The Research Of Internal Control On Purchase And Payment Cycle For Continental Co., Ltd.

How to improve procurement efficiency, saving the purchasing cost, optimizingpurchasing process is always worth thinking and research. The purchasing andpayment business face new problems and challenges continuously as the socialenvironment, economic environment and business situation continuouslydevelopment and change. This article uses the theory of internal control, consideringthe actual situation of Continental, through analysis the weakness existing in theinternal control of the Purchase and Payment cycle, and is helpful for the Company toachieve the strategic objectives and improve the business efficiency, guarantee theproperty security of the Company, ensure the business activities and legal compliance,ensure the fairness and reliable of the financial information, while also havereferential significance for other enterprises in the same industry. This study alsomakes some beneficial attempts to expand the theory of internal control additionally.Only by designing feasible purchase and payment of the internal control system,could the enterprise achieve the strategic objectives and enhance economic efficiency,so that enterprises keep strong vitality and into the healthy development track.Continental Automotive Co., Ltd.(The “Company”) is the fastest growing plantof Continental Group, and also the biggest central electronic plant (CEP) ofContinental. The products supply to the153customers which layout68locations ofChina, and also export to the54customers of18countries. In these years, theCompany has a dramatic sales increase and a huge amount of new start ups and alsonew technologies in mechanics and electronics. This goes simultaneously with astrong increase of the number of employee. While at the same time, with the rapidexpansion and complex business type, in the actual operation, following problemsexposing: the purchasing material quality is unqualified, high procurement cost andoverdue payment leads to the suppliers out thereby affecting production, etc. All theseshow that some problems exist in the procurement and payment management, directly impact on the Company’s operational efficiency.Therefore, find out the existing problems in the actual operation, put forward theimprovement proposal, improve the internal control of procurement and payment, iscrucial for the Company’s effective operation and keep the competitive advantage.Firstly, this article summarizes the basic information of Continental, introducesthe detail current organization structure of the Company, focus on analyzing of thepresent situation of the internal control of the purchasing and payment, and point outthe existing problems accordingly; secondly, using the latest internal control theory toanalyze of the purchasing and payment comprehensively, which existing in thecontrol environment, risk assessment, information and communication, monitoringand control activities and other aspects of the problem; thirdly, proposing the specificsolutions according to the problems of the five aspects; finally, combining with theactual situation of the company and using the Control Self-Assessment theory toteasing the internal control system of the purchasing and payment cyclesystematically. With the introduction of CSA theory, the dynamic evaluation of theinternal control of procurement and payment cycle is possible, so that the newproblems appear in the development to be resolved in a timely manner, so as toensure the long-term healthy development of the Company.