The Study On Internal Control Of *ST Kunming Machine Tool Company

Recently,public's interest and attention to internal control have gradually increased.The reason is that since the beginning of the twenty-first Century,there have been a large scale of corporate fraud scandals.The scandals that attracted worldwide attention and triggered extensive discussions on corporate governance are Enron Corp(2001)and World Co(2002).Both companies are world-record bankruptcies and the failures have occurred in the United States in a relatively short period of time.These scandals shook investors' confidence and destroyed public trust in the business world.The Enron scandal caused public outrage for the first time because investors lost money and countless workers not only lost their livelihoods but also lost pensions when the company went bankrupt.With the development of Chinese market economy and the fierce market competition,some large old state-owned enterprises enterprises have exposed the weakness of internal control in the competition.In order to meet the requirements of Chinese economic system reform and institutional reform,it is necessary to establish a sound management system and standardize the internal control system.According to the research of the COSO framework,the current situation of internal control of Kunming Machine Tool company is investigated and studied in this paper.I also analyzed the main problems of enterprise internal control,and put forward the improving mechanism and effective internal control system.It provides a useful reference for the internal control norms of similar enterprises.This article is divided into five chapters.The first chapter is the introduction,which includes the research background and significance of the article.It also summarizes the main research development and characteristics of the internal control,introduces the internal control framework of COSO,and summarizes the research content and research methods according to the relevant literature.The second chapter is the related theoretical analysis.The first theory is the principal-agent theory,the separation of the decision-making control and the residual risk bearing capacity is related to the principal-agent problem,and the internal control is analyzed from the information asymmetry angle caused by the agency agent.The second aspect is the corporate governance theory.In order to alleviate the principal-agent problem,the enterprise needs corporate governance.The third chapter is a brief introduction of the case.It reviews the financial fraud process of the case company Kunming Machine Tool and analyzes the status of its internal control.The fourth chapter combines the internal control framework of COSO.Taking Kunming Machine Tool as an example,according to the five elements of internal control,the problems existing in the internal control of Kunming Machine Tool are analyzed.The fifth chapter proposes measures to improve internal control for the company based on the existing internal control deficiencies,the theoretical combination of cases,and optimize the design of its internal control system.The study found:(1)The management layer of the Kunming machine tool is not independent.The management does not attach importance to the internal control of the company.There is a lack of sound internal control system,and the enterprise culture needs to be improved.(2)The company lacks an estimate of risk and there is a problem in the risk assessment process.(3)Lack of systematic management control activities.(4)The information transmission inside the company is slow,and the communication between departments is not smooth.In the meantime,and the use of external information is insufficient.(5)The company's supervisory departments fail to fulfill their responsibilities and the company is lack of evaluation mechanism and disciplinary mechanism.Based on the above internal control defects,this paper makes suggestions for improvement of internal control system of Kunming Machine Tool company.Based on the above internal control deficiencies,this article makes an improvement proposal for the internal control system of Kunming Machine Tool Company:(1)Through the development of corporate moral values,internal control publicity and training,the management practices the company ethics and leads the employees to establish a good internal control environment.(2)The company should develop risk awareness and be able to identify and assess risks.(3)In order to minimize corporate risks,the company should develop control activities that reduce risks to acceptable levels.(4)The company should use relevant information to support the effectiveness of internal control,and it is also important for management to communicate internal control objectives through communication channels suitable for the company.(5)The company shall carry out continuous supervision to determine whether the internal control exists and operates normally.