Is Internal Financial Control The Lever Of Enterprise Operation?

First, the understanding of the definition of internal financial control.

The author believes that internal financial control is a general term for a series of methods, techniques, procedures and concepts of financial activities, which are based on the basic principles and methods of cybernetics.

The definition of internal financial control has the following characteristics:

1., clarified the theoretical basis of internal financial control.

The author believes that internal financial control is the specific application of cybernetics in the financial activities of enterprises.

The theory is based on Cybernetics rather than narrow policies, systems and plans in the dictionary of accounting and the new accounting dictionary.

Recognizing this makes our research vision not only limited to subjective policies and regulations, but also to the height of basic economics theory.

2., the concept of internal financial control is abstracted.

The author thinks that the definition of any concept can only reveal its difference from other concepts by emphasizing its qualitative stipulation.

In this paper, the definition of the concept of internal financial control is to get rid of the model which only expresses the phenomenon, grasp the essence of "changing all the time", and grasp the concept, and fully study its connotation and denotation.

3., it helps to understand the essence of internal financial control.

The author believes that the essence of internal financial control is a kind of control activity to reduce paction costs. One important reason is that internal financial control is an important part of corporate governance structure.

This article expounds the definition of the internal financial control, which emphasizes this point and helps to grasp its essence.

4. internal financial control is purposeful. It is the process of making enterprise management and management go ahead according to the established goal, but it is a means rather than an end.

5. internal financial control is not a certain event or situation, but a series of control behaviors scattered in the operation of enterprises.

And internal financial control and business activities are intertwined, and exist for the basic business activities of enterprises.

6. internal and external environment affects the formulation and implementation of internal financial control objectives.

Every employee in an enterprise is not only the subject of control but also the object of control. It controls and controls the operation of a company.

All internal financial control is set up and implemented for "people". Therefore, enterprises will form a kind of control spirit and control concept, which directly affects the control efficiency and effectiveness of enterprises.

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Two. The relationship between internal financial control and internal control, accounting control and financial supervision.

(1) the relationship between internal control, accounting control and financial control.

Internal control is also known as internal control system. In the thematic report entitled "the importance of internal control, coordination system elements and its importance to management and independent and impartial certified public accountants" formulated by the Committee of audit procedures of the American Institute of Certified Public Accountants in 1949, the definition of internal control is: "internal control includes the design of organizational structure and all the coordination methods and measures adopted by enterprises, aiming at protecting assets, checking the accuracy and reliability of accounting information, improving operational efficiency, and promoting the implementation of established management policies.

"This definition emphasizes that internal control is not limited to control directly related to accounting and finance departments, but also includes budgetary control, cost control, financial control, periodic reports, statistical analysis, training plans and internal auditing, and other business activities in other fields.

The Audit Procedure Specification No. nineteenth issued by the audit committee of the American Institute of Certified Public Accountants (CPA) divides the internal control into two types: accounting control and management control.

1. accounting control, that is, the organization plan and all protection assets, the protection of accounting records reliability or directly related to the method and procedures.

2. management control, that is, in order to help managers coordinate the various departments within the enterprise to achieve the desired goals, the enterprise uses the principle of balance deviation in the control theory to regulate and control the operation and management of enterprises, such as plan control, financial control, and new product development control.

In my opinion, control is an important function of management. Accounting control, management control and financial control are all aimed at enabling the financial system of an enterprise to operate effectively and achieve its purpose. However, there are obvious differences between the three in terms of definition, content and scope.

(1) accounting control and management control are juxtaposition. The difference between them is that the purpose of control is different.

Accounting control is the control of the economic information system mainly based on providing objective and useful accounting information. Management control is related to ensuring the implementation of operational decisions and policies and promoting the efficiency and effectiveness of economic activities.

(2) accounting control and management control are organically combined. They are not mutually exclusive and mutually exclusive.

Accounting control generally has a direct impact on financial records. Management control usually has an indirect effect on financial records. Therefore, management control can make deviation correction and coordination control on the basis of information provided by accounting control. At the same time, accounting control can also use the information of management control feedback to judge the appropriateness of accounting control.

(3) financial control is part of management control.

The essence of management control is to use the principle of balance deviation in control theory to regulate and control the operation and management of enterprises and its activities, which in itself covers the theoretical basis and purpose of financial control.

Therefore, it is appropriate to classify financial control into management control. It will neither separate the two from the other, nor confuse the differences between them.

(two) the relationship between financial control and financial supervision.

In my opinion, control is an activity that can be carried out by things (system) itself, that is, a series of self regulating and self constraining actions to achieve their goals. Although supervision has internal supervision and external supervision, its purpose is to make or restrict the external force to a certain thing.

