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Analysis of internal control information disclosure of listed companies in China

Author: ChenShuRong From: www.yourpaper.net Posted: 2009-04-02 18:45:36 Read:
[Abstract] China's listed companies internal control disclosure of information is relatively simple, the lack of power of voluntary disclosure, both external causes internal mechanism. Mechanism should be established by the authorities to force listed companies to disclose internal control report, in order to enhance the transparency of the securities market information disclosure, prompting listed companies focus on internal control and management, thereby protecting the interests of investors.

In recent years, China's securities market on a number of listed companies' financial fraud. The frequent occurrence of the violations, which is a very important reason is the the serious absence or failure of internal control of listed companies. Internal control is an important factor affecting the company's operations and the reliability of accounting information, the fraud scandal intensified so that our regulatory bodies internal control of listed companies have realized the importance of information disclosure.

Listed companies in China internal control information disclosure status quo

In order to understand the situation of China's listed companies internal control disclosure of information, a survey on the situation of internal control disclosure of information in the annual report of listed companies, the survey does not involve internal control disclosure of information in the prospectus. In view of the securities regulatory authorities higher than the general provisions on internal control disclosure of information in the annual reports of listed commercial banks, securities companies listed company, I analyze the situation of internal control disclosure of information in the annual report of the commercial banks, securities companies, and randomly selected Shanghai Stock Exchange, Shenzhen listed companies (non-commercial banks, securities companies) 100 each for the study.
(A) the overall situation of internal control information disclosure
207 listed companies in the survey, a total of 192 (92.75%) disclosure of internal control, 15 (7.25%) did not disclose relevant information. The generality of 200 listed companies, 185 companies to disclose internal control, but they are simple words, like "the company has established a comprehensive internal control statement. Seven commercial banks and securities companies have disclosed internal control information, the disclosure of the contents of the content more than the general listed companies.
(B) the main internal control information disclosure
In the disclosure of internal control information 192, 173 (90.11%) by the Board of Supervisors to the disclosure of internal control information, only two companies disclosed by the Board, the other three companies only disclosed by the Board of Supervisors to internal control information disclosure of internal control information through the accounting firm.
Since the Commission is the accounting firm to evaluate the internal control of commercial banks, securities companies, five internal control information disclosed by the accounting firm are commercial banks and securities firms. 207 companies in the information disclosed by the Board 19 7 12 voluntary disclosure of securities companies and banks, general listed company's board of directors, and the Securities and Futures Commission is not mandatory general boards of listed companies disclosure requirements. This indicates that China's listed companies is still a lack of power of voluntary disclosure of internal control information.
(C) internal control information disclosed is
The front has general information disclosure of listed companies in poor condition, only simple internal control information disclosed by the Board of Supervisors, and commercial banks, securities companies due to special disclosure requirements, a more detailed disclosure of the contents.
Specific disclosure of the commercial banks, securities companies, the Commission did not make the relevant provisions, which resulted in the board of directors of the commercial banks and securities firms are disclosed on the Company's internal control, but they disclosed content big difference.
Internal control system described different emphases
Analysis of companies, 57% of the company talking, just a description of the internal control system, a more detailed description of the remaining 43% of the company's internal control system, but the disclosure of a different focus.
Internal control inherent defects undisclosed
Many companies do not recognize the internal control inherent flaws. Effectiveness of internal control may change with the environment, changes in circumstances, the only statement in the report of the Board effective internal controls, information users may make certain misunderstanding that internal control can absolutely prevent fraud, and continued effective.
Internal control deficiencies and improvements less disclosure
Only a few companies are disclosed in the report of the Board found that the internal control problems and generated from operating activities, and other Board of Directors of the Company are of the view that the company's internal control reflects the integrity, rationality and effectiveness. And the number of companies did not propose further measures to improve internal controls, and only an expression of determination to constantly improve the internal control.
4 accounting firm expression of the concluding observations
Not required by CSRC CPA evaluation report to be disclosed, so I read the annual report to disclose only the concluding observations of the accounting firm on internal control evaluation. In the analysis of several companies, only a few companies to disclose the accounting firm to the concluding observations of the internal control evaluation. Several CPA, rationality and effectiveness of delivered a firm opinion on the integrity of the internal control system of the audited entity, but specific to the expression, but different.

