Evaluation And Improvement Of Internal Control Of Jimin Group

The financial crisis spreading all over the globe has led to the world economy's serious recession, and has had enormous impact upon the global medical market. Under this tremendous pressure, the medical market will have to reframe its structure. Unavoidably, Chinese economy is now faced with a double task to make both periodic adjustments and structural adjustments. The development of Chinese pharmaceutical industry is currently now against great challenges as well. The risks the Chinese pharmaceutical manufacturers are now confronted with are diverse and complicated. Therefore, the internal control within the enterprises is now receiving more and more concerns. It has become a must for any pharmaceutical enterprise to strengthen its internal control so that it could keep its vitality, and to develop continuously and soundly.Internal control includes five key elements:environment-control, risk-assessment, activity-control, information and communication,and supervision.As a administrative process, internal control is influenced by the board of directors, the administrative authorities, and other employees. It aims to ensure the reliability of financial reports, the operational effectiveness and efficiency, and to guarantee that the enterprises abide by all the existing laws and regulations. Internal control has become a generally accepted control mechanism built in modern enterprises. Sound and effective inner control is considered an effective way to help a modern enterprise to reinforce its economic management, to improve its economic benefit, to safeguard the reliability of its financial reports, to keep its property safety, and to make sure that it reaches its strategic objectives. The internal control mechanism in Chinese enterprises, especially in the Chinese pharmaceutical enterprises, is still in its preliminary phase. Therefore, the laws and regulations related to inner control are not soundly built yet, while the inner control practice is still on its way to explore further possibilities. This reality has been obviously hindering the healthy development of the Chinese enterprises. On April26,2010, supported by the Stock Supervisory Committee, the Audit Administration, the State Assets Administration Committee, China Banking Regulatory Commission and China Insurance Regulatory Commission, China Ministry of Finance issued a complete set of rules and regulations entitled as A Supporting Guide to Inner Control in Chinese Enterprises. This supporting guide, and The Basic Norms of Inner Control in Chinese Enterprises, issued in May,2008, have together constructed a complete system of inner control norms within Chinese enterprises. The establishment of a complete inner control system is an essential measure to help improve the operational and administrative standards of the Chinese listed companies and non-listed companies. Besides, a complete inner control system could also help China better fight against the international financial crisis. In this background, it is significant for the scholars to study upon the inner control system within the enterprises.Ever since the JM group was established, its management and operation have been running soundly and steadily. In2008, the JM was ranked among the Top20Pharmaceutical Enterprises in China. In2009, the total sales of the group reached3.8billion RMB and took its position as the runner-up in the market of Chinese Medicine in our country. In the past three years, the JM group has been beating all the other private enterprises in Jiangxi and has remained its championship on the list of tax payment.This essay is based on both theoretical analysis and practical research. It starts with the COSO Risk Management Framework, and then focuses on the present status of the inner control practice in JM group, analyzing all the links within its inner control system, as well as exploring into all the disadvantages of its current inner control practice. Finally, the essay offers a solution to these existing problems and aims to help JM group further improve its inner control system and hopefully, brings it to its maturity.