First, corporate governance and internal control content comparison

1. Contents of corporate governance. Corporate governance can be subdivided into internal corporate governance and external corporate governance. This paper discusses the related issues involved in the whole corporate governance, that is, corporate governance in this paper includes internal corporate governance and external corporate governance. Specifically, the internal governance mechanism of the company mainly includes: (1) the protection of shareholders' rights and the role of the shareholders' meeting; (2) The form, scale, structure and independence of the board of directors; (3) Composition and qualifications of directors. (4) The establishment and functions of the board of supervisors; (5) Salary system and incentive plan; (6) Internal audit system, etc. These institutional arrangements of internal governance are aimed at establishing a perfect mechanism of supervision, encouragement, restraint and decision-making. From the perspective of market system, the external governance mechanism of the company mainly includes: (1) product market. Market pressure is the basic mechanism to prevent commercial companies from abusing their rights and maintaining their operations for a long time in most free market economies. Corporate governance depends on the product market. Standardizing the competitive product market is the basic standard to judge the company's operating results and managers' management performance, and the market mechanism of survival of the fittest can motivate and spur managers. (2) the manager market. A well-run manager market can evaluate managers' human capital according to their previous performance, thus encouraging managers to work hard. (3) Capital market. The corporate governance mechanism of capital market can be divided into two parts: the governance mechanism of equity market and the governance mechanism of creditor's rights market. (4) M&A market. From the perspective of corporate governance, active market control plays a unique role as an external mechanism of corporate governance, and moderate takeover pressure is also an important part of a reasonable corporate governance structure. However, the development of M&A mechanism needs to pay huge social and legal costs, and needs a highly liquid developed capital market as the foundation. (5) Independent market audit evaluation mechanism. This mainly depends on the objective and fair evaluation and information release of market-neutral institutions, such as accountants, auditors, tax agents and law firms. External governance mechanism, as an informal institutional arrangement, mainly uses market mechanism to make managers feel persistent and ubiquitous pressure and threats. Its organic combination with internal governance mechanism forms a complete corporate governance system.

2. The content of internal control. Internal control consists of five elements: control environment, risk assessment, control procedures, information and communication and supervision. Only when these five elements exist and are effective can we judge that the internal control of an enterprise is effective. (1) Control environment. It is the basis of a unit atmosphere, which affects the control of other parts by the personnel inside the unit. Including the integrity and professional ethics of employees, the competence of employees, the participation of the board of directors and the board of supervisors, the organization, the provisions of rights and responsibilities, etc. (2) Risk assessment. The analysis of relevant risks identified by the unit for its purpose forms the basis of risk management. Usually, risks come from the change of business environment, the employment of new employees, the adoption of new information systems, the application of new technologies, the reorganization of enterprises and the adoption of new accounting methods. (3) control activities. Policies and procedures for taking necessary measures against identified risks to ensure the achievement of unit objectives. It includes performance evaluation, information processing control, physical control, work separation and so on. (4) Information and communication. Information system methods and records related to financial reporting objectives. It can confirm and record all effective economic businesses, so as to correctly classify and provide accounting statements, and reveal economic businesses in financial reports. (5) supervision. The process of evaluating the implementation quality of internal control is the evaluation of internal control setting, operation and improvement activities. According to the specific implementation mechanism of internal control, internal control can usually be divided into two levels: the first level is the management system of enterprises, also known as "management control system", based on corporate governance. By checking and improving the relevant management policies and procedures, we can effectively control the operation of enterprises, continuously improve the efficiency and benefit of enterprise operation, and realize the preservation and appreciation of the capital invested by investors. The second level is the accounting system of enterprises, also known as "accounting control system". It ensures the reliability of business operation and financial status information and the property safety of investors through appropriate business authority setting and authorization, accurate accounting records, timely physical inventory and fair reports. The internal control system at this level can be considered as the most specific control. Because whether the control system can take effect depends on whether the appropriate information is obtained at the appropriate time and place, and the existence and effective transmission of accounting information affects the effectiveness of the control system.

