Research On The Measurement Standard Of Internal Control Self-assessment Reports’ Quality

Along with the relevant regulations, rules, explanations, instructions and otherdocuments on internal control were released, our listed company’s internal controlself-assessment report achieved a gradual transition from the almost non-disclosure tothe full disclosure, from the voluntary disclosure to the mandatory disclosure, from thesimple disclosure to the detailed disclosure. The internal control self-assessment reportis a platform for the enterprises reflecting their internal control status to the outsideworld. According to this report, the stakeholders can evaluate a company’s managementefficiency and effect, and combined with the enterprise financial report, they can make aprediction to the company’s future development, and then make decision on investmentor supervision. However, after checking the disclosed internal control self-assessmentreports, we found the reports’ form and content vary widely from one company to theother. How to judge whether an internal control self-assessment report is reliable andrelevant to decision making has become a problem that investors must resolve as soonas possible, and that is the meaning of this paper study the measure standard of thequality of internal control self-assessment report.Based on the above background and objective, this paper studies the quality ofinternal control self-assessment report from different angles such as the report itself andthe relationship between the report and other external variables. First, it selects certainevaluation indexes and formulates the index system of evaluation to assess the internalcontrol self-assessment report’s quality, and gives scores for each sample company’sinternal control self-assessment report, by using entropy method, it obtains an annualcomprehensive score of internal control self-assessment report quality from2011to2013, and carries out descriptive statistical analysis of the results. Then it tests therelationship between the internal control self-assessment report quality and the possiblenon-financial factors, and the relationship between the quality of internal controlself-assessment report and earning quality through empirical model. Based on the aboveresearch, this paper establishes some methods and standards for measuring the qualityof internal control self-assessment report.According to the scores of internal control self-assessment reports, the disclosureratio and quality of our listed companies’ internal control self-assessment reportrevelation have improved year by year from2011to2013, but have not yet reached a very satisfactory level. Through empirical research, this paper found that thenon-financial variables such as firm size, proportion of independent directors, listedtime, ownership concentration, the share ratio of the institutional investors, the nature ofthe controlling shareholder, and the financial variables such as earnings quality, haveobvious impact on the quality of internal control self-assessment report. So far, thispaper assumes that the quality index system can be used as the strongest and most directstandard for measuring internal control self-assessment report quality, through thisstandard we can judge the quality of an internal control self-assessment report visually;and the previously mentioned variables can be used as indirect standards, thenon-financial variables are more suitable for horizontal comparison between differentcompanies, the financial variables are more suitable for vertical comparison of the samecompany in different years.Through the study of the internal control self-assessment report quality measurestandards, we can not only understand the status of implementation of the internalcontrol self-assessment report, which gives the improvement direction of the internalcontrol self-assessment report quality for enterprises and regulators, but also providemethods and suggestions on how to use those reports for investors and other stakeholder.And it is also a good reference for the relative studies on internal controlself-assessment report.