A Case Study On The Negative Opinion Of Internal Control Audit

Internal control is an important internal governance mechanism of modern enterprises.Whether the internal control mechanism is perfect and effective,whether the internal control system is effectively implemented,and whether the auditor's opinions on internal control are reasonably supervised will affect the healthy and sustainable development of enterprises.Firstly,this paper summarizes the existing research results of audit opinions on non-standard internal control and the influencing factors and economic consequences of internal control,and specifically analyses the status quo of negative opinions on internal control,the reasons for negative opinions and the disclosure of internal control defects of companies that have negative opinions.Then,by using case study method,this paper takes Shandong Revitalization Biochemical Company as the research object.Briefly introduce the company,then elaborates the major internal control defects of the company from three specific issues: related transactions,information disclosure and loan guarantee,explores the influencing factors of negative opinions of internal control from the perspective of five elements of internal control,and finally combines financial statement analysis to analyze the financial situation and investment situation of revitalizing biochemical company,and uses financial analysis method and event research method to analyze the financing constraints and market reactions after the revitalization of biochemical company is issued with internal control audit negative opinions.From the perspective of the five elements of internal control,the control environment and information communication are the most important factors affecting the quality of internal control.Second,the company did not disclose the related party and related party transactions in detail,to a certain extent,indicating the existence of management ethics problems;third,the revitalization of internal supervision of biochemical company did not play its due role.Through financial statement analysis and event study,it is found that the defect of the company internal control will cause negative economic consequences.From the analysis of financial situation,we can conclude that the company's operating performance will be affected,and the company's investment efficiency is not high.Secondly,due to the influence of negative opinions disclosure of internal control audit,the company will have a negative market reaction,which will cause the fluctuation of the company's stock price and a continuous downward trend,resulting in the decline of the stock excess return rate and accompanied by financing constraints.Finally,based on the existing problems,some suggestions for the company are put forward.Through the case study,it is helpful to understand the standard and economic consequences of non-standard internal control audit opinions.It provides a useful reference for strengthening the awareness and motivation of enterprise internal control construction and improving the efficiency of enterprise management.