Interpretation Of Enterprise Internal Control Supporting Guidelines

The Ministry of Finance recently issued the "guidelines for internal control of enterprises" with the SFC, the Audit Commission, the SASAC, the China Banking Regulatory Commission and the CIRC. Liu Yuting, director of the accounting department of the Ministry of finance, explained how to understand and grasp its main contents and spiritual essence on 5 th.

Liu Yuting said that the supporting guidelines, together with the basic norms of enterprise internal control released in May 2008, have jointly constructed the internal control standard system of Chinese enterprises. This is an important measure to comprehensively enhance the management level of listed companies and unlisted large and medium-sized enterprises. It is also an important institutional arrangement for China to deal with the international financial crisis.

He said that the supporting guidelines were composed of 21 application guidelines (18 issued recently, 3 guidelines on banking, securities and insurance, etc.), "guidelines for evaluation of internal control of enterprises" and "guidelines for internal control audit of enterprises". Among them, the application guidelines are the guidelines for enterprises to establish and improve their internal control according to the five elements of internal control and internal control, and occupy the dominant position in the supporting guidelines and even the whole internal control standard system. The enterprise internal control evaluation guidelines are guidelines for the enterprise management to evaluate the effectiveness of the internal control of the enterprise; the guidelines for enterprise internal control audit are the practice criteria for the implementation of the internal control audit business for certified public accountants and accounting firms. The three sides are independent and interrelated, forming an organic whole.

The application guidelines can be divided into three categories, namely, internal environmental guidance, control activity guidance and control means guidance, which basically covers business and matters such as enterprise capital flow, real logistics, manpower flow and information flow.

Liu Yuting analysis pointed out that the internal environment is the basis for enterprises to implement internal control, which controls the internal control consciousness of all employees, and affects the attitude, knowledge and behavior of all employees in implementing control activities and performing control responsibilities. There are 5 internal environmental guidelines, including organizational structure, development strategy, human resources, corporate culture and social responsibility.

While improving and improving the internal environment control, enterprises should also control the specific business activities accordingly. To this end, the Ministry of Finance and other ministries and commissions have formulated 9 guidelines for controlling the application of activities, including capital activities, procurement operations, asset management, sales operations, research and development, engineering projects, guarantee business, outsourcing and financial reporting.

The guidance of control means focuses on the nature of "tools" and often involves the overall business or management of an enterprise. There are 4 such guidelines, including comprehensive budgets, contract management, internal information transmission and information systems.

Liu Yuting said that internal control evaluation refers to the process of comprehensive evaluation of the effectiveness of internal control, the formation of evaluation conclusions and the issuance of evaluation reports by the board of directors or similar decision-making bodies. In the practice of enterprise internal control, the evaluation of internal control is a very important part. The basic norms of enterprise internal control and 18 application guidelines are based on China's economic, social, cultural and managerial realities. No matter the size and scope of the system requirements, or the contents and relationships of specific elements and business activities, compared with the practice of major market economies in the world, there are many characteristics that meet the requirements of the development of China's socialist market economy under the premise that the framework remains the same. Therefore, how to scientifically evaluate the internal control system of Chinese enterprises and copy the ready-made practices of developed market countries or regions has become an important proposition and challenge for the construction of internal control standard system in China. The formulation and promulgate of the evaluation guidelines for enterprise internal control provides a common criterion for enterprises to carry out internal control self-evaluation, and provides self-discipline requirements for Chinese enterprises participating in international competition in the field of internal control construction, which is conducive to improving the trust of Chinese investors in enterprises, the public and even international capital markets.

He also said that internal control audit refers to the accounting firm's entrustment to audit the effectiveness of the internal control design and operation of a specific benchmark day. It is a mandatory requirement introduced in the implementation of the internal control standard system, which is conducive to promoting the sound internal control system and enhancing the reliability of enterprise financial reporting. The United States, Japan and other countries have made similar institutional arrangements. In order to regulate the implementation of CPA's internal control audit business, the Ministry of Finance and other ministries and commissions have formulated the guidelines for internal control audit in enterprises, focusing on how to make clear requirements or stress on how to do well in internal control audit business from the aspects of audit responsibility division, audit scope, integration of audit, utilization of the work of audited units, audit methods, evaluation control defects, and issuance of audit reports.

Liu Yuting said that laying stress on and strengthening the preparatory work before implementation is an important prerequisite for ensuring the smooth implementation of the internal control standard system. In order to ensure the smooth implementation of the internal control standard system, all relevant departments and units should take active action and conscientiously and conscientiously do all the work before implementation.

Liu Yuting emphasized that establishing an effective and effective internal and external supervision and evaluation system for enterprises, certified public accountants and relevant supervisory departments is an important guarantee to ensure the smooth implementation of the internal control system. First, enterprises should attach importance to and play the supervisory role of the audit committee in the implementation of internal control, and entrust the board of auditors to monitor the effective implementation of internal control and self evaluation of internal control, and coordinate the functions of internal control audit.
　　
Two, certified public accountants should strictly abide by the requirements set forth in the internal control standards of enterprises, and carry out internal control audit business.

Three, the Ministry of Finance and other relevant regulatory departments should combine the relevant policy guidance and supervision with the implementation of internal control standards, while providing good services for enterprises and accounting firms, pay close attention to and follow up the implementation of internal control standards by enterprises and accounting firms, and establish a prompt and efficient mechanism for early warning, response and handling, so as to properly handle various problems arising from the implementation of internal control norms. It is necessary to strengthen the supervision and inspection of enterprises and accounting firms in implementing the internal control standard system, deal with the units or individuals who violate the requirements of internal control standards according to law, and strengthen departments' communication, coordinate supervision policies, standardize the supervision caliber, form a joint force of supervision and improve the efficiency of supervision.