Actively build the framework structure of enterprise internal control standard system

Basic norms are at the highest level in the enterprise internal control standard system, playing a controlling role, describing the framework structure that enterprises must establish to establish and implement internal control system, and stipulating the basic requirements of internal control, such as definition, objectives, principles and elements, which are the basic basis for formulating application guidelines, evaluation guidelines, verification guidelines and enterprise internal control system.

the basic norms * * * have seven chapters and fifty articles, each chapter is: general principles, internal environment, risk assessment, control activities, information and communication, internal supervision and supplementary provisions.

objectives of internal control. The basic norms point out that internal control is a process implemented by the board of directors, the board of supervisors, the managers and all employees of the enterprise to achieve the control objectives. The objectives of internal control are located in five aspects, including: reasonably ensuring the legal compliance of enterprise management, asset safety, authenticity and integrity of financial reports and related information, improving operational efficiency and effectiveness, and promoting the realization of enterprise development strategy. The target positioning of internal control is a scientific choice made after combining the reality of enterprises in China and comparing the internal control targets of enterprises in other countries and economies.

principles of internal control. The basic norms establish five basic principles for enterprises to establish and implement internal control: first, the comprehensive principle requires that internal control should run through the whole process of decision-making, implementation and supervision, covering all kinds of businesses and matters of enterprises and their subordinate units; Second, the principle of materiality requires that internal control should focus on important business matters and high-risk areas to effectively prevent major risks; The third is the principle of checks and balances, which requires that internal control should form mutual restraint and supervision in governance structure, institutional setup, power and responsibility distribution, business processes, etc., while taking into account operational efficiency; The fourth is the principle of adaptability, which requires that internal control should be adapted to the business scale, business scope, competition situation and risk level of the enterprise, and be adjusted with the changes of the situation; Fifth, the principle of cost-benefit, which requires that internal control should weigh the implementation cost and expected benefit to achieve effective control at an appropriate cost.

elements of internal control. The basic norms establish a five-element internal control framework: first, the internal environment, which generally includes governance structure, institutional setup and distribution of powers and responsibilities, internal audit, human resources policy, corporate culture, etc., is an important basis for enterprises to implement internal control, indicating that enterprises should start with governance structure before implementing internal control. If modern enterprises do not have a good governance structure, internal control will exist in name only. Second, risk assessment refers to the process that enterprises identify and systematically analyze the risks related to the realization of internal control objectives in business activities and reasonably determine the risk response strategies, which is an important link for enterprises to implement internal control. Thirdly, control activities refer to enterprises adopting corresponding control measures according to the results of risk assessment, which is an important means for enterprises to implement internal control. Fourthly, information and communication means that enterprises should collect and transmit information related to internal control in a timely and accurate manner, and ensure effective communication between enterprises and outside, which is an important condition for enterprises to implement internal control. Fifth, internal supervision means that enterprises should supervise and inspect the establishment and implementation of internal control, evaluate the effectiveness of internal control, and find defects in internal control, which should be improved in time. This is an important guarantee for enterprises to implement internal control.

Application guidance occupies a dominant position in the internal control system, which mainly includes two aspects:

First, application guidance for the main business and matters of the enterprise. At present, the exposure draft basically covers fund management, procurement, sales, fixed assets, inventory, engineering projects, intangible assets, investment, financing, budget, cost, guarantee, contract agreement, business outsourcing, control of subsidiaries, preparation and disclosure of financial reports, human resources policy, information system control, derivatives, enterprise mergers and acquisitions and related transactions, etc. These are the most common and related transactions for enterprises. With the gradual deepening of soliciting opinions, necessary adjustments may be made in the composition of specific projects.

the second is the application guidelines for special enterprises or industries. For example, commercial banks, insurance companies, securities companies, trust companies, fund companies, futures companies and other financial enterprises, because of their special business, involving financial risks, have a great relationship with economic development and financial security. In terms of internal control, in addition to following the general internal control requirements, it is necessary to stipulate special application guidelines, which constitute an integral part of the application guidelines. This is a very important institutional arrangement, and its positioning is not only the reliability of financial reports, but also the risk control of enterprises, which is broader than the Sarbanes-Oxley Act of the United States

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