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Internal control information disclosure of listed companies in China Current Situation, Causes and Countermeasures

Author: ShiWeiDong From: www.yourpaper.net Posted: 2009-04-28 23:08:51 Read:
[Abstract] In this paper, control of information disclosure status quo from the inside of the listed companies to start, our internal control information disclosure of listed companies exist, and proposed measures to improve for the benefit of investors and other external users of information by determining the internal control sexual overall evaluation of the quality of listed companies, to make the relevant decision-making.

First, China's listed companies internal control information disclosure status quo

Internal control disclosure of information on listed companies, the China Securities Regulatory Commission made a series of provisions, especially for securities companies and commercial banks listed on the insurance company in the internal control information disclosure requirements than the general listed companies. Generally speaking, these provisions are relatively complete, but there are also unreasonable, especially for general listed companies. The system requires relatively simple, resulting in information disclosure of internal control too formal, therefore, the need to further improve the internal control information disclosure system.
At present, China's internal control information disclosure requirements have not been effectively implemented, the annual reports of listed companies, the Supervisory Committee shall be an independent opinion on whether to establish a sound internal control system, but there are still some companies did not disclose that most companies internal control disclosure of information a mere formality, often only the establishment of a sound internal control system "like the simple rhetoric, no substance. For placement of shares of listed companies, the issue of new shares in listed companies prospectus issued are disclosed in the corporate governance section of the internal control information, but is a self-assessment of the management unit or CPA evaluation reports are a mere formality . Internal control of listed companies in the main body of information disclosure from the disclosure of the main view, the main supervisory board, board and independent directors, which the report of the Supervisory Committee of disclosure is a disclosure form, which is relevant to the current regulations. At the same time, the internal control of listed companies in China Voluntary Disclosure underpowered.

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

The author believes that the internal control of listed companies disclosed the formation of the status quo because our country does not form a system of internal control information disclosure system. China in the listed company's internal control system of information disclosure requirements still shortcomings and deficiencies.

(A) disclosure of the content and format of the lack of detailed provisions
For general-listed companies, the SFC revised in 2005, the annual report content and format, which provides supervisors of listed companies should be on the company's internal control system is perfect an independent opinion, but the disclosure requirements only limited to "establish a sound internal control system, and did not require disclosure of the companies to establish internal control information as well as the evaluation of the Board of Supervisors. If only require disclosure of whether to establish a sound internal control system, likely to cause formal disclosure, the information content. On the other hand, for the summary of the annual report, to allow the Supervisory Committee of the Company from disclosure considered to establish a sound internal control system, a listed company to reduce to some extent the disclosure of relevant information and to evade responsibility to provide a reason. The same time, the lack of detailed provisions on the disclosure format, which not only caused by listed companies to disclose a loss as to what to do, but also makes a number of listed companies to deal with the matter, does not disclose detailed information.

(B) disclosure of the form of the lack of uniform requirements
The disclosure of the lack of uniform requirements, greater selectivity and arbitrariness in the internal control information disclosure of listed companies. Although the China Securities Regulatory Commission to require the issuer to disclose in the prospectus the Company's internal control information and CPA concluding observations, but the lack of uniform requirements for internal control disclosure form.

(C) the lack of the Board of Directors on internal control information disclosure obligations relevant provisions
The main aspects of the internal control information disclosure, dependent on the Board of Supervisors and the Board responsibility for internal control disclosure of information is not relevant provisions. The author believes that the Board of Supervisors is not the main responsibility for internal control, they express an opinion is just an oversight board of directors and managers to establish an internal control system. Establish and maintain an effective internal control system is the responsibility of the Board of Directors and management. Most familiar with the board of directors and managers of the enterprise's internal control best able to evaluate them; same time, will the internal control system assessment report on the results to investors, the Board of Directors and management authorities internal control information is actually part of the fiduciary duty on the relief fiduciary duty. Therefore, it should be clear that the responsibility of the Board of Directors and management of the internal control information disclosure. (D) the lack of certified public accountants audit opinion on internal control information disclosure
Internal control information disclosure to the lack of certified public accountants audit opinion. The current system only requires accounting firms to the integrity of the internal control system, the rationality and effectiveness of evaluation and recommendations for improvement, and the appraisal report, does not require a certified public accountant to comment on the authenticity of the information disclosed on the company's internal control. This suggests that the regulation of internal control information disclosure of listed companies in China is still not complete. Precisely because there is no strong regulatory measures, resulting in internal control information disclosure of listed companies credibility is not very user satisfaction, and listed companies in the actual disclosure of internal control information word games fuzzy internal control information disclosure, resulting in internal control uncertain of the authenticity of the information. In view of the absence of external regulations and monitoring mechanisms, are likely to make the internal control information disclosure mere formality, to achieve their effect is therefore imperative to strengthen supervision.

Third, China's listed companies internal control disclosure of information perfection and development

In view of the inadequate implementation of the existing system and our system of listed companies in China lack, we should be in-depth discussion, suggestions for improvement, improve our internal control information disclosure system and strengthen enforcement system.

(A) improve and perfect the internal control information disclosure system of norms
1 requires that all the board of directors of listed companies disclosed in the annual report on internal control, also asked the Board of Supervisors and the audit committee composed of independent directors to evaluate the opinions of internal control. In order to prevent the internal control information disclosure formalized, can learn from the practice of the United States authorities to provide separate internal control report.
SFC should be on the internal control specific content and format of disclosure of information to make detailed provisions to regulate the disclosure behavior of listed companies, to enhance the operability of the system. Internal control report should indicate: the board of directors and the management responsibility for internal control; has been designed in accordance with the standards and the promulgation and implementation of the internal control system; declared that the Company have been prepared in accordance with the relevant standards, procedures of internal control design and implementation of the validity of the assessment, found no significant deficiencies (if the assessment found significant deficiencies should be noted that the defects and management authorities have taken measures); statement the company's internal control (or in addition to the above flaws, effective internal control) does not occur on reliability of financial reporting of the company and have a material adverse effect on the security, integrity of the company's assets. The premise of cost-effective internal control report should also have a brief description of the basic internal control system, so that information users evaluate them.

(B) encourage listed companies to voluntary disclosure of internal control information
Internal control of listed companies in China are implementing a mandatory disclosure system. Although this mandatory information disclosure to the investor information about listed companies. However, this mandatory disclosure requirements for reasonable still debatable. Generally speaking, the needs of our investors and creditors of the internal control information is still insufficient, the listed company's internal control and information supply is also flawed, research and the relevant provisions of the internal control system is imperfect, it is mandatory for all listed companies to disclose internal control difficult. Moreover, the mandatory information disclosure system there are also shortcomings: on the one hand, the listing of the Company's internal control information supply capacity is limited. Mandatory disclosure can indeed increase the supply of listed companies, but subject to enforcement costs, protect the legitimate rights and interests of listed companies constraints, its role is limited. When the disclosure of the social costs than social utility of such a system will lose the meaning of existence. On the other hand, mandatory disclosure also the loss of voluntary disclosure with the role of signal transduction. At present, the internal control of voluntary information disclosure in China's listed companies, while not common, but the existence of such motives, there are some enterprises try to do.
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