Second, China's listed companies internal control disclosure of the status quo cause analysis

Control information disclosure by listed companies in China internal investigation, I found serious formal internal control information disclosure of listed companies in China. General listed companies lack the motivation of voluntary disclosure, disclosure is often only a simple sentence, and are not comparable between the contents of the disclosure by listed commercial banks, securities companies. I believe that the reason for this phenomenon from the external and internal analysis.
(A) internal control of listed companies in China the status quo of the information disclosed to external causes
A lack of public recognition of the internal control standards
In recent years, as the strict supervision of the company to build and strengthen internal control of authorities released a series of internal control standards, however, these norms awareness and understanding of internal control are not uniform, are not mutually convergence even in the presence of conflicts. For example: the basic norms of internal accounting controls --- released by the Ministry of Finance in 2001 (Trial) "internal control located in the internal accounting controls, listed companies to establish an internal control in accordance with this specification, mainly from each business cycle activities ( such as: procurement and payment, sales and receivables, foreign investment, financing and other business cycle) to disclosure of internal control information. Securities companies to establish an internal control in accordance with the Securities internal control guidelines published by the SFC in 2003, mainly from the control environment, risk identification and assessment, control activities and measures, information communication and feedback, monitoring and evaluation aspects to evaluate internal control and disclosure of relevant content. Published in 2004 by the Chinese Institute of Certified Public Accountants Association of Independent Auditing Standard No. 29 - understand the entity and its environment and to evaluate the risk of material misstatement (draft) "just released from the perspective of the audit of internal control standards, can not be as a guide for listed companies to establish and direct basis for evaluation of internal control. Due to the lack of public recognition internal control standards to guide the establishment and evaluation of internal control of listed companies, listed companies in the establishment and evaluation of internal control, lack of uniform standards for disclosure of the contents are not comparable.
Lack of a better internal control information disclosure requirements
Regulatory bodies in China is mainly due to the internal control information disclosure requirements to improve the Company's internal control situation, improve the information disclosure, to protect the legitimate rights and interests of investors and to ensure the effective operation of the securities market considerations. However, these provisions do not expressly disclosed the scope, content, manner and time, making listed companies greater selectivity and arbitrariness in the internal control information disclosure, resulting in all listed companies to disclose internal control information formalized, reduce the usefulness of the investment decision-making. The existing provisions of the annual reporting requirements for all listed companies are lack of internal control information disclosure format and content requirements and uniform requirements. In addition, although the SFC in the public offering of the securities company's annual report content and format requirements for commercial banks and securities company's internal control information disclosure requirements are more stringent, requirements are also higher than the general listed companies, but there is no specific that the main responsibility for internal control information disclosure, when the non-disclosure or disclosure of false internal control information requires listed companies to be held accountable, the company's internal prone to shirking of responsibility. For other listed company's annual report, the existing regulations require listed companies, the Board of Supervisors only whether to establish a sound internal control system, "an independent opinion, does not require express their views on the implementation of the internal control, information disclosure provisions are too simple, and existing provisions dependent on the Board of Supervisors as the main internal control information disclosure. I believe that the Board of Supervisors not internal control the main information disclosure, to establish and maintain effective internal control is the responsibility of the management, the Supervisory Committee concluded that only the authorities to establish a monitoring and implementation of internal control. These provisions likely to cause a formal information disclosure of listed companies, to some extent, provided an opportunity to reduce the company's disclosure of related information and regulatory authorities to evade responsibility. In addition to the provisions did not require a certified public accountant on the listed company's internal control information disclosure to express their views, it is difficult to guarantee the reliability of the companies to disclose information. SFC is still a lack of the detailed requirements of the format and content of the internal control disclosure of information in the prospectus requirements is not conducive to the information users access to information.
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