Case Study On Invalidation Of Internal Control Of Aerospace Communications

Aerospace Communications is a state-owned and state-controlled super-large enterprise with first-class qualifications,which should have a relatively perfect operation and management mechanism.However,public disclosure information shows that it has been found seven internal control failure events between 2007-2017,and it has a record of 26 violations.Therefore,it has been repeatedly required to rectify or report criticism by relevant agencies.Many violations of law and discipline and multiple financial fraud cases reflect various problems of Aerospace Communications’ internal control.Failure of internal control occurs frequently,which is not only a threat to the survival and development of enterprises,but also a major hidden danger to the stability of the market.Based on the theory and status quo of internal control failure,this paper studies and discusses the performance,causes and effects of internal control failure in Aerospace Communications,and puts forward some suggestions to prevent its internal control from failing again.The failure of internal control in Aerospace Communications mainly manifests in the imbalance of control environment,the failure of risk assessment,the failure of control activities,the serious distortion of information and the lack of internal supervision.The internal reasons for the failure of internal control mainly include:the concentration of equity,the internal control system cannot be updated in time to match the development strategy and the lack of corporate culture;the absence of a special risk control department and the weak risk control in advance;the lack of anti-fraud mechanism and the lack of communication channels with subsidiaries and anonymous reporting channels for employees;the lack of independence of internal supervision institutions,less developed audit committee and the appointment of the same accounting firm is too long.External reasons are mainly manifested as intermediary institutions are not independent and the regulators are not strict.The failure of internal control of Aerospace Communications has resulted in serious consequences for the decline of business performance and operational efficiency,and the corporate image and credibility.In order to prevent the invalidation of internal control,Aerospace Communication should optimize the internal control environment and lay a solid foundation for internal control;strengthen the awareness of risk management and improve the level of risk management;improve the detailed rules of control activities and enhance the implementation of internal control;improve the internal control information system to ensure effective communication of information;improve the effectiveness of internal control and promote a virtuous circle of internal control.Besides,the state should also strengthen supervision and create an effective internal control external supervision environment.