What are the deficiencies in the internal control system?

An internal control deficiency is when a company's internal controls are designed or operated in such a way as to reasonably guarantee the achievement of internal control objectives.

Internal control defects are divided into design defects and operational defects according to their causes, and major defects, important defects and general defects according to their degree of influence.

1. Classification according to the nature of internal control defects.

1) Design flaws.

A design defect is when an enterprise lacks the controls necessary to achieve the control objectives, or the existing controls are not reasonable and fail to meet the control objectives. It is divided into systematic defects and manual defects.

2) Operational defects.

Operational deficiencies are well-designed and effective internal controls that are not properly implemented operationally. This includes inappropriate personnel execution, not operating as designed, such as inappropriate frequency, etc. For example:

The amount of the material purchase application has exceeded its procurement authority, but it has not applied to the superior company to arrange the purchase of bulk items" (this has a permission management provision, but it has not been properly implemented in practice).

2. Classification according to the severity of internal control.

1) Major defects.

A material vulnerability, also known as a material vulnerability, refers to a combination of one or more control deficiencies that may seriously affect the effectiveness of the overall internal control, resulting in the inability of the enterprise to prevent or detect serious deviations from the overall control objective in a timely manner.

2) Important defects.

A material defect is a combination of one or more general deficiencies that are less severe than a major defect, but the severity of the company's inability to prevent or detect a significant deviation from the overall control objective is still significant and requires management's attention. For example, the negative impact of the defect is circulating in some areas, causing damage to the company's reputation.

3) General defects.

refers to defects other than important defects and major defects.

Internal control can be divided into accounting control and management control according to the different purposes of its control. Accounting control refers to the control related to the protection of the security of property and materials, the authenticity and integrity of accounting information, and the legality of financial activities; Management control refers to the control related to ensuring the implementation of business policies and decisions, and promoting the economy, efficiency, effectiveness and realization of business objectives of business activities. Accounting control and management control are not mutually exclusive and incompatible, and some controls can be used for both accounting and management control.

The inspection and evaluation of internal control is done through internal audit. Internal audit can be understood as the control of internal control to some extent. In general, the following procedures and steps can be followed:

1.Determine the standards for the internal control of the audited entity. The internal audit will check and judge the current status of the internal control of the audited entity according to the standards.

2.Inspect and judge the soundness of the internal control of the audited unit, and evaluate the soundness of the internal control of the audited unit on the basis of analyzing the control defects and potential impacts of the audited unit.

3.Test the effectiveness of the audited entity's internal controls. Internal audit should scientifically select representative test samples to correctly judge the quality status of the audited entity's internal control.

4.Write the final report of internal control inspection and evaluation. In their final report, the internal auditor presents a number of specific findings, observations, evaluations and recommendations for the top management of the unit and to the management of the audited entity for improvement of internal control.

1. Accounting information is distorted.

2. The causes of the failure of the internal control of the enterprise.

3. The performance and performance mechanism of enterprise cadres are not perfect.

4. The quality of accounting personnel is low.

5. Lack of external supervision.

The internal control of an enterprise refers to the order of an enterprise to ensure the effectiveness of its business. Policies, measures and procedures formulated and implemented to carry out and ensure the safety and integrity of assets, to prevent, detect and correct errors and fraud, and to ensure the authenticity and integrity of accounting information.

The newly revised Accounting Law attaches great importance to the issue of internal control of enterprises, and Article 27 clearly stipulates the basic requirements for internal supervision (i.e., accounting control in internal control of enterprises). However, judging from the current actual situation, most enterprises have a certain gap in giving full play to the role of internal control.

The internal control defect is that the establishment or implementation of the internal control system does not meet the standard of pre-pure pure sale period, and the internal control system cannot provide reasonable assurance for the realization of the internal control objectives of the enterprise. Internal control defects are divided into design defects and operational defects.

The important control measures necessary for the enterprise to achieve the internal control objectives are insufficient, or the design is unreasonable, resulting in the failure to achieve the internal control objectives, which is a design defect; The failure of the executor of internal control to comply with the requirements of the internal control system, or the failure of the executor to effectively implement internal control, resulting in the failure to achieve the internal control objectives is an operational defect.

Internal control deficiencies can be divided into major deficiencies, important deficiencies and general deficiencies according to the degree of repercussions, and one or more of the control deficiencies cause the enterprise to seriously deviate from the control objectives as major deficiencies. If an enterprise is assessed and found to have major deficiencies, it shall not issue an internal control evaluation report that concludes that the internal control is effective.