3. Conclusion. This shows that: (1) there are significant differences between corporate governance and internal control. First of all, the elements of corporate governance and internal control are different. Corporate governance includes internal corporate governance and external corporate governance. Internal corporate governance is mainly the division of responsibilities within the enterprise, while external corporate governance is mainly the external environment in which the enterprise is located. Internal control mainly includes two levels: management system and accounting system, and five elements: control environment, risk assessment, control procedures, information, communication and supervision. Secondly, the structure of corporate governance and internal control is different. Corporate governance consists of two linear structures: internal corporate governance and external corporate governance. Internal control is a tower structure, with supervision at the top, control environment at the bottom and risk assessment and control activities at the tower body. Third, corporate governance and internal control have their own emphasis. The content of corporate governance pays more attention to the overall grasp of the enterprise, including the division of powers and responsibilities and the external environment in which the enterprise is located. The content of internal control pays more attention to the management of specific operations and production activities within the enterprise. (2) There is a certain relationship between corporate governance and internal control. It is not difficult to see that the content of internal control can be regarded as the extension and concretization of production and operation in corporate governance, and the content of internal control is unified with that of corporate governance. Perfect corporate governance is the guarantee for the effective operation of internal control. Internal control is under the general environment set by corporate governance, which is the institutional environment of internal control. Whether the internal control can operate effectively has a great relationship with the improvement of corporate governance. Only in a perfect corporate governance environment can a good internal control system really play its role, improve the operating efficiency and benefit of enterprises and strengthen the authenticity of information disclosure; On the other hand, if there is no scientific and effective corporate governance structure, no matter how effective the internal control system is, it will become a mere formality and it will be difficult to achieve good results. Secondly, some contents of corporate governance also belong to internal control, such as organizational plan control, which actually includes two levels: one is the organizational plan between shareholders' meeting, board of directors, board of supervisors and managers, and the other is the organizational plan between internal management institutions, posts and personnel led by managers. The former level is actually a corporate governance issue. Therefore, there is some overlap between internal control and corporate governance.

Second, the status of corporate governance in China

At present, China's corporate enterprises have made some achievements after decades of development. However, because most enterprises were originally state-owned enterprises that grew up under the planned economy system, in the process of modern enterprise system reform of state-owned enterprises, due to the limitation of concepts, means and environment, there are still serious administrative interventions, so that most companies just hung up the brand of a joint-stock company and did not really form a scientific corporate governance mechanism. There are also many problems in corporate governance mechanism of other small and medium-sized enterprises.

1. Nominal shareholders' meetings generally exist. The shareholders' meeting is the highest authority composed of all shareholders of the company to decide on major issues in the company's operation and management, and it is the legal institution for shareholders to express their wishes and exercise the rights of investors. All major issues of joint-stock enterprises, such as the change of company agenda, the appointment and removal of company directors, the dissolution and merger of the company, etc. , must be decided by the shareholders' meeting; Major investment plans, annual financial budget and final accounts, profit distribution and other major plans related to the company's operation and management. It must be reviewed and approved by the shareholders' meeting. Generally, laws and regulations in various countries have made legal provisions on matters related to the shareholders' meeting. China's "Company Law" also clearly stipulates the functions and powers of the shareholders' meeting, and stipulates the form, convening method and frequency of the shareholders' meeting. However, the current situation in China is that among many shareholders, only a few are willing to attend the shareholders' meeting and express their wishes. This often leads to the failure of the shareholders' meeting to function normally. The shareholders' meeting is an important part of the company's internal governance, and its decision directly affects the board of directors and the board of supervisors.

