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Corporate governance and internal control review of the literature

Author: XiangYongPing From: www.yourpaper.net Posted: 2009-07-02 05:27:45 Read:
Abstract: With the continuous development of economic globalization, the rate of change of the economic environment to speed up the constant increase in the factors of production in the global restructuring and configuration, enterprises are facing increasingly fierce competitive pressures and challenges, good corporate governance and internal control is not only the key to the survival and development of enterprises. Therefore, internal control and corporate governance as the core of the modern business enterprise system, more and more attention has been paid, the relationship of internal control and corporate governance has also become a hot research.
Keywords: corporate governance; internal control

A corporate governance literature review

"Corporate governance" concept first appeared in the economics literature is the early 1980s. Williamson had 1975 put forward the concept of "governance structure" (ovemancestructure), and the concept of corporate governance has been quite close. The Phliph and SyevenL: W artick "Corporate Governance - Review of the Literature," published in 1988, pointed out that the issue of corporate governance, including the specific issues generated by the interaction of the senior management, shareholders, the Board of Directors and other stakeholders of the company, constitute The core of the corporate governance issues are: (1) who benefit from the company's decision-making and actions of senior management; (2) who should benefit from the company's decision-making and actions of senior management. , A corporate governance problem arises when there is an inconsistency between the "what" and "should be". Hart says that, in the case of the following two conditions are established, the issue of corporate governance will produce. First, the members of the organization there are agency problems, or the question of conflict of interest; Second, there are transaction costs, which solve the agency problems through a full contract. In other words, in the case of the presence of agency problems and incomplete contracts, corporate governance issues will be generated. Corporate governance as making a decision a mechanism of the problem is no specific requirement in the initial contract.

2 internal control review of the literature

2.1 Summary of foreign literature
Internal control emerged in the mid-1940s, Western countries, the overall development of internal control is basically experiencing internal check, internal control systems, internal control structure and internal control of the overall framework of four phases. Early internal control is the possibility to protect the safety and integrity of the assets and financial records, requires enterprises to implement authorization and approval of transactions, assets controls, segregation of duties of the audit of the financial records and management custody. In 1980s, the U.S. corporate financial fraud, some large companies have a business failure, these phenomena are caused by the unprecedented attention of the American community. In order to study the reasons for business failure and false financial reporting, "against false financial report of the Commission" (COSO) of the Service fraud event a full and detailed research. By a large number of investigations have found that the majority of financial fraud incidents are caused by internal runaway, Coso immediately began to study the internal control problems. "Internal Control - Integrated Framework issued a programmatic document guiding internal control practices in the early 1990s, known as the Coso report.
2.2 domestic literature review
90 years of the 20th century to the beginning of this century, the internal control during the initial development of internal control study focuses on the fields of accounting and auditing, research services in audit procedures and methods of application, audit cost savings, the audit efficiency improvement and audit risk control.
(1) the construction of government regulations. In China, from the 1990s onwards, the government began to intensify the implementation of the internal control, in December 1996, the Ministry of Finance released the "Independent Audit Guideline No. 9 - internal control and audit risk" to require CPA Review internal control, and to raised internal control including the control environment, the accounting system and control procedures. May 1997 the People's Bank of China promulgated the "guiding principles to strengthen internal control of financial institutions", the China Securities Regulatory Commission in 1999 listed companies to make all asset impairment and other relevant matters, Revised October 1999 given by the Accounting Law of the People's Republic of China, the National Audit Office in January 2000 implementation of the People's Republic of China National Auditing Standards put forward specific demands from different aspects of the construction of internal control. This period of the introduction of the regulations, basic are around to ensure the integrity of corporate assets, accounting information is true as the main target.
(2) theoretical studies. This stage of theoretical research focused mainly on thought control introduced within the United States and Europe, as well as how to strengthen internal control audit accounting. Yan Dawu, Yang have red main line to study the internal control accounting controls stone Benren side Red Star goal-oriented to audit internal control. Li Fengming, Wu Shui Peng, combined with the COSO framework for internal control study, part of the framework, and from overall architecture, design and evaluation of internal control, risk management and other parties from elaborate internal control theory. 3 corporate governance and internal control want associated literature review

3.1 Summary of foreign literature
Research on the relationship between internal control and corporate governance, the foreign key in Card Berle report, the the Hamm Pell reports and Turnbull report, as well as the COSO internal control framework and the OECD "Principles of Corporate Governance" as the representative. Among them, the first three are referred to as a the three milestone in British corporate governance and internal control history.
In 1992, Ramzan Burleigh reports research company from a financial point of view of governance, internal control is placed within the framework of corporate governance, explicitly require the company to establish an audit committee, independent directors system and internal control, financial reporting quality and relationship between corporate governance as a precondition, explicit requirements for companies to improve their internal control mechanisms, and recommended that the board should be a statement on the effectiveness of the company's internal control, external auditors and the audit committee to respond to a statement issued by the Board of Directors for review.
1999 as the Corporate Governance Committee guidelines Guide, Turnbull report pointed out that the effectiveness of internal control of the board should companies be responsible for the development of proper internal control system and seek daily to ensure the internal control system can play an effective role should be Further confirmation of internal control risk management is effective. Which specifically pointed out that the Board should be cautious, careful understanding of the relevant information on the basis of the formation of the right to determine whether effective internal control.
The DECD "principles of corporate governance provisions in 2004: the corporate governance structure should ensure that the board of directors of the company's strategic guidance and effective supervision of the management of public
Division and shareholder responsibility and loyalty. Requested the Board to ensure that the integrity of the company's accounting and financial reporting system, including the integrity of the independent auditor, to ensure that the company has the appropriate control system, risk management systems, financial and operational control of the system to ensure that the company's behavior does not violation of the law and related standards.
3.2 domestic literature review
(1) the relationship of the internal control and corporate governance. Four perspectives, mixing theory, forthcoming, both mixed together indiscriminately string with each other; fragmentation theory, will soon the two are completely separate from each other the other factors deemed not associated; environmentalism, is about corporate governance as internal control environment, look at, for example, Wu water Peng pointed out that the structure of corporate governance is the internal control environment factors, Yan Dawu also pointed out that the internal control framework and company governance mechanism for the relationship between internal control management and monitoring system; chimeric theory, in 2005 ESSAYS proposed that an interactive relationship between corporate governance and internal control.
(2) the efficiency of the internal control in the different structure of property rights. Generally believed that internal control under the different structure of property rights, in particular the internal accounting control has a different efficiency, the structure of private property rights owned enterprise internal accounting control employees have higher efficiency, but often failed to landlords; internal partners The control efficiency depends largely on the design of the internal control system in the partnership contract and related regulations. State-owned enterprises is a typical representative of the public ownership structure of enterprises, such enterprises internal control in the early juvenile status, a mere formality, a very low efficiency of the internal control. AG mixed structure of property rights under the modern internal control has a very high efficiency due to the improvement of corporate governance structure. Analysis of the efficiency of the internal control in the different structure of property rights, the more unified the views of the parties, including the main researchers von all subjects, bacon, Li Xifu.
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