Financial reporting control refers to the internal control implemented by the board of directors, the board of supervisors, the management and all employees of the company, designed and operated to reasonably ensure the authenticity and integrity of financial reports and related information, and the control related to the reliability of financial reports in the internal control used to protect asset security.
Policies and procedures for financial reporting control, including the retention of relevant records; Reasonably ensure that necessary transaction records are kept, allow the preparation of financial statements in accordance with generally accepted accounting standards, and ensure that the issuer's income and expenses are only conducted in accordance with the appropriate authorization of the management and the board of directors; And provide reasonable assurance for the prevention or timely detection of unauthorized acquisition, use or disposal of assets that may have a significant impact on the financial statements of the issuer.
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What is financial control
Financial control refers to the measurement and correction of the process and results of capital investment and income of an enterprise. The purpose is to ensure the realization of the enterprise's goals and the financial plan formulated to achieve this goal. The following is the basic introduction of financial control that I have carefully arranged for you. I hope you like it.
Financial control characteristics It refers to the process of ensuring that the enterprise and its internal organizations and personnel fully implement and realize the financial budget according to certain procedures and methods. The characteristics are as follows: take the form of value as the control means, take different economic businesses of different posts, departments and levels as the comprehensive control object, and control the daily cash flow as the main content.
It is an important part of internal control, the core of internal control, and the embodiment of internal control in terms of capital and value. From the experience of the development of industrialized countries, there are two different models of enterprise control: macro view and micro view. Among them, the macro view control of finance is mainly achieved through the direct impact of finance, securities or capital market on the invested enterprise, or by entrusting certified public accountants to audit the enterprise. The former mainly reflects the impact of corporate governance system, capital structure and market competition on the enterprise, while the latter is actually external audit control.
The purpose must be to ensure the efficiency and effectiveness of unit operation, the security of assets, and the reliability of economic information and financial reports. Its role mainly includes the following three aspects: first, it helps to achieve the company's business policies and objectives. It is not only a real-time monitoring means in the work, but also an evaluation standard. Second, it protects the safety and integrity of various assets of the unit, and prevents the loss of assets. Third, it ensures the authenticity and integrity of business operation information and financial accounting data.
Financial control principle
The basic principles include:
1. Purpose principle 2 sufficiency principle 3 timeliness principle 4 identity principle 5 economy principle 6 objectivity principle 7 flexibility principle 8 adaptability principle 9 coordination principle 10 conciseness principle.
Type of financial control 1. According to the content, it can be divided into general control and application control.
2. According to the function, it can be divided into preventive control, investigative control, corrective control, guiding control and compensatory control.
3. According to the time sequence, it can be divided into three categories: pre control, in-process control and post control.
Limitations of financial control Although good control can achieve the above goals, no matter how perfect the design and implementation of control is, it cannot eliminate its inherent limitations. Therefore, these limitations must be studied and prevented. There are three main limitations:
First, it is limited by the cost-benefit principle. Second, the financial controller fails due to misjudgment, neglect of control procedures or artificial fraud. Third, the administrative intervention of managers leads to the establishment of a control system that is virtually non-existent. As financial management exists in all aspects of the economic activities of enterprises, it has a great impact on the production and operation of enterprises. It has a complete system, which consists of three parts: environment, accounting system and control program. Its environment refers to various factors that establish or implement control. The main factor is the attitude, understanding and behavior of the management unit and relevant personnel towards it.
Specifically, it includes: organizational structure of the unit, management thought and style of management, management functions and constraints on these functions, methods for determining authority and responsibility, control measures adopted by the management when monitoring and inspecting work, personnel work policies and their implementation, and various external relationships that affect the business of the unit. The accounting system refers to the methods and procedures of accounting and accounting supervision established by the unit. An effective accounting system should: confirm and record all true economic transactions, describe economic transactions in a timely and fully detailed manner, make appropriate classification of economic transactions in financial accounting reports to measure the value of economic transactions, record its appropriate monetary value in financial accounting reports to determine the time of economic transactions, Record economic transactions in appropriate accounting periods to reflect economic transactions and disclose accounting information in financial reports. Control procedures refer to the methods and procedures formulated by managers. Specifically, the approval authority of economic business and economic activities defines the division of responsibilities of personnel, effectively prevents the establishment and use of fraudulent vouchers and bills, accurately reflects the management of economic business and the use of property and materials through accounting books, and reviews the registered business and its valuation.
