Research On Internal Control Defects Of Lanpec Technologies Limited Based On Performance Forecast Amendment

The survival and development of an enterprise cannot be separated from internal control.When a company faces some problems such as financial crisis,poor quality of information disclosure,its internal control is often flawed.In the long run,it will affect a series of negative impacts.By releasing the performance prediction,the company informs the information user in advance about the company’s relevant information,so that the majority of information users can have a psychological preparation for the upcoming information changes.Meanwhile,it can also show The company’s higher-quality information disclosure and management with integrity and regulations.However,if a company’s performance prediction has been amended after releasing,in this way,it not only makes the information user feel that the company’s disclosure of information is not serious or true,but also causes the company to be punished by the regulatory body,affecting the reputation of enterprise.Such a correction on the performance forecast will indicate definitely the serious internal control defects,which is worthy of study.Based on the revision of Lanpec’s two annual performance predictions from 2017 to 2018,this paper arranges the research results of Lanpec’s performance prediction and internal control defects.Through querying Lanpec’s financial reports over the years together with reading its internal control data and using the Choice database,this paper adopts literature research method and case study method,introducing cases from three aspects: the brief introduction of Lanpec,the details of revision of performance prediction,result analysis and internal control condition,which is to explore the relation between internal control defects and performance prediction correction.The research results are as follows.First of all,the frequent revision of the company’s performance prediction will cause serious economic consequences to the company,and convey information that the financial information is inaccurate to the information users,which will lead to the decline of stock prices,the confidence loss of investors,the punishment on the company and top managers by the regulatory body,the auditing report of negation sent by certified public accountants.Then,there are many internal control defects in the revision of performance prediction,such as the inefficient management of the company,the failure to effectively identify the risk,the failure of control activities,poor condition of information and communication,and inadequate performance review.The reason for these internal control defects is that the internal control environment of Lanpec Technologies Limited is obviously weak,mainly because the organizational structure design is unreasonable,the management is above the internal control,the management personnel are a little older,and the young employees are difficult to promote.Still,the risk assessment process is not appropriate in the assessment activities.Besides,in the control activities,the design and implementation of the four control activities of finance,R&D,sales and engineering are not satisfactory.Also,in information and communication,the information system is backward.What’s more,in internal supervision,the internal audit department is lacking and internal supervision is insufficient.In view of the situation of internal control defects of Lanpec,this paper proposes measures to improve internal control.Specifically,it includes improving the organizational structure of the company,optimizing the internal control environment;improving the risk assessment procedures,enhancing the awareness of risk assessment,standardizing internal control policies,implementing internal control activities;updating the information management system,strengthening remote information communication,establishing internal audit departments,improving the supervision of internal control.It is hopeful that these measures will help the company improve its internal control system,improve the quality of the company’s accounting information,enhance the accuracy of the external disclosure of performance prediction,reduce the possibility of performance prediction corrections to a certain extent,and provide timely and accurate financial information to all stakeholders in the market.Meanwhile,it hopes to enhance the company’s own management level to improve its economic efficiency.