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Perfection

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PerfectionPerfec

    Perfection

    Sep.2009,Vo1.5,No.9(SerialNo.52)JournalofModernAccountingandAuditing,ISSN1548-6583,USA

    ;PerfectionsolutionsofsupervisoryauditinChineselistedcompanies

    ;WANGWeihong,WANGWei-peng2

    ;(.SchoolofBusinessManagement,ShandongUniversityofFinance,Jinan250014,China ;2.DepartmentofEconomicsandManagement,WengInstitute,Weng261061,China)

    ;Abstract:OperationalmechanismofsupervisoryauditinChineselistedcompaniesisnotidea1.the ;supervisoryeffectofthelistedcompanyrelyonfeaturesofsupervisors’boardandmemberofthesupervisors’

    ;board.BasedonthecomparisonofsupervisoryauditinBritain,Germany,FranceandJapan,andtheempirical

    ;researchon100listedcompaniesinasharemarket,thepaperanalysessupervisoryauditinChineselisted ;companies,andproposessomeperfectionsolutionstostrengthensupervisoryaudit. ;Keywords:supervisors;supervisoryaudit;supervisors’board

    ;1.IntrOductiOn

    ;Supervisoryauditappearedfirstin1844inBritainwiththedevelopmentofStockCorporationauditing,it ;playsincreasinglysignificantroleinmaintenanceofshareholders’interests,andhaslongsolvedtheprob

    lemof

    ;ownerabsenceafterhundredyears’development.Supervisoryauditsystemisofgreatimportanceintheenterprise

    ;auditingsysteminwestdevelopedcountries,andhasaroletorestrictionmechanicsofmanager.Makeageneral

    ;surveyofsupervisoryauditwithalongdevelopmenthistory,therepresentativecountriesshouldbeBritain,

    ;Germany,FranceandJapan,butsupervisoryauditinthefourcountriesalsohavesimilaritiesanddifferences.

    ;2.ComparisonofsupervisoryauditinBritain,Germany,FranceandJapan

    ;2.1Legalbasisaredifferent

    ;SupervisoryauditoriginatedinBritainandhasimpactsondifferentcountries,butsupervisoryauditin ;differentcountrieshasdifferenthistoricalheritageandlegalbasis.BritainandFrancestipulatethesupervisory

    ;auditinCompanyLaw,GermanyisinCommercialCodewhileJapanisinCommercialLaw.

    ;2.2Economiccrisisorsignificanthistoricaleventsarepositivedrivers

    ;ThefirsteconomiccrisisofBritainoccurredin1825.facedwiththeseveresituation:Britainparliament ;realizeditisnecessarytoformulateactsforsocialsupervisiontomaintainthestabilityofthemarket,afterNanhai

    ;companybankruptcyevent,thecreditorsandshareholderthoughtitnecessarytorestrictcompanyoperation.

    ;GermanygovernmentmadeinitialregulationsforinterestprotectionoftheshareholdersinCommercial

Lawin

    ;1861aftertheindustrialrevolution.TheJapanpublicstronglycriticizedthesupervisoryauditsystemafter

    ;Japanesesugarrefineryeventin1909.Japanstrengthenedthesupervisoryaudittosatisfyoperatingneedsafter

    ;separationofthemanagementandownershippowers.

    ;WANGWei-hong,Ph.D.,associateprofessorofSchoolofManagement,TianjinUniversity, ;Management,ShandongUniversityofFinance;researchfields:financialaccountingandauditing. ;WANGWei-peng,associateprofessor,DepartmentofEconomicsandManagement,Weifang ;management.

    ;50

    ;postdoctorofSchoolofBusiness

    ;Institute;researchfield:enterprise

    ;PerfectionsolutionsofsupervisoryauditinChineselistedcompanies

    ;2.3Businessscopesofsupervisorauditindifferentcountriesaredifferent

    ;Supervisoryauditinvolvesfinancialauditandoperationalaudit.InGermany,FranceandJapan,auditscopes

    ;includenotonlyenterpriseachievements,butalsobusinessconduct,sonatureofsupervisoryauditisdifferent.

