According to the traditional and present explanation, financial control refers to the management activities that financial personnel (departments) guide, organize, supervise and restrain the fund movement (or daily financial activities and cash flow) through financial regulations, financial systems, financial quotas and financial planning objectives to ensure the realization of financial planning (objectives). This is an important link or basic function of financial management, and together with financial forecasting, financial decision-making, financial analysis and evaluation, it becomes the system or all functions of financial management. Today, financial management is the main means of enterprise value-added, and financial status is the lifeblood of every enterprise's survival and development. Financial technology has attracted great attention from all walks of life and every enterprise. We professionals need to re-examine all aspects of financial management under the concept of continuous innovation, especially the function of financial control and its position in the whole financial management system.
First, we need to redefine the concept of financial control.
Because the theory, environment and people's expectations of financial management have changed, it is necessary to redefine financial control. First of all, compared with the traditional system, financial management has been separated from financial management and exists independently, just as enterprises are independent of the government as legal persons after the separation of government from enterprises. In other words, the microscopic nature of financial management is its basic attribute. The discussion of financial control must be guided by the principal-agent theory and based on the requirements of modern enterprise system and corporate governance structure of "clear property rights, clear rights and responsibilities, separation of government from enterprises and scientific management". Specifically includes the following aspects:
1, the main body of enterprise financial control is the company's board of directors first.
According to agency theory, "agency relationship exists in all organizations, all cooperation activities and every management level within enterprises". Empirical analysis shows that the economic basis of agency relationship is that the shareholders of the company grant the operators the right to operate and manage, which can reduce the operating cost of the company, because the cost of many shareholders directly participating in the company's decision-making, operation management and production control is amazing. However, the establishment of agency relationship will inevitably lead to agency costs. This cost is not only ultimately borne by shareholders, but also its existence will affect the company's operating efficiency and may even threaten the company's survival. Under the modern enterprise system, an important feature of corporate governance structure is that the board of directors has strengthened financial restraint and control over CEO. According to the relevant provisions of China's company law, the board of directors is elected by the founding meeting or shareholders' meeting. Judging from the authority of the board of directors, we can easily draw the conclusion that the corporate governance structure is built around the board of directors, and the board of directors carries out various major activities on behalf of the company externally and manages the company's finance and operation internally. Only the board of directors can be fully responsible for financial decision-making and control, which essentially determines the company's financial situation.
This paper emphasizes the main position of the board of directors in modern enterprise financial control, and never denies the certain position of CEO and CFO in the financial control system. In fact, due to the emergence and operation of multi-level agency relationship in enterprises, the subject of financial control is also hierarchical and multi-level (in enterprises with serious insider control, the general manager actually occupies the "chief" in financial control). At the same time, the main position of the board of directors in modern enterprise financial decision-making and control is not to deny the position of CEO in enterprise value creation. In the two fields of enterprise strategic decision-making and tactical execution, both strategic decision-makers and experts who implement it, that is, CEO, are needed. Gates said with emotion: "Being a strategic master is not worth mentioning, and being a CEO is even harder."
From the mechanism point of view, financial control is not only a matter for the financial department, nor is it the responsibility of enterprise operators, but the comprehensive and comprehensive management of enterprise finance by investors. A perfect enterprise financial control system is actually the embodiment of a perfect corporate governance structure. Conversely, the innovation and deepening of financial control will also promote the establishment of modern enterprise system and the improvement of corporate governance structure.
2. The goal of financial control is to maximize the financial value of the enterprise, balance the agency cost and financial income, and unify the realistic low cost and future high income of the enterprise, not just the realistic compliance and effectiveness of traditional control of financial activities. The primary goal of financial control is for the board of directors to reduce agency costs (referring to the costs that agents such as operators and employees are lazy and irresponsible, deviate from shareholders' goals, and obtain wealth from the company through various means, which are ultimately borne by shareholders). The existence of agency cost will affect the company's operating efficiency and may even threaten the company's survival. Secondly, the financial control goal promotes the realization of the enterprise's combat readiness goal, so the financial control process must be the whole process of taking a series of measures around the formulation, implementation and control of the enterprise strategy. Finally, financial control is committed to integrating and optimizing enterprise resources, minimizing resource consumption, maximizing resource utilization efficiency and maximizing enterprise value.