Based on this, the author thinks that financial supervision refers to the supervision and management activities that are relative to the main body outside the enterprise and make use of relevant laws and regulations to carry out production and operation activities or business activities.

Financial control refers to a general term of a series of methods, techniques, procedures and concepts for financial activities to be scientifically standardized, restricted and evaluated by using the basic principles and methods of cybernetics.

Through the definition of the two, we can see that the two sides have mutual coordination, but they each perform their duties, each has division of labor, and there are obvious differences.

The concrete manifestation is:

1., the main body is different.

The main body of financial control is mainly related to internal enterprises, such as board of directors, managers and grass-roots units (such as workshop), while the main body of financial supervision is external related enterprises, such as national audit institutions, finance, taxation, people's Bank, Securities Regulatory Commission, Insurance Regulatory Commission and so on, mainly representing a kind of social justice.

2. according to the difference.

The basis of financial control is mainly a series of planned and budgetary indicators formulated in advance according to the actual production and operation of enterprises, and the basis for financial supervision is mainly based on the financial regulations, financial systems and relevant laws promulgated by the state.

3. the content is different.

The contents of financial control are related to the internal production and operation of enterprises, including fund-raising, investment, cost, income, distribution, etc., and the contents of financial supervision are mainly directed at whether the labor cost, financial revenue and expenditure, the realization and distribution of financial results are reasonable and legitimate, such as the supervision of chief financial officers, such as the assets and costs of enterprises, the raising and using of funds, the truthfulness and validity of financial reports, the distribution of dividends, the change of net assets and so on.

4. the purpose is different.

The purpose of financial control is whether there is any deviation between the production and operation process and the result of the enterprise in comparison with the planned and budgetary indicators. The purpose of financial supervision is to compare the production and operation processes and results of the enterprises with those of the state's financial regulations, financial systems and relevant legal provisions.

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Three, the important role of internal financial control.

(1) internal financial control is the core of modern enterprise financial management.

As far as investors are concerned, the goal of internal financial control is to maximize the financial value of enterprises, and to balance the agency cost and the financial income. The object of internal financial control is the managers, to prevent them from laziness, irresponsibility, deviate from the established financial targets of the investors and obtain wealth from the company by unfair financial means through internal financial control. For the operators, the emphasis of internal financial control should be established on the internal financial control measures to ensure the realization of the financial objectives of the investors, such as short-term financial budget control, capital flow and stock control.

(two) internal financial control is the guarantee for the realization of enterprise financial plan.

The purpose of enterprise financial management is to promote the realization of enterprise financial plan.

In order to ensure the realization of enterprise financial plan, we must supervise and adjust the execution process of enterprise financial plan.

At the same time, the enterprise financial plan is made before the financial activities, because the financial activities are very complex and changeable factors, therefore, it is very difficult for the enterprise financial planning to be seamless, and there are always some shortcomings.

And all of these are often found in the control process of financial activities. Only by controlling the financial activities can we get the adjustment.

Therefore, strengthening internal financial control is an important and reliable guarantee for enterprise financial planning.

On the other hand, internal financial control is the key link to achieve the goal of enterprise financial management.

In financial management, it is difficult to achieve a predetermined financial goal if it is only to determine reasonable decisions and make practical financial budgets, but without controlling the implementation of budgetary actions.

In a sense, financial forecasting, decision making and budgeting are the directions, basis and planning measures for financial control, and financial control is the implementation of these plans.

Without control, any prediction, decision and budget will be futile.

(three) the role of internal financial control in practice

In the management of market economy, it is very necessary for enterprises, governments and even the whole society to establish and constantly improve the internal financial control system of enterprises.

Throughout the world, many successful enterprises regard internal financial control as blood's importance to life, and strengthen internal financial control as a secret weapon for company's success.

Some enterprises, however, fail to control internal financial control, resulting in huge losses and even bankruptcy.

The collapse of the giant group has still kept us in memory. There are many reasons for the collapse of the giant group. Chairman Shi Yuzhu, in an interview with reporters, complained bitterly: "the most important reason is that the internal management of enterprises is impetuous and chaotic. The direct reason is the lack of financial operation and financial control experience, and can not effectively leverage financial leverage.

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It can be seen that internal financial control plays an important role in ensuring, promoting, supervising and coordinating the enterprise's economic control system. Strengthening the internal financial control of enterprises has become the need of the enterprises' survival and development.

Especially after China's accession to the WTO, the domestic market will be in line with the international market, the market competition will become more intense and the survival pressure of enterprises will be increased. All these require urgent demands for enterprises to strengthen internal financial control.