Study On The Internal Control Of The Retail Enterprises In Procurement Operations

The year 2004 witnessed China’s retail industry opening to foreign capital. Since then, China’s retail industry has been developing rapidly. Total sales have been growing in a row and the number of employees has been increasing rapidly. However, due to inefficient management, undisciplined personnel and many other reasons, there are still many problems in the retail enterprises. Among them, the problem of procurement operations is outstanding. The problem roots from the failure of internal controls on the procurement operations.At present, internal control environment of retail enterprises is generally poor; risk management capabilities is limited; the internal control system is seriously deficient in design or implementation; information cannot flew freely and miscommunication exists. The reasons for these problems are as follows:Internal control system is not yet perfect; many managers are affected by traditional ideas, lack of understanding of the importance of internal control; retail enterprises’ personnel quality is not high; The deficiencies existing in internal control of procurement operations have resulted in the high cost of procurement and caused that quality could not be effectively guaranteed and that procurement fraud frequently happens. Not only the normal business activities of enterprises but also the survival of the enterprise was affected, which would bring a huge crisis to the retail enterprise. Therefore, China’s retail enterprises should strengthen internal control of the procurement operations.This paper analyzed the deficiencies in internal control of procurement operations based on the basic theory of internal control and its in-depth root cause. Combined with the internal control theory and WGY Company’s procurement operations experience in the construction of internal control, this paper proposed solutions to retailers on how to strengthen internal control procurement strategies.