    ;SupervisoryauditinGermanyisinternalaudit,Britainisexternalaudit,whileJapaniswithbothinternalaudit

    ;andexternalaudit.

    ;3.SupervisoryauditinChineselistedcompanies

    ;CorporationLawdrawnupin1993clearlystipulatedthatChineselistedcompanyshouldcarryoutinternal

    ;supervisionbyadoptingsupervisoryaudit.Supervisoryauditisaspecialandindependentsupervisorymechanism

    ;incorporategovernancestructure,thoughthebasicformsarecomplete,thesupervisionoperationmechanismis

    ;notjdea1.Infact.thesupervisoryeffectofthelistedcompanyreliesonfeaturesofsupervisors’boardandmember

    ;ofsupervisors’board.Thefeaturesofsupervisors’boardcanbesummarizedinscale.independenceandbehavior.

    ;Thefeaturesofmemberinsupervisors’boardcanbesummarizedinsubjectivityandmotivation.Thispap

    er

    ;analysessupervisoryauditinChineselistedcompaniesbasedon2008annualfinancialreportsissuedbythe100

    ;listedcompaniesinAsharemarket,theresearchsamplesarerandomselectedscatteredinvariousindustdesand

    ;geographicalareasbymeansofGuotaiandatabaseandlistedcompaniesinformationnetwork. ;DescriptivestatisticalfeaturesofMembersinsupervisorsboardareasfollows:(1)Degreeofboardmembers

    ;aremainlyconcentratedinuniversity(58%),12%ofthemembershavedoctordegree,soeducationlevelis

    ;moderate.(2)Professionalstructurearemainlyconcentratedontheengineer,administrationengineers.economic

    ;engineersandaccountants,thetotalproportionis92%,inaddition,therearefewindustryexpertsandscholars.

    ;theircommoncharacteristiciswithprofessionalknowledgewhichishelpfultoperformtheirdutiesbetter. ;f31

    ;Agesaremainlyconcentratedin35_50(76%),membersintheagegroupsarewithprofessionalknowledgeand

    ;richexperience,agestructureisreasonable.(4)Accordingtostockholdersituation,48%ofthesupervisorsin

    ;listedcompanyarezeroshares.Supervisorswithsharesinlistedcompaniesarelessthan40%.andmostofthem

    ;areinteriorstaff.Generallyconcernedwiththecontradictionofindependenceandmotivation,thereisless

    ;supervisorsheldstockinthelistedcompany.

    ;Descriptivestatisticalfeaturesofsupervisors’boardareasfollows:fI)Supervisoryboardismainlycomp

    osed

    ;Of35persons,atleastlandatmostl1persons,theaverageis4.07persons,officetenureis3years.Inadditionto

    ;theindividualcompany,thenumberofthesupervisoryboardcomplieswiththenewCompanyLawstipulatedby

    ;Articlel18said”ajointstocklimitedcompanyshallsetupaboardofsupervisors.whichshallcompriseatleast3

    ;persons”.(2)Annualmeetingisfocusedon2-4,theaverageis3.64.Theminimumislandthemaximumis1

    3.in

    ;additiontotheindividualcompanies,supervisoryboardinmostcompaniescomplieswiththenewCompanyLaw

    ;stipulatedbyArticlel20said”heldconferenceatleastleverysixmonths”.

    ;(3)18%ofthelistedcompanies

    ;withoutexteriorsupervisors,itisnotcompletelycompliedwiththenewCompanyLawstipulatedbyArticle124

    ;said”supervisoryboardshallbecomposedofshareholdersandemployeesofthecompany

    ;,

    ;employees

    ;representativesshallaccountfornotlessthan1/3,andtheconcretepercentageshallbespecifiedinthearticles”.

    ;4.Perfectionsolutionsofsupervisoryaudit

    ;4.1Systemconstructiontoperfectsupervisoryenvironment

    ;Thegovernmentshouldsetupsupervisoranonymousreportingsystemandcollectivelawsuitsystem. ;51

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    ;solutions——

    ;ofsupervisoryauditinChineselistedcompanies

    ;Supervisoranonymousreportingsystemispracticallygoodenterpriseinternalsupervisionandself-mechanism

    ;restraint,whichcanmaketheonewaycommunicationtothetwo.waycommunication.