Seven ways of financial control
Organizational planning
According to the requirements of financial control, the unit should follow the principle of separation of incompatible positions in the process of determining and improving the organizational structure: it means that one person cannot concurrently hold different positions in the financial activities of the same department. The economic activities of a unit are usually divided into five steps: authorization, issuance, approval, implementation and recording. If each of the above steps is implemented by a relatively independent person or department, it can ensure the separation of incompatible duties and facilitate the play of financial control.
Authorized approval
Authorization and approval control refers to the permission control for internal departments or employees to handle economic business. When a department or an employee in a company processes economic transactions, they must be authorized and approved. Otherwise, they have no right to approve. The authorization and approval control can ensure the implementation of the established policies of the unit and limit the abuse of power. The basic requirements for authorization and approval are: first, the boundary and responsibility between general authorization and specific authorization should be clarified; second, the authorization and approval procedures for each type of economic business should be clarified; third, the necessary inspection system should be established to ensure the quality of the economic business handled after authorization.
budget control
Budget control is an important aspect of financial control. Including the whole process of financing, financing, procurement, production, sales, investment, management and other business activities. The basic requirements are as follows: First, the budget must reflect the operation and management objectives of the unit and clarify responsibilities. Second, in the implementation of the budget, it should be allowed to adjust the budget after authorization and approval, so that the budget is more realistic. Third, the implementation of the budget should be fed back in a timely or regular manner.
Physical assets
Physical assets control mainly includes restricted access control and regular inventory control. Restricted access control is to control the access to physical assets and files related to physical assets, such as cash, bank deposits, marketable securities and inventory. Except for cashiers and warehouse keepers, other personnel limit access to ensure the safety of assets. Regular inventory control is to conduct regular physical asset inventory to ensure that the actual quantity of physical assets is consistent with the book records, If the account is inconsistent with the actual situation, the reason shall be found out and handled in a timely manner.
cost control
Cost control is divided into extensive cost control and intensive cost control. Extensive cost control is a method of controlling from the purchase of raw materials to the final sale of products. Specifically, it includes three aspects of intensive cost control: raw material procurement cost control, material use cost control and product sales cost control. One is to reduce costs by improving production technology, and the other is to reduce costs by improving product technology.
Risk Management
Risk control is to prevent and avoid as many risks as possible that are not conducive to the realization of the business objectives of the enterprise. Among these risks, operational risk and financial risk are extremely important. Operation risk refers to the uncertainty of enterprise profits caused by production and operation, while financial risk, also known as financing risk, refers to the uncertainty of enterprise finance caused by borrowing. As business risk and financial risk have a great impact on the development of enterprises, enterprises must try to avoid these two risks when making various decisions. For example, an enterprise can operate by borrowing money, although it can alleviate the difficulty of the shortage of operating funds, because the borrowed funds need to repay the principal and interest, once the enterprise is unable to repay the debt when it is due, the enterprise will inevitably fall into financial difficulties.
Audit control
Audit control mainly refers to internal audit, which is the control and re supervision of accounting. Internal audit is an independent evaluation of various business activities and control systems within an organization to determine whether the established policies and procedures are implemented, whether the established standards are conducive to the rational use of resources, and whether the objectives of the unit are achieved. The content of internal audit is very extensive, generally including internal financial audit and internal management audit. Internal audit's supervision and review of accounting materials is not only an effective means of financial control, but also an important measure to ensure the authenticity and integrity of accounting materials.
What is the internal control of financial reporting
Internal control over financial reporting refers to the internal control implemented by the board of directors, the board of supervisors, the management and all employees of the company, which is designed and operated to reasonably ensure the authenticity and integrity of financial reports and related information, as well as the control related to the reliability of financial reports in the internal control used to protect the safety of assets.
Why distinguish between internal control over financial reporting and internal control over non-financial reporting
Internal control refers to the internal control of the Company, and non internal control refers to relevant government units. Internal control over financial reporting refers to a series of management activities and control procedures adopted by enterprises to ensure the authenticity, integrity and consistency of the company's financial reports and internal reports. These management activities and control procedures include procurement, inventory, finance, etc. Non financial reporting internal control refers to a series of management activities and control procedures adopted by an enterprise to ensure the effectiveness, safety and compliance with regulatory requirements of the company's daily operations. These management activities and control procedures can be any type of control related to the company's business, such as security control, resource allocation control, quality control, etc.
