Study On Internal Control Of Steel Trade Practice

Steel trading company is the key connection between steel manufacturers and end users. With the fast capacity expansion of local steel manufacturers since2000, the steel trading industry also has grown rapidly with huge transaction volume. But the supply exceeded the demand since2011. Steel traders are going through a tough time with business decline, negative profit and serious credit crisis. Many steel trading companies went to bankruptcy across the country, and trend is still going worse. Now is the transforming and upgrading time for Chinese economy. The trading company’s position in the steel supply chain is weaker, which is under the condition of fierce competition and downturn in external economy. More hidden risk before will pop up soon. Since steel trading is a capital intensive industry, any minor mistakes in operation will bring serious consequences. Therefore, for the surviving steel trading companies, how to construct a effective internal control system? A good internal control system will support the daily operation, and also it is the key factor for the survival during this industry crisis. The purpose of the thesis is to apply the theory of internal control to the operation management of the steel trading company. It will be very realistic to find out how to choose a reasonable, effective internal control system.This thesis is based on the case study method which takes a state-owned steel trading company (hereinafter called L Company) as the objective. It starts from the theories of internal control by definition and development. Based on the analysis of steel trading industry’s characteristics and crisis, it expounded the current internal control conditions in L Company. With the combination of internal control theories and practice of L Company’s internal control system improvement, the internal workflow was groomed, the prqblems in the process were identified, and the improved internal control system was expounded. This thesis has provided a good case for internal control theory, and also can be used as reference for similar companies.