The Case Study Of Dayou Energy's Internal Control Adverse Opinion

Energy industry has an important strategic significance in state economy.The main energy industry in China includes coal, oil, natural energy,electric energy and so on. As one of the basic industries,the coal industry is the foundation of other industries.On the background of integrative recombination, more and more problems exposed in the internal control process, such as flabby internal management, weaken control,accounting fraud, distortion on financial state, lack of understanding of internal control,rules and regulations not followed or out of nowhere, unsound internal control system,lack of scientific characteristics and continuity, insufficiency of supervision and inspection during implementation, insufficiency of assessments and rewards,interference from external conditions when accountants executing their tasks,unreasonable enterprise institutional framework and poor staff quality. All the problems above has seriously affected the development of enterprises. Therefore, an effective internal fiscal controlled system is needed to help strengthen and perfect the internal control in order to enhance the competitiveness of enterprises.This paper integrated applies the management theory knowledge and the knowledge of the internal control defects by research methods of combining literature review, normative research and case study analysis. From the perspective of internal control defects, the paper deep analyzes the reasons that why Dayou Energy are issued by the negative reasons of internal control auditing opinions for two consecutive years.Combined with domestic and foreign related experiences and lessons, the paper explores the root cause of internal control defects of Dayou Energy, which helps to further understand the function and existing problems of internal control on Chinese stock market. These will provide beneficial reference to enhance the sense and motivation of enterprise internal control construction, improve enterprise management efficiency, strengthen market supervision regulator and smoothly implement internal control.This paper puts forward the background and significance of topics, analyzes the current research of this topic, determine the main content and structure the paper structure and characteristics and innovation. Then the background of internal control system and the related research results at home and abroad is expounded. The third part and the fourth part is main body of this article. The third part is mainly based on perspective of internal control defects to analyze internal control negative audit ofDayou Energy, including the background of the case and the specific questions of resulting in internal control defects, covering five problems of loss of joint transaction,placement, rights and interests of inventors,undervaluation of assets and punishment of CSRC. The fourth part analyzes the fundamental issue of internal control defects of Dayou Energy. The analysis is mainly conducted from governmental management,information disclosure and market supervision. At last, this article summaries the problems above, gives a conclusion of this case study, makes comments on raised problem and figure out the deficiency of the study.Through case analysis and research of Dayou Energy, this paper aims to remind the listed company to strengthen the construction of the internal environment,especially trying to play the role of internal supervision in the operation of control activities. If the assessment team found the defects in the evaluation process, the review should be more real, comprehensive and accurate to reflect the real situation. In addition, the internal control regulation system has not been perfect in our country. The implementation of the related laws and regulations in the enterprise rules is imperfect,which makes difficulties when the enterprise deals with internal control defects,especially major defects. This paper also puts forward some policy suggestions,providing reference for our country's internal control system implementation in the future.