3. The object of financial control is firstly people (managers and employees such as managers and financial managers) and the resulting internal and external financial relations, followed by various financial resources (funds, technology, manpower, information) or cash flow of the enterprise.
4. The realization of financial control should be the unification of a series of incentives and constraints. In order to reduce agency costs and achieve financial goals, we must design perfect incentive and restraint mechanisms, including "internal mechanisms" and "external mechanisms". The factors or means of "internal mechanism" include: dismissal or replacement of operators with poor performance; Through various committees under the board of directors, improve the supervision function of the company's board of directors to operators; Clearly define the boundaries of decision-making power and control power of shareholders' meeting, board of directors and managers; Implement an "incentive system" in which the remuneration of operators and employees is linked to business performance, including annual salary system, profit sharing system and stock option plan. Implement budget management; Through the design and reorganization of the organization, improve the internal organizational control, responsibility control and performance evaluation system. The factors or means of "external mechanism" include: the adjustment of managers and labor market. Under the influence of talent market, a rational operator and employee can't go against the interests of company shareholders too much; Control the threat of potential acquirers in the market; Government laws; Regulators of the capital market, such as the government, intermediaries, professional securities analysts, etc.
Second, financial control occupies a core position in the financial management system.
As we know, the content of financial management has different expressions from different angles: from the analysis of the process of capital movement, financial management includes fund raising, capital investment, capital operation, income distribution and so on; From the management link analysis, financial management includes financial forecasting, financial decision-making, financial control and financial analysis. From the analysis of financial elements, the content of financial management includes various opinions on capital, cash flow, securities and capital (property right) management. What is the core of the above content? There are also different views in theory: some people think it is financing, investment and distribution; Others think it is financial decision (this view may be deeply influenced by the famous management scientist H. Simon's famous saying "management is decision"); Others think it is the circulation and turnover of cash (funds). However, the more concentrated views are capital structure decision-making, investment decision-making in fund-raising and dividend decision-making in fund allocation. For example, "financial management can improve the rate of return and reduce risks to achieve its goals through investment decision-making, fund-raising decision-making and dividend decision-making." (See page 7 of the textbook Financial Cost Management designated by certified public accountants, Dongbei University of Finance and Economics Press).
The view that financial decision-making is the core of financial management will undoubtedly improve the position of financial management in real economic life, and financial personnel will no longer only belong to the housekeeper like Mr. Accountant. But in theory, putting financial decision-making at the top of financial management system and function may violate the most essential meaning of financial management, which is not conducive to the effective realization of financial goals and is difficult to play the most effective guiding role in financial management practice. There are two reasons: first, financial decision-making, especially the most effective long-term financial decision-making, belongs to enterprise strategic planning, and the power of this decision-making planning only belongs to the shareholders' meeting or the board of directors in the corporate governance structure, including the approval power of the annual financial budget. In other words, the authority of "prior" financial management basically belongs to investors, and never belongs to the level of executive operators and financial managers. The latter two levels of financial management mainly focus on the "ongoing" stage in content. Due to the multi-level agency relationship within the enterprise, financial management is divided into investor finance, operator finance and financial manager finance. The basic duties of operators and financial managers are to implement strategic decisions and the company's budget, so it is called execution, not decision-making. From the inside of the enterprise, financial management mainly belongs to the level of the operator and the financial manager, because the specific management problems under the modern enterprise system mainly involve the operator (CEO), and the specific financial management must be linked with the CFO; Second, from the concept of decision-making, decision-making is decision-making. Although any decision also involves a complicated process of analysis, comparison and selection, CFO, as the core figure of financial management, will often be in a state of "unemployment" or "closed" if the main responsibilities or functions of financial management are stipulated in the financing decision, investment decision and dividend distribution decision. Because an enterprise's investment, financing and distribution decisions, especially long-term investment decisions, capital structure decisions and dividend distribution decisions, are accidental events in the complex management activities of enterprises, and more are non-programmed decisions. From the realistic analysis, CEO and CFO balance enterprise logistics, capital flow and information flow with the help of corporate governance structure, and complete financial decision-making and financial budget matters through detailed management system and specific management means. For example, the organizational behavior theory of management is based on this understanding to solve the interest contradictions and coordination problems between the various actors within the enterprise and between the enterprise and external stakeholders, that is, to solve the contractual relationship between different management subjects or stakeholders, so as to coordinate the responsibility and rights of financial actors (such as shareholders' meeting, board of directors, operators, financial managers, creditors and other stakeholders) with the help of management system. Enterprise finance mainly belongs to the category of management science. It takes system management as its main feature, solves the asymmetry of incentives and constraints of various actors in enterprise management from the financial system, coordinates and guides the financial activities of various departments and units to achieve the overall goal of the enterprise, and the task of financial control is to integrate individual and scattered financial behaviors through adjustment, communication and cooperation in order to pursue the short-term or long-term financial goals of the enterprise.