Design flaws: Lack of controls necessary to achieve control objectives, or inappropriate design of existing controls that make it difficult to achieve the expected control objectives even when operating normally.

Operational deficiencies: Existing properly designed controls do not operate as designed, or executives do not have the necessary authority or competence to effectively implement internal controls.

Classified by its severity:

Material Deficiencies: A control deficiency or a combination of control deficiencies in internal control that may result in the failure to prevent, detect and correct material misstatement in the financial statements in a timely manner.

Material Deficiency: A control deficiency or a combination of control deficiencies that exist in an internal control that is not as serious as a material deficiency but is sufficient to bring it to the attention of the person responsible for overseeing the financial reporting of the audited entity, such as an audit committee or similar body.

General deficiencies: are control deficiencies in internal control other than major deficiencies and material deficiencies.

In today's increasingly fierce competition among enterprises, the operational risks of enterprises are constantly increasing, so the internal control of enterprises needs to pay attention to comprehensive risk assessment. The risk assessment of an enterprise generally includes four main stages: risk identification, risk analysis, risk management, and risk control. "SWOT" is one of the most popular and practical methods right now.

The methodology not only analyzes the company's own strengths and weaknesses, but also analyzes the opportunities and threats faced by the company. Modern companies should have a comprehensive analysis of their business environment, identify their strengths and weaknesses, identify potential opportunities and threats, and develop a reasonable risk assessment system. According to the prompts of the environment, the enterprise can assess the risks that the enterprise will face in this town, pay attention to the problems found in the process of operation, revise the current risk response policy of the enterprise, standardize the risk response procedures, and improve the ability to prevent risks.

Even if the external environment changes in the future, we will be able to continue to operate and maintain stable growth. Be prepared for danger in times of peace and make continuous improvements to avoid the decline of enterprises.

Summary. Deficiencies in internal control and deficiencies in internal control are two common problems in internal control. Their similarities and differences are as follows:

Similarities: Both are internal control issues that can lead to risks and problems in business operations. Differences:

Deficiency refers to the failure of the enterprise to establish a necessary internal control measure, such as the failure to establish a financial accounting system; Deficiencies refer to problems in the internal control measures of the enterprise itself, such as internal control standards that are too low or too lax, resulting in risks that are difficult to control, or problems in the implementation of internal control measures by employees. Therefore, the lack of internal control requires the enterprise to establish necessary internal control measures, and the internal control deficiency requires the enterprise to improve and optimize the established internal control measures to ensure their effectiveness and reliability.

Deficiencies in internal control and deficiencies in internal control are two common problems in internal control. Their similarities and differences are as follows: Similarities:

These are internal control issues that may lead to risks and problems in the operation of the enterprise. Differences: Lack of breadth and loss refers to the failure of the enterprise to establish a necessary internal control measure, such as the failure to establish a financial accounting system; Deficiencies refer to problems in the internal control measures of the enterprise itself, such as the internal control standards are too low or too loose, resulting in risks that are difficult to control, or the implementation of internal control measures by employees has problems.

Therefore, the lack of internal control requires the enterprise to establish necessary internal control measures, and the internal control deficiencies require the enterprise to improve and optimize the established internal control measures to ensure their effectiveness and reliability.

Dear, you refer to the above.

What are the reasons for the lack of internal controls?

The reasons for the lack of internal control can be divided into the following aspects:1The organizational structure is not reasonable:

If the organizational structure is unreasonable, it may lead to problems such as unclear and overlapping responsibilities of departments, which will affect the implementation of internal control. 2.Personnel Issues:

If the quality of personnel is not high and there is a lack of understanding of internal control, it will also affect the implementation of internal control. In addition, if employees do not have sufficient self-discipline, it can also lead to problems with internal control. 3.

Inadequate systems: If an enterprise does not have a rigorous and comprehensive system in place, or if the system cannot be implemented, it may also lead to a lack of internal control. In particular, the lack of necessary processes, approvals, records, etc., in the management of some key systems, will create opportunities for theft, fraud and other behaviors.

4.Imperfect technical means: Some enterprises rely on weak technical means in internal control, such as old software systems and security equipment, etc., and the internal control risk of such enterprises is likely to be greater.

5.Unreasonable rules and regulations: If the company's rules and regulations, such as employee evaluation, are unreasonable, it will lead to a lack of necessary awareness of internal control among employees, which will lead to internal control problems.

6.Problems caused by changes in the external environment: External environmental factors, such as changes in corporate strategy, changes in business models, changes in laws and regulations, etc., may bring challenges to internal control.