The Research Of Internal Control Elements’ Influence On Accounting Standards Implementation Effect

Based on this background that the accounting standards tend to be internationalized,the national standard setters are in reference to International Financial Reporting Standards(IFRS), are based on their specific conditions to improve their own accounting standards,realize their own accounting standards internationalization. Our country is also in line withthe international accounting standards actively, makes every effort to achieve theinternational convergence of accounting standards for business enterprises in our country.China’s Ministry of Finance released in April2010“The road map Chinese AccountingStandards are convergent with International Financial Reporting Standards". It marked ourcountry formally established the united front of international convergence of accountingstandards for enterprises. The establishment of global united high quality accountingstandards has become the inevitable development trend. At the beginning of the21stcentury, however, many of the high quality accounting standards countries successivelyoccur a series of financial fraud, financial scandal. These events show that only to establishhigh-quality accounting standards is not enough. Quality of accounting standards does notdetermine the effect of accounting standards implementation. Any of the formulatedaccounting standards must go through the effective implementation to achieve the goal ofaccounting standards. The implementation of accounting standards is more important thanthe establishment of the accounting standards itself. So the problem of accounting standardsimplementation should raise the attention of standards setters, standards practitioners andstakeholders. However, many existing research around the accounting standards itself,accounting standards practitioners, execution environments and so on. It is the lack ofaccounting standards implementation research which is from the Angle of enterpriseinternal control. Therefore, this article is based on researching internal control elements’influence on accounting standards in different parts of our country.This article adopts the combining of normative research method and empiricalresearch method. On the basis of expounding the basic theory about internal control andaccounting standards implementation, this article does the empirical research.And it selects thefive elements of internal control environment, Internal Environment Quality (IEQ), RiskAssessment Level (RAL), Control Activities Quality (CAQ), Information CommunicationLevel (ICL) and Internal Supervision Level (ISL) as explained variable. At the same time, itselects the accounting information quality as the dependent variable, the earning quality andthe quality of information disclosure, respectively as two representative variable of theaccounting standards implementation effect. The implementation of accounting standardson an enterprise directly reflected on the information disclosure behavior. The informationdisclosure behavior is quantified eventually to the quality of the accounting information, so this article selects the earning quality and quality of information disclosure as the twodependent variables. Respectively, two basic models are established. For different basicmodel, it selects the different sample, adopted different research methods, research therelationship between the five elements of internal control and the accounting standardsimplementation effect.First, for the first basic model–the earning quality, this article selects2010-2012,Shenzhen motherboard a-share3003samples, uses the cross-sectional modified Jonesmodel (1995) to calculate the quantitative indicator of the degree of earnings management-Discretionary Accruals(DAC),as the measure of the earning quality, uses linear regressionmethod, draws the conclusion: the better quality of internal environmental, the higher levelof risk assessment, the better quality of control activities, the higher level of informationcommunication, the higher level of internal supervision, the higher earnings quality, thebetter effect of accounting standards implementation. Secondly, for the second model-thequality of information disclosure, this article selects again2010-2012, Shenzhenmotherboard a-share1289samples, selects the information disclosure rating fromInformation disclosure plate as dependent variable, uses multivariate linear regressionmethod and draws the same conclusion. The consistency Conclusion of the two models, toa certain extent, realizes the reliability and robustness of the empirical results.Through the empirical research, the contribution of article is that the researching viewof it is from external mechanism to internal mechanism. This paper goes into internalcontrol activities of the enterprises, researches the internal control elements’ influence onaccounting standards implementation effect. Meanwhile, this paper is based on its nationalconditions, research the different areas and different domestic enterprises’ internalenvironment quality, risk assessment level, control activities quality, informationcommunication level, internal supervision level five elements’ the relationship withaccounting standards implementation effect. To a certain degree, it makes a furtherexploration to the existing research, better guides domestic regional accounting standardsimplementation, strengthens the construction and execution of enterprise internal controlmechanism, promotes the coordinated development between enterprise and government.