Therefore, financial control is at the core of enterprise financial management system. Of course, we are not denying the importance of correct financial decisions to the realization of financial goals.
Third, the implementation of financial control needs innovation and integration.
From the mechanism point of view, financial control should aim at eliminating hidden dangers, preventing risks, standardizing operation and improving efficiency, establishing an all-round financial control system, various financial monitoring means and establishing multiple financial control defense lines in progressive order. The so-called all-round control means that financial control must penetrate all levels of corporate governance structure and organization management, the whole process of production and operation, and all links of business, covering all departments, posts and employees of the enterprise. The so-called diversified financial supervision measures refer to both ex post supervision measures and ex post supervision means and strategies; There are both restraint means and incentive arrangements; There are not only financial capital flow, stock budget index setting, accounting report feedback information tracking, but also strategies such as personnel appointment, production and operation integration, price transfer and fund financing. The so-called progressive multi-channel financial security intrigue line means that the processing and management of enterprise procurement, production, marketing, financing, investment and cost must be handled by two people, two systems or two functional departments at the same time. If a single person handles business, corresponding follow-up monitoring procedures are needed; This system of two people with two responsibilities in front-line posts can be the first line of defense for finance and the second line of defense for enterprise safety, that is, on the basis of the above system, the transfer system, budget and indicators of related bills, contracts and other business documents between relevant departments and related posts are established. What can become the third line of defense for enterprise security is that the financial and auditing departments can independently supervise, inspect and adjust the activities of various posts and departments, especially financial activities. Such financial control means and methods are not limited to financial system, financial plan and capital cost quota, but also need innovation. Many concrete and operable financial control methods created in real enterprises deserve further study and improvement, including:
1, a board system characterized by socialization and specialization.
As mentioned above, the key of corporate governance structure is the board of directors, which connects the interests of both owners and operators, while preventing the intervention of owners and supervising the behavior of operators. The key to the board of directors is the composition of the board. From the experience of the development of modern enterprise system, only socialized and professional board of directors can play its due role. The sign of socialization is the intervention of external independent directors, and the sign of specialization is the formation and operation of professional committees. For example, the basic principle of General Motors (GM) in organizing and managing its huge organization is to separate policy formulation from implementation control, and to combine decentralized management with coordinated management. The board of directors is the highest decision-making body of the company, with only the most fundamental issues, such as business scope, product direction, production scale, investment arrangement, fund raising, planning objectives, appointment and removal of important personnel, etc. , can be submitted to the board of directors and its committees for discussion. The Board of Directors consists of six committees: Management Committee, Appointment and Removal Committee, Dividend and Remuneration Committee, Relations Committee, Executive Committee and Finance Committee. These committees are small in number and generally composed of directors. A director can participate in several committees, the most important of which are the Executive Committee and the Finance Committee. The task of the Executive Committee is to be responsible for the overall leadership of the company's business activities and master all decision-making and command except finance. However, it does not engage in the specific implementation of daily business activities, but instructs the relevant departments of the enterprise to complete it. The Finance Committee monopolizes the company's financial power, approves fixed capital investment above a certain limit, sets the company's long-term financial objectives, determines the salary of the company's senior staff, examines and approves the price plans of various products put forward by the Executive Committee, is responsible for raising funds, supervising and inspecting the economic effects of various departments of the company, reviewing the company's year-end final accounts, and formulating the dividend distribution plan. The management committee is mainly to understand and inspect the company's operation on behalf of the directors. The appointment and removal committee is mainly responsible for the nomination of reserve personnel of senior leaders of the company. The Dividend and Remuneration Committee mainly decides the remuneration and annual salary of senior staff. The relationship Committee is mainly responsible for the relationship between the company and all aspects of society.
