Research On The Defects Of Internal Control Disclosure Based On The Case Study Of Shenzhen Seg Co., Ltd

There are always two sides of everything, so as economic development. While globalfinancial market benefits from economic development, the following negative effects meana great blow to economic market. As a company is getting larger, its structure tends to bemore complex. If it lets internal control go as it is, financial position will deteriorate.Gradually, operating and finance issues come to public view. Since the end of last century,the world has witnessed Enron, Worldcom and the other series of leading enterpriseseconomic scandals. The authorities realize that the important impact of the internal controlon operating. In July2002, the United States Congress issued "Sarbanes-Oxley Act" whichis specially designed to deal with the problem of internal control disclosure. This Actstipulates that listed companies must disclose internal control assessment report onmanagement in their periodical repots. Internal control guidelines of listed companies inSSE and SZSE stipulates that listed companies need to disclose internal controlself-assessment reports in their annual reports. Apart from that, companies need to hireaccounting firms to issue audit opinions on design of internal control and operating. Theprovisions of these regulations provide supporting systems for internal control of listedcompanies. They are also deemed as the standards of defects of internal control disclosure.But we have got to see that we are just on the starting period of internal control systems. Itis not an easy job for enterprises to transform from voluntary disclosure to compulsorydisclosure. It is of great significance to know the effects of internal control defectsdisclosure on identification, assessment and prevention of major risk of internal control.There are mainly methods used in this paper: case analysis, deductive method andsummary method. Through statistical analysis on defects of internal control disclosurebetween2011and2012, we conclude the current situation of internal control systemamong listed companies. The data of defects of internal control disclosure of SHENZHENSEG Co., Ltd between2011and2012is researched. At the end of this paper, we concludethat there mainly four feasible suggestions that can improve defects of internal control.This paper provides meaningful information to SSE A-share listed companies as well as interested stakeholders.