Study On Internal Control Defect Rectification Of Aoruide Company

With the gradual improvement of China’s internal control regulatory system,the government has issued a series of normative guidelines such as the "Guidelines for Supporting Enterprise Internal Control",requiring listed companies to attach importance to internal control auditing and evaluation.Therefore,China has become increasingly strict in controlling the quality of internal control of listed companies.However,in recent years,there have been numerous cases of financial fraud in listed companies in China.Defects in internal control are one of the important factors leading to financial fraud,and some listed companies do not promptly rectify their internal control deficiencies after disclosing them.The case company of this article,Aoruide,had significant internal control deficiencies in 2018 and 2021,and the subsequent rectification measures were not completed,resulting in the continued existence of significant deficiencies.This article adopts research methods such as literature review,comparative analysis,and case analysis,and uses the basic principles of principal-agent theory,information asymmetry theory,and information transmission theory as theoretical guidance to connect the entire text.The main research focuses on the internal control deficiencies and rectification situation of Aoruide Company in 2018 and 2021.Firstly,analyze the internal control construction situation of Aoruide.Secondly,starting from the major,important,and general defects of Aoruide,and then analyzing the specific rectification situation of Aoruide from year to year.Deeply analyze the reasons why the major defects in Aoruide’s internal control still exist after two years,and the rectification is not optimistic.Finally,provide corresponding suggestions based on the many factors that affect the completion of rectification within and outside the enterprise.This article believes that the main reasons for the incomplete rectification of internal control deficiencies in Aoruide Company are:the lack of proactive attitude towards rectification,and the lack of leadership and execution by the management;The company’s governance structure is unreasonable,with a small board size and significant changes in independent director personnel,as well as imbalanced equity,resulting in the phenomenon of "one shareholder dominating",The audit committee and audit department lack relative independence,and their supervisory role is greatly reduced.The company’s directors,supervisors,and senior executives serve in some important affiliated enterprises;The punishment risk and Moral hazard undertaken by the company are low,and the punishment intensity for the company is far from the income brought by the company’s violation of the law;Moreover,there is currently a lack of mandatory laws and regulations for rectification and rectification tracking.In order to actively complete the rectification,this article finally proposes inspiration from the internal and external regulatory departments of the company to promote the effective rectification of internal control deficiencies in listed companies.