Resezarch On Internal Control Defects Of Fund Management In HD Company

A company is a continuously growing organic life form,and the funds are the blood that runs through it.To improve the funds utility and ensure the long-term and healthy development of enterprises is always focused by the internal corporate management.With effective internal control mechanism implementing in a company,the continuous operation and clipping development are guaranteed.And this mechanism runs through all aspects of capital flow procedure in a company.It can remarkably lower financing risks,cut down financing costs as well as improve capital utility.Therefore,the internal control of fund management is undoubtedly the most fundamental and essential part in the internal control mechanism of the enterprise.In the contemporary capital market,where financial fraud cases occur with high frequency,how to ensure the effectiveness of the fund management mechanism has been the core concerns of scholars in this academic field.HD Company was once the bellwether of the dairy industry in Northeast China.The company possesses a unique production model,named as the whole industry chain,which has made HD company grows at top speed and has successfully become the pattern of the dairy industry.However,a short-selling report from a third party caused it to collapse in an instant,and a series of events rushed to the company.Its stock price crashed without any warning and a subsequent debt crisis happened,which eventually led to the company's bankruptcy and restructuring.In order to lucubrate the deep causes behind its bankruptcy,this paper will use the bankruptcy and reconstructing of HD company as a typical case,and take the failure of its internal control in fund management as a starting point,combine the five process of the internal control environment in the Internal Control Guide to dig out the built-in problems and hidden danger of the company's internal control.After that,this paper will also analyze and study the deep causes for the failure of internal control,and finally proposing relevant suggestions to improve the utility of internal control of fund management.The first part of the thesis irritates the background of the case study,elaborates the academic value of the research topic,research idea and research method of the case,and comprehensively summarizes the research results of Chinese and foreign scholars on the internal control Deficiencies of fund management.The second part systematically sorts out the relevant theoretical basis of the internal control Deficiencies of fund management;Based on the COSO framework,the third part,the fourth part and the fifth part use the case study method and expert consultation method and follows the logic of problems-causes-suggestions to doing research on the case of HD Company.In terms of the part of the problems existing in the internal control of fund management of HD Company,it mainly discusses several factors related to the internal control of fund management,such as separation of relevant fund management positions,the approval of funds,the assessment of capital risks,the evaluation of fund management,the effectiveness of internal audit,and the efficiency of uplink and downlink communication.It also discusses the financial consequences of HD company's internal control Deficiencies of fund management.It elaborates the consequences by five aspects,which are capital cost,available funds,fund matching and capital recovery.The causes of internal control Deficiencies of fund management is mainly based on the COSO framework and combined with specific situation of HD company.This part analyzes the soundness of the company's internal control environment,the degree of risk assessment,the completeness of control activities,the status of internal information and communication and the effectiveness of internal supervision in detail.In the final part,based on the previous discussion,COSO framework and specific situation of HD company,the author puts forward five aspects of suggestions and countermeasures for improving the internal control of fund management.The first is to improving the control environment,specifically by optimizing the share proportion and human resource,strengthening the supervision of fund use and cultivating the loyalty of core employees;the second are measures aimed at completing control activities,including the improvement of the approval system,as well as paying attention to the management of suppliers,and the implementation of farmland construction;the third aspects is the strengthening of risk management,starting from institutional improvement and risk strategy formulation,and following with establishing a risk management committee for monitoring the company's fund management risk and taking into account the identified risks and adopting an effective investment strategy simultaneously.Fourth,guaranteeing the smoothness of internal information and communication,starting from the aspects of system construction and standardization construction,improving the internal control disclosure mechanism,strengthening the construction of internal information systems,and critically improve the negative disclosure situation and release the internal control evaluation report timely in accordance with relevant norms.The fifth is to give full play to the internal and external supervision by addressing the supervisory role of the audit committee and the board of directors,which can be helpful to control companies' major fund flowing with prudence in professional angle;And by strengthening the supervision function of external parties through rationally selecting third-party audit institutions to guarantee the independence of external audit.