2. Power of attorney control
Here refers to the control of approving the correctness, rationality and legality of a financial activity in accordance with established procedures, and deciding whether to let it happen before it happens. This control is a kind of ex ante control. The method of authorization management is to specify the authorization matters and the limit of fund use through authorization notice. The principle of authorization management is to give full trust to the behavior within the scope of authorization, but not to recognize the behavior outside the scope of authorization. The Notice of Authorization is not only held by the authorized person, but also distributed to the relevant departments of the company, which should strictly implement it according to the scope of authorization.
Theoretically, authorization can be divided into general authorization and special authorization. General authorization refers to the authorization of political parties' economic behavior by the lower managers within the enterprise according to the established standards such as budget, plan and system within their authority. General authorization exists in a large number of enterprises. Special authorization refers to the authorization to conduct special research on irregular economic behavior. Different from general authorization, the object of special authorization is some special economic business. These exceptional economic businesses are often individual and special, and there are generally no established standards such as budget and planning, which need to be analyzed and studied according to specific conditions. For example, authorizing the purchase of an important piece of equipment and authorizing the sale of goods at a reduced price are examples of special authorization.
The authorization control of an enterprise should achieve the following points: (1) Without legal authorization, all employees of the enterprise cannot exercise corresponding rights. This is the minimum requirement. No one can approve it without legal authorization; The person who has the right to authorize shall act within the prescribed scope of authority and shall not authorize beyond his authority. (2) Without authorization, all businesses of the enterprise cannot be executed. (3) Once authorized, financial business must be carried out.
3. Budget management
Budget management can be said to be a popular financial management method in the west. In industrial countries, a group of enterprises represented by Xinxing Cast Pipe and Baosteel are implementing budget management as a new control mechanism for enterprise management. In my opinion, there are three institutional guarantees to standardize the corporate governance structure under the modern enterprise system: first, the company law, second, the articles of association, and third, the company budget. Among them, the company's budget is based on the Company Law and the Articles of Association, specifically implementing the responsibilities and rights of shareholders' meeting, board of directors, operators, departments and even employees, and defining their respective authority space and responsibility areas. It can be said that it is precisely because of the implementation of all-round, whole-process and all-staff budget management that the financial control function of the budget has been strengthened and the company's financial objectives and decisions have been specifically implemented.
4. Financial settlement center
The financial settlement center is a specialized institution that handles cash receipts and payments and current settlement business of internal members or branches and subsidiaries. Usually located in the financial department, it is an independent functional institution. Its main tasks are: centralized management of cash income of all units or branches and subsidiaries, and unification of cash income; Allocate (lend) monetary funds needed by members or companies for business needs, and monitor the use direction of monetary funds; Unify external financing to ensure the capital demand of the whole enterprise or group; Handle the settlement between branches; Implement financial control, etc. These responsibilities of the internal settlement center play an important role in enhancing the vitality of enterprises, strengthening fund management, controlling financial revenue and expenditure, correctly handling the relationship between business management and fund management, and improving the business mechanism of enterprises.
