Research On Internal Control Of Construction Enterprise Material Procurement

Nowadays, enterprises manage their operational status through the internal control.The purpose is to safeguard the company’s normal operating conditions, to further enhance the company’s overall strength, to ensure internal information accurate, to prevent enterprise assets from any threat and to achieve its strategic objectives. However, China’s major enterprises’ internal management system are still not perfect at the current stage, generally in the construction stage, and there is still a certain distance to a sound management system. Also, there are many shortcomings compared to foreign countries, which makes many domestic enterprises have not been able to rely on a more comprehensive internal control system to achieve good operating company. Therefore, to establish a sound internal control system is an important prerequisite for healthy development of enterprises.Take the construction industry as a representative to illustrate that the development of construction enterprises can not operate well without good management and internal control. In recent years, as competition intensifies, many enterprises are facing severe challenges and more risk, many enterprises in the development process will encounter many difficulties impeding the normal development of enterprises, so companies need internal controls to strengthen the standardization of enterprise management, in order to help enterprises overcome difficulties and operate well. In the construction companies, construction materials procurement chain is essential. Therefore, enterprises should pay attention to internal control and management. For construction companies, the cost of construction materials takes up a larger proportion of the total cost. Its impacts are often the most directly and most clearly reflected in the cost and quality of the project. The internal control of construction material procurement is the top priority during the construction of projects.Taking FY Construction Company as the research objectives, the case study method will be used to explore internal control of construction material procurement. Firstly, the report combines the theory about internal control of procurement and "basic norms of internal control" and related theories related guidance theory issued by Ministry of Finance and the National Audit Office to analyze the internal control of the company’s purchasing department with case analysis. Secondly, the report introduces the present situation about FY Company’s internal control of procurement and comes up with the current problems of the internal control of procurement, namely the lack of predictability and co-ordination of the procurement plan, ineffective approval and implementation, Supplier management irregularities and untimely payment, and gives detailed analysis of the causes. Finally, the report gives optimization recommendations from the aspects of internal control environment, control activities, and focuses on establishing a mechanism of procurement risk assessment in FY Company. Though common risk identification of common risk, the report adopts risk quantification matrix to analyze risk to help FY Company better cope with high-risk issues in procurement operations during project construction process, in order to promote the company further improvement in internal control and enhance business performance and core competitiveness.The innovation is in terms of the topic. There are many researches on the overall internal control but fewer on a part of construction business operations relatively. Take FY construction company for the study, internal procurement of materials control as a starting point, through the analysis of the business process of internal control problems to introduce a procurement risk assessment mechanism and through risk quantization matrix to help FY company to better manage risk in the procurement business. Based on the research of internal control of procurement in FY Company, the report intends to provide guidelines and recommendations to other construction companies, and to improve the management level of construction enterprises.