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A sound internal control system to improve the corporate governance structure

Author: WeiZhi From: www.yourpaper.net Posted: 2007-11-19 11:02:59 Read:
(a), the relevant departments of the status quo of China's securities corporate governance survey, China's securities companies in the general meeting of shareholders, board of directors, board of supervisors, organization of senior management and the corresponding relations of the definition has great randomness.Vague definition between Chairman, board of directors and managers, board chairman and general manager of division of labor between the often unknown, some just a shoulder, there are currently two of the number of firms with two hats.At the same time, as the state-owned enterprises or state-owned asset holdings of securities companies, due to the lack of state-owned assets on behalf of, "three" setting only, the board of directors formality.The board of supervisors is often only the form is to set up an office, not a valid function department to supervise the financial status, directors and managers, but assume party, administrative job "".Therefore, the balance of power in the vacuum state in the actual decision-making power brokers, mainly by the executives grasp, cause information opaque part company, internal control and operating without norms and other defects, the management and decision-making of the company can not do the scientific and democratic.In addition, the two extremes are also formed in the ownership structure: on the one hand, "alone big", big shareholder control management phenomenon is more prominent, and some even directly appointed management personnel, obviously constitute a on the other, in the interests of small shareholders.On the other hand, some of the securities will be made equity structure design are too scattered, individual shareholders have the proportion is not large, even if the largest shareholder holding less than 10%.To this end, but weakened the shareholders' meeting, board of directors and constraint on business layer, business layer strengthened the control of the company's efforts, increase the internal control.

(two), countermeasures to perfect the corporate governance structure of the securities of the situation, countermeasures to improve the corporate governance structure of the focus is: first, to expand the securities company equity financing, promote the brokerage Kuogu capital and open to the public issuance of stocks, bonds and other securities, provide a guarantee for the firms to obtain long-term stable funding; and promote equity diversification at the same time, so as to facilitate the dispersed ownership, optimizing equity structure, perfect the governance structure of securities company.Secondly, the incentive and constraint mechanism of managers and employee stock ownership and stock options, help the companies to become the interests of the company related to the community; and also to expand the company's financing channel, reducing the cost of funds.Third, establish the system of independent director in the board of directors, perfecting the organization of the board of directors, the controlling shareholders do not have any relations, honesty, integrity, diligence, conscientious professionals through legal procedures, to the identity of independent directors to the board of directors, and has the corresponding rights, so that the independent directors should take the protection of shareholders, especially small shareholders liability.

(three) how to perfect the internal control system of

Should the lessons learned from the failure of internal control internal control in 1 cases for reasonable assurance of the financial reports the effectiveness of business activities, the reliability and the compliance of laws and regulations and self inspection, control and adjust the internal activities of autonomic system.It runs through the whole process of management, including control environment, risk assessment, control activities, information and communication, inspection and supervision and other factors, and influenced by the company's board of directors, management and other personnel.However, the following is the failure of internal control: two cases of Bank of Bahrain -- one of England's oldest merchant bank, has been a leader in just 23 people in Singapore small company manager Nick Lilin down.At that time, almost everyone considers "financial derivatives" out of the Bank of Bahrain.However, the real arch-criminal is lack of basic balance, and senior management personnel in that conflict or other problems caused by not taking appropriate measures.Similarly, and so is the January 12, 1988 declaration of insolvency peregrine.After detailed evidence for more than two years, the Hongkong government survey report pointed out: "the most fundamental reason is that the crisis did not make full mental preparation, basic system, accounting procedures, internal audit, risk awareness is obviously weak,"


2 the company mismanagement is the culprit, internal control failure is the main reason. establishment and survival of any internal control system depends on the senior management.If senior management to take a tough stance, we will never tolerate any deviation in violation of operating policies and internal control system; then, the entire firm will survive in the atmosphere.On the other hand, the senior management in the internal control of the lax attitude, then there will be a failure of internal control and other issues.If senior management is committed to the establishment of sound internal control environment and in the circumstances to give employees sufficient development rights, such companies will be more successful.

3 weak links in our securities of internal control and the main existing problems.The actual situation of financial industry in China today, there are two aspects of the problem, one is the accumulation of financial risks, the two is illegal and financial crime more serious.These two problems are related to internal control of financial institutions have a direct relationship.Mainly in the following aspects:

(1) the lack of awareness of the importance of internal control, did not mention the relationship between business development and internal control;


(2) lack of effective constraints on the branches, in the actual execution may be beyond one's grasp, the branches of the book business is not corrected in a timely manner and cause serious consequences;


(3) interaction mechanism is not perfect, not enough supervision of management decision-making."Top leaders" into the "tyrant" act arbitrarily in the failure of internal control under the condition of
;

(4) so, not through the chapter is a common phenomenon;


(5) lack of necessary to important business risk assessment and monitoring;


(6) internal control means and measures ineffective, the implementation of the rules and regulations of the lack of effective supervision, the internal audit function is not fully played out.

(four) the formation of numerous facts system of internal control mechanism confirmed: short speculation in any form, only the strong, only focus on the long term, specification development, be prosperous and lasting.Should see, every level including enterprise, government, administrative departments and investors, have their own limitations, the key lies in whether can actively, properly adjust and reform will not meet the requirements of the times of the restrictions and fetters, follow the objective law, for the development of sustainable, stable.Therefore, the need to establish a sound internal control mechanism as the specification development support system.It includes the following aspects:

1, the securities company of the internal control system to form

The establishment of internal control system construction, form the system of internal control mechanism, internal control is a leader in management level and the decision-making level of the problem, the responsibilities of leadership is the management of the whole system, so that each part of the risk control to form a whole, so that the system does not leave loopholes, safe operation in the market, the greatest degree to ensure the security of enterprises.

2, we must strengthen a legal system of

To strengthen the internal control of securities companies, strengthen legal system.Assume corresponding responsibility.The system of internal control, under the first-grade legal person system should be relatively independent, system authorization credit should be upright, directly controlled by a corporation to be perfect; the authorization system, should have an independent system, supervision should be independent, have a problem can be directly reflected in the headquarters, master directly by the company.

3, must establish the mechanism of interaction of

A securities company all the responsibilities, should be restricted to everyone.The decision led to have the restriction.The construction of the internal control system should be targeted, to every post what to do, what not to do the normative provisions.Can't take no risk, no problem hopes in the ideological consciousness.Because of ideological education is not a substitute for the implementation of the rules and regulations.



4, pay attention to the internal control of the benefits and costs of

The construction of internal control must be input and cost.The current situation is going to continue to increase investment, to improve the conditions of internal control; the use of modern means to increase the speed of information transmission, control risk; so that some people can effectively, timely supervision practice not part of the people, to ensure that the whole system is able to control risk.Of course, will come for a certain time.
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