Preliminary Analysis Of Internal Control Deficiencies

In recent years, companies’financial fraud has been discovered frequently, such as Bohui Paper1billion fraud, Xinzhongji’s fraud for6years. These events caused a very bad influence for our capital markets, corporate accounting fraud repeated, in addition to oversight beyond, their own shortcomings is also one important factor. Since the United States’ Sarbanes-Oxley Act, governments and businesses are increasingly concerned about the construction of internal control. Internal control for the prevention of the occurrence of corporate fraud and financial fraud has been an important role. Ministry of Finance, the Commission, the Audit Commission, China Banking Regulatory Commission, China Insurance Regulatory Commission and other five ministries (hereinafter referred to as the "Five ministries") to further standardize China’s capital market, safeguard China’s capital market order, respectively, in2008and2010jointly issued guidelines namely "Basic norms of internal control" and "Enterprise internal Control guidelines." Because of our enterprise internal control started late, slow development,"Supporting Guidelines" and the "Basic norms" introduced for the implementation and continuous improvement of our internal control provides standards of conduct so that our internal control is not just a mere formality, but combined with their own specific situation, and gradually establish a modern system of internal control standards.Based on the literature review and theoretical research on top, this paper selects the2011-2013year1775sample companies, from the perspective of the five elements of internal control analysis of the company’s internal control factors and the extent of the defect, combined CSMAR series database and listed company’s annual report relevant information, through the design of a set of internal control evaluation system and criteria for the classification and rules, through descriptive statistics, correlation analysis and binary LOGISTIC regression analysis found that in the five elements of internal control in relation to other elements of the control environment internal control deficiencies on whether the degree of influence is the largest; secondly, internal supervision of listed companies if there are elements of the internal control deficiencies affect a relatively small and not significant. Finally, for the above conclusions presented specific recommendations to strengthen internal control.This paper is divided into six parts:The first part is an introduction. It concludes the main research background and the definition.The second part is literature review. This part concludes the literature review which wrote by foreigners and natives.The third part is the theoretical basis of the internal control.The fourth part is the theory and the assumption. It concludes the agency theory and so on.The fifth part is the empirical analysis of internal control. It concludes the five elements of internal control, and the result of the SPSS19.0program.The sixth part is the conclusions and recommendations to improve internal controls and in the end, it is the paper’s limitation.