Internal control system is a series of relevant rules and regulations that employees are required to abide by in order to institutionalize and standardize the operation and handling methods of enterprise economic activities. It includes internal accounting control system and internal management control system. Accounting control system includes the establishment of organizational structure and various measures directly related to property protection and the reliability of financial accounting records. Management control system is not only the establishment of organization. It should also include the procedures and records of management approval and decision-making steps.
The methods of internal control include organizational control, business control, personnel control, inspection control and facilities and equipment control. It involves the procurement cycle, sales cycle and salary cycle of the enterprise. Financial management cycle (including investment and financing decisions), these five cycles involve various fields and transactions of enterprises.
In the early 1970s, during the investigation of Watergate, the US government found that some companies bribed some foreign officials in order to conduct trade and maintain trade relations. In order to cover up these illegal expenses, they often forge accounting records or set up off-balance-sheet records. In view of this, after 1977, the U.S. government promulgated "every company must design and establish an effective internal control system" in the Foreign Corrupt Practices Act in the form of legislation. This is the first time that the establishment of internal control system has been brought into legal jurisdiction. At the same time, in a short time, auditors need to rely on the relevant internal control system of the audited entity to make a correct evaluation of the financial status and operation of the audited entity. Otherwise, the audit risk will be difficult to control. Therefore, the relationship between audit and internal control is getting closer and closer.
With the deepening of opening to the outside world, audit theory and methods are gradually updated. The original detailed examination of accounting information has been gradually replaced by the audit method based on the evaluation of internal control system, which is commonly called system-based audit or risk-based audit abroad. This is a way to determine the audit focus and scope by evaluating the existence, rationality and effectiveness of the internal control of the audited unit, so as to achieve the purpose of overall evaluation of the unit. In order to ensure the objectivity and impartiality of audit evaluation, auditors must master the control points. The so-called control points refer to the key links that need to be controlled in the process of business activities because of easy mistakes. Any business activity may have several control points. Enterprises are required to take different control measures to ensure the realization of internal control objectives.
In recent years, strengthening enterprise internal control has been paid more and more attention by managers at all levels because of its importance in operation and management, which provides a good external environment for internal audit. However, it should also be noted that the goal of internal control can not always be achieved. No matter how perfect the control system and organizational settings are, if they are not effectively implemented by the management, the result can only be equated with no control and easy to lead to wrong behavior. If effective measures can be taken to supervise and limit the violation of internal control, good control can be maintained.
According to the experience of audit work in recent years, many enterprise control systems look perfect on the surface, but the actual implementation effect is not ideal. If it is stipulated that suppliers should be selected through bidding, but if the same suppliers participate in bidding every time, bidding will not play a real role. Therefore, it is important to establish and improve the relevant internal control system and operation mechanism, but more attention should be paid to strengthening the supervision of system executors and implementation effects. Establish a collective leadership decision-making mechanism, give full play to the role of shareholders' meeting, board of directors, board of supervisors and external expert institutions in business decision-making, and avoid decision-making mistakes and low investment returns. Especially for some large group companies with diversified business operations, because of their wide investment scope, large capital investment and long input-output cycle, it is particularly important to strengthen the economic responsibility assessment of leading cadres and personnel in important positions and strengthen the supervision of leading cadres at all levels to correctly exercise their power. As auditors, we should pay more attention to this aspect, ensure that all systems play their due roles in the business activities of enterprises, and avoid the system becoming a mere formality.
It should be pointed out that no internal control measure can be perfect, and it always has its inherent limitations. Mainly manifested in the failure of internal control measures due to human factors. Including misunderstanding of control responsibility, carelessness, fatigue and fraud when implementing control. In addition, with the passage of time, business activities may change constantly, and the initial perfect control measures may gradually fail. Therefore, the construction of internal control system is a long-term task.
From the analysis of internal control system, the conflict of interest between employees and enterprises is a great threat to the effectiveness of internal control. If the buyer has a financial interest relationship with the company's potential suppliers, the buyer's personal income comes not only from the company, but also from the profits obtained by the supplier's transaction with the company. This potential conflict of interest makes it violate the formal procurement procedures for self-interest when choosing suppliers, so as to choose suppliers with interests. In addition, nepotism will also lead to many conflicts of interest. Because internal collusion is one of the main risks that auditors can't control, many large enterprises strictly limit the number of employees with relatives. Auditors should urge enterprises to formulate corresponding restraint measures, at the same time strengthen the construction of corporate culture, improve the overall quality of employees, and ensure the correct implementation of various systems.
Auditors undertake service and supervision functions. In the construction of enterprise internal control system, it is necessary to strengthen the study of various policies, regulations and professional knowledge, constantly broaden audit ideas, improve audit methods, improve comprehensive business capabilities and enhance macro-awareness. In the audit process, we should not only adhere to the general financial revenue and expenditure, but also pay attention to collecting all kinds of information in the process of enterprise operation; At ordinary times, we should know more about the latest international and domestic audit trends, provide honest financial information and management information for enterprise decision makers, put forward opinions and suggestions that should be operable, pay attention to the combination of principle and flexibility, and not be divorced from reality and talk on paper, so as to promote the continuous improvement and perfection of enterprise internal control system.