Research On The Relationship Between Corporate Strategy And Internal Control Deficiency

Strengthening the construction of internal control is one of the important means to improve the modern enterprise system,and it is also the basis for the smooth operation of the enterprise.As the saying goes,the metal itself must be hard to be turned into iron.Internal control is essentially the self-management and improvement of the enterprise,it can effectively realize the change of risk control from "post processing" to "ex-ante prevention",this is an important part of the enterprise to strengthen their competitive strength.Although the study of internal control in China started late,the frequent occurrence of fraud in listed companies makes the government recognize the seriousness of these problems.Therefor,in late 1990 s,hoping to establish a good internal control system,China's Ministry of finance,people's Bank,Chinese CIRC,CSRC,CICPA and other departments have promulgated a number of relevant laws,regulations and guidelines.These laws,regulations and guidelines define the objectives,principles,contents,methods,supervision and inspection of the internal control system of enterprises and institutions.However,generally speaking,referencing to the latest "basic norms" requirements,there are quite a number of enterprises in many places there is a serious shortage.Hence,in order to realize the expectation of the government,change the current situation of the enterprise,and promote the healthy development of the socialist market economy,it is of practical significance to study the disclosure of internal control,the types of internal control defects and the improvement of major defects.Enterprise strategy is the direction of enterprise development,and it also gives enterprise ideal and vitality.Enterprise strategy is the key to the success of enterprise management.The strategic goal of entrepreneur design is correct or not,often determines the rise and fall of the enterprise.In September 2004,the COSO Committee issued the "enterprise risk management integrated framework",it changed the internal control three targets to the fourtargets,and the strategic objective in the first place.Enterprise strategy is a part of the internal environment of the five elements of internal control.Moreover,considering the cost and the actual situation,different strategic positioning of the corresponding internal control situation is different.Then enterprise strategy will have certain influence on internal control deficiency.Therefore,the study of the relationship between corporate strategy and internal control deficiency is helpfulto improve professional judgment.Moreover,for evaluating the quality of internal control,enterprise strategy is a useful indicator.This article can be divided into two parts: theoretical analysis and empirical test.The theoretical analysis includes literature review,concept definition and theoretical analysis.Firstly,it reviews the domestic and foreign research results of internal control internal control deficiency and enterprise strategy;Secondly,according to the research results at home and abroad,we define the concept of enterprise strategy,internal control and internal control deficiency,and put forward the theoretical basis of this article.It consists of principal agent theory,asymmetric information theory,organization theory and strategic management theory.The empirical test is based on the relationship between corporate strategy and internal control deficiency,we use whether the company disclose internal control evaluation report and audit report,Internal control defects and defect types and whether the enterprise to modify the major defects to measure Internal control deficiency.We rank the R & D expenditure ratio,fixed asset ratio,and the average of each indicator in the market share for three years,then based on the five bit assignment and added up the scores.According to the score,the enterprise strategy is divided into differentiation strategy,analytical strategy and cost strategy.Three models are constructed in this paper: the model of enterprise strategy and the possibility of disclosure internal control evaluation report,the model of enterprise strategy and internal control defects and the model of enterprise strategy and modification of major defects in internal control.Based on the data of 1290 manufacturing enterprises in China from 2013 to2015,we use descriptive statistics,correlation analysis and logistic regression analysis to examine the relationship between corporate strategy and internal control deficiency.Through the research and analysis of this paper,we can regard the enterprise strategy as a main index to evaluate the internal control of the enterprise.