, first introduces the basic theory of this study, then highlights the latest results of the internal control ERM Framework through painting the development of internal control theory at home and abroad, furthermore introduces the internal control evaluation theory, at last this chapter presents the full life-cycle theory according to the duration of hydropower development projects, at which point, the theory framework of the paper has been built up.The third part, based on the eight elements of the ERM framework, the paper establishes a comprehensive internal control evaluation index system by combining with the concept and characteristics of hydropower development projects and builds up the internal control evaluation modelThe forth part, case analysis. Design questionnaires based on the internal control evaluation index system, then through field visiting and questionnaires to obtain the data required by the model, to calculate and analyze the comprehensive evaluation score, and to make recommendations for improvement.The last part, summarizes the main points, as well as the innovations and.future research directions.The expectant contribution of this paper is:learning from the latest and most authoritative ERM framework, expanding COSO report from five elements to eight elements, aligning the life-cycle theory with the level indicator, in order to make the indicators designed more in line with the characteristics of hydropower development project management process; and also, using fuzzy comprehensive evaluation method to achieve fuzzy quantitative evaluation of internal control in order to make internal control evaluation of the hydropower development projects more targeted and intuitive.Nonetheless, the deficiency of this article might be the non-exhaustive survey indicators and human subjectivity which cannot be avoided. The paper only puts forward the initial ideas about the internal control evaluation application of hydropower development projects, it will strengthen the evaluation index system in the future, and improve the means of research to explore measures of reducing or avoiding subjective, which can make the results more in line with reality, meanwhile applying the valuable ideas to other industry of internal control evaluation research.