Discussion On Internal Control Of Family Enterprises

Family-owned enterprises began to prosper in the late 1970 s in China.With the development of China's economy,the Third Plenary Session of the 11 th Central Committee put forward the strategic policy of “taking the public ownership economy as the mainstay and developing a variety of ownership economies together” and establishing a private economic system in the Chinese market.The role and status of economic development.After years of accumulation since the reform and opening up,the market economy has flourished,and the family-owned private economy has blossomed everywhere.China's family-owned enterprises have significantly improved both in terms of asset size and technology.In the family-owned private economy,family members who control the ownership and management rights of the family members account for half of the family.More than 80% of Chinese private enterprises can be classified as family businesses.From small to husband and wife shops to corporate groups with assets of hundreds of billions,they can all be family businesses.Family-owned enterprises are easy to develop in a short period of time because of their unique advantages.At present,there are not many family-owned enterprises with large scale of operation in China,such as South Beauty,Wanda Group,and Midea Group.These family businesses are not only related to China's social and cultural progress,but also the backbone of China's market economy development.As the national economy is closed to open,family businesses have not kept pace with globalization.As a protagonist in the original market competition,the pure family business has limited living space and growth space.In the face of fierce market competition,the closed management mode,which is completely controlled by members of the family,has become a stumbling block to its continued development.The founders of family enterprises in China have little crisis awareness.They have not established an internal control system for the company as a whole,or even if there is an internal control system,the establishment of its system is relatively arbitrary.Enterprise managers often remedy after a crisis in the enterprise.“Reinforcement” is often the basic attitude of small and medium-sized family enterprises facing internal control systems,and very few have the awareness of “precautions”.Although some family-owned enterprises draw on the model of large-scale enterprises and establish corresponding internal control systems according to market demand,most of them are flawed.The original family culture dominates the construction of corporate culture,theintroduction of talents is lagging,the management system lacks innovation,and the lack of internal supervision of enterprises hinders the further development of family businesses.Under the strict screening of the market environment,bankrupt enterprises are everywhere because of the failure of internal control.To this end,enterprises need to raise the issue of lack of effectiveness of internal control to a new level of importance,and establish a sound internal control system to support enterprises.Continue to develop healthily.This paper takes family business as the research object and takes Zhonglian Construction Group as the research case to discuss the internal control of family business from both theoretical and practical aspects.The first chapter of this paper is the introduction part of the full text.It introduces the research background and research significance of this paper.From the theoretical research of family business,the theoretical research of internal control,and the research on the establishment of internal control system of family business,some domestic and foreign scholars are brought together.The research results and a brief introduction to the organizational framework of this paper.The second chapter is a theoretical overview of family business,including the definition,classification,characteristics,and governance model of family business.It analyzes the basic characteristics of family business internal control and lays the theoretical foundation of the article.The third chapter leads the case of this article-Zhonglian Construction,introduces the basic situation of the case company,organizational structure,development process and difficulties in the implementation of internal control of the enterprise.The fourth chapter analyzes the various problems existing in the internal control system of Zhonglian Construction in accordance with the five elements of internal control.The fifth chapter analyzes the problems raised in the previous chapter and analyzes the reasons for the weak internal control environment,lack of control activities,unsatisfactory information exchange and communication,and lack of internal supervision.The final chapter summarizes the full text.Based on the current situation analysis and problem analysis,the paper puts forward reasonable suggestions such as optimizing the internal control environment,scientifically completing risk assessment,standardizing internal control activities,strengthening information communication and communication,and improving internal supervision mechanism.The internal control mechanism of the family business is not perfect.In the course of more than 20 years of development,it is still exploring the development path suitablefor its own enterprise.Family business is the integration of family and enterprise.Family business governance has some special characteristics compared with non-family enterprises.Good internal control system is the cornerstone of the long-term development of family business.The prosperity of family business is the embodiment of national economic strength and capital market.It is the basis for the sustained and healthy development of the country.This article takes the epitome of family business,Zhonglian Construction,as an example,analyzes the status quo,identifies problems,and makes recommendations.In the future,we hope to study more types of family businesses and summarize more suggestions for family business.