The degree of marketization of China companies is getting higher and higher, and the market competition is becoming more and more fierce. In the long-term management consulting experience, after consulting companies of different industries and sizes, we believe that although the financial management of each company is different based on different business models of different industries, there are similar problems in financial control and internal control, which are summarized as follows:
1 Weak financial management foundation and weakened financial internal control; Nowadays, financial accounting or management software has become very popular. Financial management or accounting software at all levels or functions can help financial personnel improve efficiency and ensure the correctness and timeliness of accounting data. However, there is a certain gap between the basic financial management level of the company and the management's requirements for financial data. For example, there are problems in the internal control standard of financial information, the implementation of the principle of separation of posts, auditing, authority management, decision-making data support, strategic management and performance management. The role played by finance has not achieved our expected results. This is why many companies think that finance is not well supervised and controlled in the management process, and it is just a formality, just to complete the necessary procedures;
2 Lack of financial management functions, and obvious lack of good and effective financial management tools and internal control tools. In the actual management process, many tools and technologies have not been implemented or used by company managers, such as budget management, key performance indicators, internal control standards, financial early warning mechanism and so on. In the actual management process of the company, financial personnel spend a lot of energy and time collecting, sorting, accounting and compiling financial reports, instead of playing an active role in the process of financial data classification, cost reduction, performance management, budget control and strategic management, they retreat to the role of providing only data and information.
The company as a whole lacks internal control mechanisms and standards and is unaware of the benefits that internal control brings to the company. Many multinational companies have established standardized and complete internal control standards, and integrated them into process design and process improvement, trained and educated a large number of employees, and infiltrated internal control standards into the daily work and behavior of all employees, so as to reduce the company's business risks, avoid the occurrence of abnormal business behaviors such as fraud and fraud, maintain a good corporate social image, and safeguard the interests of shareholders;
Because the external environment of China Company does not require the company to strengthen the internal control standards, this immature market-oriented operation mode leads the company not to care about the economic and social benefits that the internal control standards can bring to the company. The company believes that the so-called "edge ball" route can help the company obtain the expected benefits, without considering that the damage caused by the failure of internal control may be fatal. We can see the consequences of "Enron" incident to the company.
Definition of internal control:
Internal control usually refers to:
1 inspect and test the internal operation process of the company; The specific implementation of internal control requires the relevant internal control auditors to comprehensively check and test the company's various operating procedures, including the use of necessary audit means, such as analysis and testing, internal control level evaluation, investigation, on-site inspection, etc. , and asked to complete the audit working papers and management reports, and report the problems found in the audit process to the management of the company and put forward their own management opinions;
2. Corrector and tracker of process management; The implementation of internal control requires the company to have a relatively complete operation process and process operation manual. In the actual audit and testing process, according to the company's operation process and operation manual, we can well judge the difference between actual and expected and pre-specified, find out the redundant and non-value-added parts in the process of operation, and standardize them.
3 is an indispensable part of the company's internal management; In fact, internal control is the basis of the company's internal management, and all the company's operating processes and management processes need to be included in the scope of internal control standards.
Benefits of internal control:
1 Help us achieve our main ideas and best corporate goals. In the process of designing internal control standards, we need to pay attention to the shareholders and strategic objectives of the company. In addition to the basic control measures, the internal control standards of strategic management can help us achieve our strategic goals well.
It helps to protect our property, information and technology. Many principles in internal control can help companies maintain the security of assets, information and technology, such as good inspection and verification procedures, regular reporting and recording procedures and authority management. These principles can help us maintain the integrity of assets, information and technology.
It helps to ensure that we can provide reliable and timely business reports and financial reports. Because the internal control standard has very good technology and means in maintaining the security and integrity of financial information and data, and it is also regarded as the most important control part of internal control, there is reason to believe that the internal control standard is very effective in maintaining and improving the company's financial information.
It helps us to abide by relevant laws, regulations and practices and avoid damaging the reputation and status of the company. In the internal control standards, we particularly emphasize the maintenance of the company's external environment, especially laws, regulations and practices. There are many painful cases in which companies violate laws and business practices due to the failure and ineffective implementation of internal control standards, including short-term economic benefits and long-term social benefits.
Evaluation criteria of internal control:
The specific criteria of internal control evaluation can also be divided into two levels: the first level is the evaluation criteria of internal control elements; The second level is the evaluation standard of internal control operation level. Drawing lessons from the research results of COSO report in the United States, internal control elements include control environment, risk assessment, control activities, information and communication, and supervision. Each factor can be further subdivided into more items, such as morality and values, execution, board of directors, management concept and business model, organizational structure, power and responsibility distribution system, human resources policy and implementation, etc. As for the evaluation standard of activity level, it is mainly to refine the elements of control activities. Control activities are policies and procedures to ensure the implementation of management instructions, aiming at helping the company to ensure that necessary actions are taken against "the risk that the company's goals cannot be achieved". Control activities are formulated for control points, and the company generally designs the internal control standard design process of control activities according to the characteristics of production and business activities:
In the process of designing internal control standards, we need to pay attention to the internal control environment.
When designing internal control standards, we need to pay attention to:
1 interest demand of shareholders;
2. Generally accepted accounting standards and auditing standards;
3. Laws and regulations of the state and the autonomous region;
4. Specific legal requirements and other requirements of the Securities and Exchange Commission;
5 customer needs;
Meanwhile, we need to pay attention to:
1 Financial policies and working procedures;
2. Internal audit requirements of the company;
3. External audit requirements of the company;
4 employee code of conduct, etc. ;
In modern companies, the establishment of internal control must be viewed from a systematic perspective, and internal control is not a work that a single department can accomplish independently.