2. There is no strict power balance between the board of directors, the board of supervisors and the management. The core of corporate governance structure is to form a balance between decision-making, supervision and implementation, and to ensure that the power of corporate governance is not abused. Therefore, the personnel of various organs generally cannot overlap. However, there is a serious position overlap in the power hierarchy of joint-stock companies in China, and it is very common for the chairman and general manager to bear the responsibility alone, especially in the companies formed by the restructuring of state-owned enterprises. This has seriously affected the quality of decision-making and the principle of market risk dispersion, and is also one of the main reasons for the decision-making mistakes and inefficient management of Chinese enterprises. Of course, it is not the fact that the chairman concurrently serves as the general manager that will inevitably lead to abuse of power. There are also many chairmen and general managers in western countries, but the economic base of these countries is different from that of China. Corporate enterprises originated in these market economy countries, and China is based on public ownership of the means of production, so companies in China should pay more attention to the division of rights and responsibilities.

3. There are serious mistakes in the formation mechanism of operators. According to the principle of separation of ownership and management rights of modern enterprises, the board of directors usually employs company operators through examinations in the manager's market according to legal procedures. However, China has not formed an operator market that can provide, supervise and evaluate managers' ability and performance. In large and medium-sized state-owned companies, the formation of managers is basically carried out by the government department as the owner in accordance with the personnel recruitment method of the planned economic system, which makes the formation mechanism of managers abnormal. Coupled with the lack of governance structure, an effective manager market has not been formed for a long time, and managers' behavior cannot be constrained by the market.

Third, the status of internal control of enterprises in China

1. Because the internal governance structure of the company is not standardized, the internal control is not perfect. Whether the corporate governance structure is scientific or not is related to all aspects of enterprise work, and imperfect internal governance directly leads to imperfect internal control. At present, the situation in our country is that most companies, especially those restructured from the former state-owned enterprises, have common problems in their corporate governance structure, which are mainly manifested in the nominal core institutions such as shareholders' meeting, board of directors and board of supervisors, and the behavior of operators is not supervised, which leads to the inability to form effective containment among internal personnel of the company, thus affecting the implementation and improvement of internal control.

2. Because the company's external governance is not standardized, the supervision and inspection of internal control is ineffective. The gradual establishment and improvement of internal control standard system and legal standard system need to be based on a standardized and reasonable external governance environment, otherwise it is difficult for the company to consciously establish and implement an effective internal control system. The implementation of any measures conducive to economic development needs the promotion and supervision of external norms. Most countries and regions with relatively perfect internal control systems in the world require enterprises to issue internal control status reports through legislation, and some countries also require certified public accountants to audit internal control and issue audit reports. Since 1999, China has also added the content of internal control to the annual audit of listed companies, but only reports are submitted without public disclosure, which virtually reduces the pressure on company managers and objectively condones the phenomenon of lax internal control.

According to the analysis of the current situation of corporate governance and internal control in China, we can see that there are still many problems in the field of corporate governance and internal control in China, which is still far from the international advanced level, which is the pressure and motivation for the reform of corporate enterprises in China. Through the above analysis, the author believes that the establishment of a sound corporate governance structure is more conducive to the establishment and improvement of enterprise internal control, so we should consider corporate governance and internal control more closely while reforming and improving them to promote their coordinated development.

Through the study of the relationship between corporate governance and internal control, we not only have a deeper understanding of corporate governance and internal control, but also realize that only under the perfect level of corporate governance can we better strengthen internal control. By analyzing the current situation of corporate governance and internal control in China, we must realize that the fields of corporate governance and internal control in China are still relatively lacking and need to be improved. Joining the World Trade Organization provides opportunities for China enterprises to enter the international market, and at the same time increases the pressure of competition. In order to occupy a place in the international market, we must abandon the previous extensive business model, strict management and intensive management. This requires first standardizing the corporate governance structure, and on this basis, in strict accordance with the requirements of the internal control standard system, establishing and improving a high-quality and efficient scientific internal control system, enhancing the competitiveness of China enterprises in the international market, and striving to build a world-class enterprise.