    ;Oncetheanonymous

    ;reportedeventoccurs,supervisiondepartmentshouldorganizeinvestigationcommitteetoverifythefacts.Once

    ;theexceptionaleventoccurs,thestockholdershaverightstocallf0rchargesfromsupervisionmechanismand

    ;supervisorypersonnelaswarningandpunishmentagainstsupervisors’omission.

    ;4.2Improvesupervisors’qualificationsrequirements

    ;Supervisorswithfullauthorityandmotivation,knowledgeandexperiencecansurelyplayabetterrole ;accordingtothedevelopmentofmodementerprisesystem.Firstly,thecompanymustappointsupervisorswith

    ;moralculture,professionalskillandethics,withstrongauditriskawareness,strongresponsibilityandmoraljustice,

    ;familiarwithnormativedocuments.Secondly,thecompanymustensuresupervisorsaretrulyelectedbybig

    ;shareholderratherthanadministrativeintervention,exteriorsupervisorscanensureessenceindependenceand

    ;formsindependence.Thirdly,supervisorsmustbeconferredwithsufficientrightssuchaslawsuits,billexamination,

    ;votingrightsandfinancialsupervision.Thesesubstantialpowerscanhelpthemclearoutdifficultiesinsupervisory

    ;audit.Fourthly,supervisorsmustundertaketheobligations.Governmentdepartmentsshouldmakelegislationand

    ;workrulesasrigidconstraints,shareholdersconferenceshouldmakeperformanceevaluationformtorecordduty

    ;application.Thecompanymustconstructcorrespondingincentiveandrestraintmechanisms.Ifintentio

nalerror

    ;occursorsupervisorsslackoffintheirwork,theymustbeliablefortheeconomicandlegalconsequences. ;4.3Improveexecutiveabilitytoguaranteesupervisoryeffects

    ;Effectivenessofthesupervisoryboarddependsonperfectsystemconstructionandthestrictsupervision ;executionsystem,systemabsenceorexecutionabsencewillleadsupervisoryjobtothecircleof”goodideawhile

    ;difficultpractice”.Supervisiondepartmentshouldstrengthenthesupervisiontoachieveefficiencyand

    ;effectivenessofsupervisoryaudit.Thelistedcompanyshouldreceivearegularreviewfromthesecurities

    ;supervisiongroupandmassmedia.Thesecuritiessupervisiondepartmentcansetupasecuritiessupervision

    ;groupwhichcarriesonregularsupervisionandinspection,oncetheydiscoverseriousproblems,theycould

    ;uncoverthecompanyandgivecorrespondingpunishment.Themediaisthesocialpublicmediawhichcangivea

    ;strongandeffectivesocietysupervisionandrestriction.SomemediasuchasjoumalofChinasecuritiesmayopen

    ;aspecialcolumnforsupervisors,sotheycanrevealproblemswithhighjustice,opennessandtransparency,which

    ;canstrengthensocietysupervision.

    ;5.Conclusion

    ;Theactualoperationofsupervisorsauditisnowemptyconventionaltalkandwithouttoomuchessentialsin

    ;companyfinancialsituation,purchaseandsellingassetstransactionsandassociatedcompaniesdisclosure,etc.

    ;Thegovernmentshouldcoordinatetherelationshipbetweensupervisoryauditandindependentdirectors,establish

    ;informationsharingsystem,avoidsupervisionfunctionconflicts,andfinallypromotetheperfectionof ;supervisoryaudit.

    ;References:

    ;CSRC.(2002).,f,2clesofcorporategovernance.

    ;LIUChang?cui.f2002).Wideangleperspectiveandthinkingofsupervisorsauditbasedonprincipalagentsupervisionmechanism.

    ;AuditResearch,(4),4043.

    ;WANGWei-hong.(2002).ComparisonofsupervisoryauditinBrigade,Germany,FranceandJapan.HunanAudit,(6),2l-22.

    ;(EditedbyCathyandMary)

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