1 Overview of internal control of trading companies in China

　　The operation of the internal control mechanism is good or bad, to a certain extent, determines the profitability of the enterprise, but also the efficiency of the operation. If we take a trading company as an example, if we hope to maintain a better operating mechanism in the long run and always remain competitive, the first thing we must do is to establish a sound and efficient internal control mechanism.

Nowadays, more than half of the companies have changed their viewpoints and recognize the key role that internal control brings. The positive impact of internal control mechanisms is evident in terms of restraining costs, improving efficiency and controlling assets.

However, the reality is worrisome, especially the distinctive features of trading companies and the high number of internal control management oversights, which need to be improved as soon as possible. Today, to win the advantage in the fierce market competition, trading companies must review the situation, improve the control mechanism, and comply with the trend of the times.

　　2 Problems of the internal control mechanism of China’s trading companies

　　2.1 The staff’s internal control concept is weak

　　In recent years, with the promotion of internal regulation and control strategies of trading companies, good results have been received. However, in the operation of trading companies, managers always believe that: the lack of effective norms and guidance within the trading company, and finally affect the practical operation and trading company benefits.

For the trading company operation process and management personnel: a large part is to provide services to the public as a commissioned agent, there is no actual right to gain and dispose of the trading company’s assets.

Due to the lack of effective market-driven business process of trading companies, managers simply stay in the operation mode without any changes and innovations. Therefore, the organization of the internal system control and operation management model is obviously insufficient and lacks scientific and effective risk pre-control mechanism.

　　2.2 Inadequate authorization and approval system

　　For internal control to play a positive role, it is essential to implement authorization and approval control. In this way, requirements are put forward for each department to make sure that it is done with due diligence to ensure that the contents of authorization and approval meet the requirements, such as responsibilities and procedures. Management is also expected to operate with reasonable rights and obligations and not to exceed the scope of delegated authority.

The regulation of trading companies is still lacking, and there is no professional authorization and approval system, and the procedures, responsibilities and scope are not clearly defined, which leads to the phenomenon of reckless use of authority and approval everywhere.

　　2.3 The rules and regulations of internal control are not sound and the internal control system is not perfect

　　At present, a large part of trading companies lack of attention in creating internal management strategies, and there are even managers who equate internal control with internal supervision or regard it as internal control, and more trading companies see internal control as the management of various systems and documents.

Because of the lack of understanding, so that many of the contents are incomplete or unreasonable, and there is even the phenomenon of using financial strategies instead of internal control strategies, such as: designating financial management programs and systems, only according to the special funding standards and scope of constraints, which makes the risk of funds always exist; some trading companies have internal control strategies, but they are limited to written expressions, oral reports, used to cope with the relevant departments

Audit and inspection, the lack of effective supervision in the implementation of the program, which is also the reason for the existence of violations, rules and regulations do not follow, so that the internal control program in the surface, the loss of due effect and seriousness, so that the deterrent effect of the internal control program and the degree of trust plummeted, in the context of the existence of the relevant strategy in name, but also let the relevant functions play a major discount.

　　3 China’s trading companies internal control mechanism of the reasons for the existence of problems

　　The reasons for the existence of problems in the internal control of trading companies are many, different companies face their own different business environment, have different business philosophy, but the causes of these problems have commonality. The reasons for the problems of internal control are mainly in the following three aspects.

　　3.1 Irrational corporate governance structure

　　Good corporate governance structure within the trading company is a necessary guarantee to ensure the effectiveness of the internal control system. In some listed companies, the board members and managers are highly overlapping, and the supervisory function of the board of directors does not play effectively, subject to the same internal control system is difficult to operate effectively.

Therefore, non-compliance phenomena such as distortion of financial information and abuse of power by managers occur from time to time.

　　3.2 Poor information communication

　　In the operation of trading companies, a smooth internal information communication channel is a strong guarantee to improve the efficiency of internal control. However, at present, it is difficult to achieve the effect of flattening the connection between various departments of China’s trading companies, and the efficiency of mutual collaboration is relatively low.

