Research On Listed Companies Deficiencies Disclosure Of Internal Control

Internal control is the inevitable outcome of social and economic development.Accompanied by the need of external competition intensified and internal management strengthened, it has been constantly enriched and developed . As the enterprises expanding gradually, their organization is becoming more and more complex. However,it would lead to a deteriorating financial condition to keep continuously blind expansion while ignoring the internal control. Thus, many problems, which exist in the aspects of the operating and financing of listed companies have been noticed by public. Because of ignoring the importance of the internal control of enterprises on their business and development, there have been many major events happened both at home and abroad since the early twentieth century, such as the infamous Enron Fraud, Singapore - listed China Aviation Oil (Cao) event, and recent Everbright Securities Oolong Means event,Red Polaroid false bills gate, and the case that impostors scam Shenzhen Energy. All of them caused significant flaws in the internal control of the enterprises and led to serious economic consequences. From 2012, China began to implement a comprehensive internal audit for listed companies, which demanded these companies should submit a qualified self-assessment report on the internal control in order to pass the internal control audit effectively.Internal control defects, as important information to reflect the implementation of enterprises' internal control,to a certain extent,enable to show the enterprises' efficiency to implement the internal control and operate the corporate governance, as well as to influence investors and other stakeholders'judgment on values of the enterprises so that affecting the long-term development of the enterprises. Besides,disclosure and rectification of the internal control defects,according to researches, can improve the enterprises' capability to prevent and respond to risks. Therefore, it is necessary to study the disclosed information of it in order to regulate disclosures of the internal control defects of the listed companies and increase the practicability of the information of internal control defects.In this paper, the author adopts the method of case study while taking the literature research and the inductive method as the theoretical cornerstone and means respectively to collect and sort out the issues related to the internal control defects of the relevant listed companies. First, the author collects and arrange related documents to learn views of domestic and foreign scholars to lay a solid theoretical foundation for this study.Among these documents, the author pay major attention to researches on the identification and information disclosure of the internal control defects after the introduction of "Sarbanes-Oxley Act",and China's basic specification and evaluation on the internal control. Then,through in-depth studies and analyses on the status of the disclosure of the internal control defects of the A-share listed companies in Shanghai and Shenzhen, the author finds such problems as identification criteria of the internal control defects are not clear; concealment of defects is still existing and the enterprises are lack of motivation to disclose; the rectification of the internal control defects is not sufficient. According to such problems, the author proposes improvement of the disclosure of this issue from the perspectives of the government, the listed companies and the investors respectively. The concrete solutions are as follows: Set up comprehensive identification criteria for internal control defects; strengthen the independence of independent directors and audit committees; optimize the environment system for the internal control, reconstruct corporate governance structure and reinforce the construction of corporate culture, etc. Finally, taking the A company as a real case,the author attempts to find out the problems as the qualitative standard is not clear;quantitative standard is not specific;disclosure content is not clear, then use knowledge learned in class to solve practical issues.