The Research On Internal Control Of China Telecom Jilin Branch

Since1990s, finance scandals have frequently happened,since then,internal control has gained more and more attentions, China also learnsfrom western countries to enhance internal control. But facing withnumerous laws and regulations, companies always facing moredifficulties.Given this, the paper take state-owned Jilin TelecommunicationsCompany as study case to deeply analyze inside and outside internalcontrol development, discuss on the shortage of internal control of JilinTelecommunications and provide a mature reference case for Chinesecompanies.Jilin Telecommunications is a provincial branch of ChinaTelecommunications, which is found on May162003with main operationsof telephone services, mobile communication services, data transmissionservices, internet services, broadband connection and value-addedbroadband applications.Combining US COSO reports and domestic company and telecommunicationbusiness, this essay conduct Jilin Telecommunications internal controlestablishment. There are lessons learned such as clear design route,complete control elements, overall business process coverage, clearcontrol points and supervision. In the meanwhile it has some shortages.1. Strategy Object is not defined as internal control target. Otherinternal control targets shall be defined based on strategy object and effectively integrated, broken down layer by layer and form a targetsystem.2. Overlapping corporate governance institutions to parent shareholding company could impact internal control operation and supervision.Corporate governance structure is the environment and precondition ofinternal control, is the foundation of internal control. Without completegovernance structure, it is impossible to establish a set of supervisionsystem, and could result in control failure risks.3.Risk management need to be further enhanced. JilinTelecommunications initially established management procedures of riskconfirmation, risk analysis and risk assessment from market policy,safety and technology aspect. It is necessary for JilinTelecommunications further improve overall risk assessment contents,extend risk identification, assessment and countermeasures, combine theconcept of risk preference and risk tolerance to control companyactivity.With inside and outside internal control theories and cases, belowsuggestions are provided for reference:1. Expand control targets: operation targets, reporting targets andcompliance targets should be integrated to company strategy object.Without strategy object, internal control is meaningless, so it issuggested to add strategy object.2.Optimize internal control environment: optimize companygovernance structure, improve management overlapping andnon-independent governing of board members to improve decision makingeffectiveness and efficiency.3.Complete risk elements: as a management method, risk management is able to better support control activity and integrated withenvironment control, communication and supervision.