　　3.3 Internal audit supervision function is weakened

　　Within the enterprise, the internal audit department should shoulder the responsibility of ensuring the compliance of enterprise operation and supervising the effective implementation of the enterprise internal control system. However, the internal audit function of many trading companies in China is weakened, and the internal audit department cannot effectively ensure that the internal control system plays its proper role.

The internal audit departments of some trading companies have many problems in organizational structure, staff quality and work settings, which seriously inhibit the supervision function of internal audit. Most internal audit organizations are directly responsible to the proprietor of the enterprise, and the leadership has absolute leadership over internal control matters.

In addition, many internal audit department personnel do not have enough professionalism and expertise, and even become a department for enterprises to “keep idle people”, lacking the necessary professional skills to exercise supervision functions. In some companies, internal auditors have several jobs, making it difficult to separate incompatible functions. This has weakened the supervision and management functions of internal audit.

　　4 Improve the internal control mechanism of China’s trading companies countermeasure suggestions

　　4.1 Improve the quality of personnel

　　First of all, the quality of the manager has a direct relationship with the development of the trading company, and the economic benefits of the trading company, to a certain extent, also plays a role in the implementation of internal control effect. The quality of managers also contains a variety of aspects, skills and knowledge is the most basic part, in addition to the corresponding professional ethics, values, etc. are also included. In the process of management, managers must adhere to the people-oriented thinking, create a positive atmosphere, find ways to mobilize the enthusiasm of employees, use a reasonable competition mechanism to stimulate everyone’s initiative, combined with the social security system and other ways to further create superior conditions for internal control.

　　Second, strengthen the training of accounting personnel. In internal control, accounting personnel become the subject and object of control. Only when accounting personnel have mastered the skillful accounting knowledge and set up a better concept of rule of law and cultivate their professional ethics can they further enhance the level of accounting information and ensure that accounting control achieves the proper effect. In order to better meet the requirements of the times, accounting personnel must strengthen their sense of responsibility, master the latest knowledge, and strengthen the idea of legal system, learn to abide by the law, understand the law, know the law, exercise their rights and obligations, and live up to the honorable title of accountant.

　　4.2 Establish an effective incentive mechanism

　　For the strict implementation of the internal control system, and timely feedback, timely processing of information, the design of the internal control system to put forward rationalization proposals, the behavior that helps the realization of organizational goals must be given spiritual encouragement and material rewards in due time; conversely, for the behavior that undermines the realization of organizational goals, such as violations of rules and regulations, intentional failure to feedback information, information feedback is not timely, feedback information is not processed should be given timely punishment .

By improving the internal control mechanism and establishing an incentive mechanism covering all functional departments, all business links, all work positions and all staffs within the trading company, we can effectively integrate organizational resources, effectively achieve organizational goals, achieve the purpose of internal control, and promote the smooth implementation of the internal control system of the trading company and continuously update and improve it.

　　4.3 Improve the internal control system and strictly implement it

　　First of all, to establish and improve the internal control system which is centered on job responsibility and focused on accounting control, which is a system of internal control in which all departments and positions within the unit are connected vertically and horizontally, with mutual constraints and supervision, and which combines power, responsibility and benefit, giving full play to the role of their respective control functions, clearly specifying the division of responsibilities and procedures for handling various economic operations, clearly specifying the division of labor for recording and keeping assets, clearly specifying the requirements for ensuring the completeness and accuracy of accounting documents and accounting records, and clearly specifying the requirements for ensuring the integrity and accuracy of accounting documents and accounting records.

The requirements of completeness and accuracy of accounting documents and records are clearly stipulated, and the establishment of property inventory system is clearly stipulated.

　　Second, to establish and improve the internal accounting supervision system of the unit, to objectively and impartially audit and appraise the legality, authenticity and integrity of the unit’s economic activities and economic benefits as well as the effectiveness of the operation of internal control, so as to realize the procedural and standardization of internal control.