General internal control system includes:
1 employee code of conduct;
2. Training of internal control standards;
3 working procedure guide;
4 financial standards;
5 electronic information security standards;
Other standards and policies of the company.
After comprehensively considering the above factors, we need to analyze and redesign our various processes. According to the management consulting project, we investigated and diagnosed the company in the early stage, and fully communicated with the management of the company, and confirmed the following problems:
1 The process control is chaotic and the design of each process is unclear; Especially in the process of liquidity management such as accounts receivable, accounts payable, inventory management, cash and bank deposits, the company's fund management and liquidity circulation speed can not meet the company's requirements for funds;
The company has no internal control standards and related internal control systems, and all controls exist in the sporadic independent activities of various managers; Unable to carry out internal management according to the internal control standards of the system;
3. The business process between departments is chaotic, which leads to uncoordinated and unsmooth business cooperation and unsmooth information exchange between departments;
4. Weak basic financial management, such as lack of necessary financial information and data management means and systems, unreasonable basic accounting business processes, lack of financial functions, and lack of necessary information collection and source channels and records;
5. Financial personnel need to obtain practical financial software system to reduce the workload and pressure in the process of financial accounting; (This can be solved by purchasing suitable software from external software vendors. )
6. Financial personnel failed to carry out financial supervision and audit in accordance with financial internal control standards or company internal control requirements in the course of business operation, which became the support and help of various departments, and the financial department was criticized in the company for the work problems of various business departments;
The lack of a unified financial policy within the company leads to the lack of necessary basis and standards for financial personnel in the actual implementation of business accounting and business supervision, as well as in the process of business supervision and management.
Consultants and members of the company's financial sector reform team ranked the above problems and worked out solutions in turn according to the principle of importance.
1 We designed a detailed action plan between each action, including:
2. The purpose of the action;
3 scope of action;
4 mode of action;
5 action steps;
Six main areas of concern;
7 implementation content;
8 Action implementation results.
The content of the plan needs to be agreed with the management personnel in charge of the work of the company; During the consultation process, the personnel from the relevant departments of process and internal control standards generally form an improvement team to fully acquire the knowledge and solutions of various functional departments and professionals.
After comprehensively considering the requirements of various key factors in the company's internal control, we confirm the goals we need to achieve, generally taking best practices as reference (best business practices: it should be the combination or part of the company's strategy, business process, support system and organizational structure, and it must be able to have a positive impact on a set of key performance indicators (KPI), such as cost, service quality and return on investment, thus bringing the maximum value to the company. Definition of Adelson Consulting).
When we choose best practices, we usually adopt:
1 the advanced level of our company in the past;
2. The advanced level of this industry;
The advanced level of other industries with similar processes;
4. Confirm the basic contents of internal standard design, generally including:
5 procurement process;
6 inventory control process;
7 financial report;
8. Crisis management and control of computing information system;
9 proprietary information protection;
10 physical protection and internal control of property;
1 1 cost internal control;
12 internal control of physical inventory and cleaning;
13 internal control of accounts receivable, accounts payable, general ledger and cash;
14 internal control of laws and regulations.
According to the content of internal control and best business practices, it is very difficult to confirm our internal control standards in each internal control link (the above link). In the process of designing this internal control standard, we need to follow the basic principles of internal control.
The basic principles of internal control include:
1 internal control standards have a great impact on resource protection, operation, reliability of financial information and compliance with laws and practices.
Provide reasonable but not absolute guarantees.
3 reasonable guarantee we can think that the cost of control should not exceed the income that can be generated.
Loyalty, good business judgment and good control culture are very important.
The implementation of control is a reasonable and good business judgment, not a fixed model, and any company and accounting unit can copy it.
Internal control emphasizes the control of process, not the treatment of results.
It's a pity that it doesn't rain, so put an end to possible risks before they happen.
The design of all internal control standards needs to meet the requirements of internal control matrix. The following four principles are very important and must be used in the design of internal control standards:
1 authorization
2 record
3 Safety/protection
4 verification
According to the contents of internal control and best business practices, consultants and managers * * * make business process charts and business process design analysis, mark each key control point, and confirm our internal control methods and means and necessary management reporting system at each control point; And summarize all internal control program files and flow charts to form a complete internal control file.
According to internal control standards and best business practices, consultants and company managers * * * adjust the process to eliminate non-value-added parts in the process, shorten the running time of the process and improve efficiency.
In the process of process design, the following principles need to be followed:
1 define job responsibilities from the purpose of work rather than the work process;
2 eliminate the part that does not add value to internal customers and external customers;
3. Incorporate internal control standards into process design;
4. Establish a performance evaluation system in the process of process design;
5. Cost-benefit ratio analysis to improve the cost-benefit ratio;
Finally, because internal control standards are closely related to process design, it is necessary for the company to conduct long-term and extensive training and education for employees at the initial stage of implementing standards.
General training methods include:
1 formal training, including training courses, temporary training and vocational training;
2 vocational education university, academic education;
3 demonstration and process demonstration;
4. Design recognizable graphic signs or simple explanatory texts and flow charts;
5. Publish on local area network or online school;
6. Distribute information and conduct regular evaluation.
7 Regular inspection and feedback meeting.
Before the implementation of internal control standards, if this part of the work does not achieve the expected results, it will have very serious consequences for the implementation of internal control standards. In this process, it will play a good role in the smooth implementation of internal control standards to gain the recognition and understanding of employees and understand the important role of internal control standards for companies and individuals.