The Research On The Effectiveness Of Internal Control In Chinese Small And Medium Enterprise

Small and medium enterprises(SMEs) have the dual advantage of labor and the market all long. It’s one of the driving forces which maintain rapid growth of the Asian economies. Developed countries take more and more attention on the important market. Internal control is the inherent requirements to establish a modern enterprise system. SMEs have to take internal control seriously like large-scale enterprises to survive and develop. It requires SMEs to establish and improve the internal control system, optimize the internal control environment, establish risk evaluation system, pay attention to the supervision of internal control. It is helpful to improve the competitiveness of SMEs, thereby contributing to sustained and healthy development of China’s economy.Professional company A as a typical service-oriented SMEs which have huge development potential. With the company’s business volume increased gradually, the scale expanded and the output value increased. But there is not a corresponding rapid increase in profitability. On the one hand, it is due to the pressure of increased labor costs, coupled with the constant macro-control of real estate market, the demands were suppressed. Architectural design industry also has a certain impact. In addition to these factors, company A should also rethink profoundly on the management of internal controls. As the self-regulation and self-restraint mechanisms, internal control is the key to success and the basis to face the crisis and not falling down.This paper insists the principle of integrating theory with practice. In accordance with the order of proposing question-analysising problem-solving problem gradually, the paper analysises the internal control effectiveness of company A with theory, The purpose of the author is to improve company A’s internal control with a sound framework.This paper is presented in five chapters, the main contents of each chapter are as follows: Chapter1Introduction. It introduces the research background, significance, internal control development process, and a brief introduction of the research methods, contribution and shortcomings of this paper.Chapter2Theory. First, explain the concept, objectives and effectiveness of internal control; then introduces the role of internal control; Go on with COSO internal control framework and our internal control standards to provide a theoretical basis for the subsequent chapters.Chapter3The analysis of internal control in SMEs. Propose the main problems by research on the status of internal control in SMEs. On this basis, find out the reasons.Chapter4The internal control situation and effectiveness in Company A. The paper introduces the internal control status of company A, and then propose the solutions to improve corporate governance environment and the effectiveness of internal control.Chapter5Conclusions.The main contribution of this paper is as follows:This paper is the work practical results of the author. The analysis and conclusions are derived from some practical and theoretical basis, I hope this can improve company A’s internal control and management, enable the company to guard against operational risks, improve efficiency, reduce costs, block up loopholes, thereby enhancing competitiveness in architectural design industry, as well as provide reference of the internal control construction for SMEs in China.