5, chief financial officer appointment system
The control of financial process, only the budget or settlement center is incomplete and illusory. Such financial control is not perfect, because there is no one's position. The chief financial officer is the investor, who supervises and controls the financial activities of the operators and the whole financial revenue and expenditure process of the enterprise.
6. Establish a performance evaluation system
The so-called enterprise performance evaluation refers to the quantitative and qualitative evaluation and analysis of the production and operation status, capital operation benefit and operator performance of an enterprise or its branches in a certain operating period by using scientific and standardized management, financial and mathematical statistics methods, and makes an objective and fair comprehensive evaluation. As a system, enterprise performance evaluation consists of five basic elements: evaluation target, evaluation object, evaluation index, evaluation standard and evaluation report. In the financial management cycle, performance evaluation is the key link between the preceding and the following, and plays an important role in financial management. On the one hand, in the process of financial activities and budget implementation, through the feedback of performance evaluation information and corresponding regulation, the deviation between actual performance and budget can be found and corrected at any time, thus realizing the control of financial business activities; On the other hand, as a perfect system, budget preparation, execution and evaluation interact and circulate repeatedly to realize the ultimate control of the whole enterprise's business activities. Performance evaluation is not only the summary of this financial management cycle, but also the beginning of the next financial management cycle. Performance evaluation includes dynamic evaluation and comprehensive evaluation. Dynamic evaluation refers to the immediate confirmation and treatment of the work performance of relevant departments or individuals in the process of production and business activities, which belongs to the control in the process; Comprehensive evaluation is the analysis and evaluation of the budget completion of each budget executor at the end of the period, and its evaluation content is mainly based on financial indicators such as cost and profit. As the starting point of the current budget and the end point of the next budget, comprehensive evaluation mainly involves the evaluation of the overall benefits of enterprises and the distribution of rewards and punishments.
The analysis of various actual financial control modes enriches our understanding of financial control. In particular, it should be pointed out that various budget models are by no means mutually exclusive. Enterprises can adopt one mode as the main mode, supplemented by other modes, or choose multiple modes according to the organizational characteristics of different levels of enterprises to form a comprehensive, comprehensive and systematic financial control system. The financial control of the system is the result of integration in various ways, which should fully embody the following principles: the combination of centralization and decentralization; Infiltration of financial management and humanistic management; Pay attention to the unity of results and monitoring process; Combination of incentive and constraint; Matching of value indicators and physical indicators, etc.
Fourthly, the acquisition and transformation of financial control right is a brand-new way to enhance and realize enterprise value.
In a modern company, it is called "financial control" to directly (or indirectly) own more than half (or a large amount) of the voting shares of the enterprise, which determines the company's directors and then determines the company's financial policy, and has the right to control the company's financial decision-making and income distribution. In short, it is the right to decide the company's financial policies and interests. It is regarded as the soul of company control. The acquisition of the company's financial control right means that the new right subject has the power to reorganize the company's board of directors, thus implementing the financial will of this right subject. The concept of control right is different from control right. Control right is only a potential control right. The subject of control is not necessarily a shareholder or a major shareholder. In the case of separation of ownership and control or insider control, the company's financial operation and major decisions are often controlled by the company's operators. Only when the major shareholder effectively exercises the right to participate in the financial decision-making and control activities of the enterprise can the potential control right be transformed into the real control right. This is why the major shareholders who are willing to participate in the company's operation can effectively control the company's business activities. In the developed property rights market, the ways of obtaining and transforming financial control right are: listing, delisting, manager's shareholding, employee's shareholding plan, merger, acquisition and agency struggle (this is that the dissenting Jidong gained the control right of the board of directors by winning the votes of shareholders). Empirical analysis shows that the acquisition and transformation of financial control right is not a simple financial operation mode, but has always existed as a mechanism to restrain company operators and improve financial efficiency. This proposition makes the influence of financial control on enterprise value have a new connotation and unique function, and makes our understanding of financial control enter a new stage.
Generally speaking, the specific content of internal accounting control can be divided into basic control, disciplinary control and physical control. They are the ultimate way to achieve the control goal.
Basic control Basic control, that is, through basic accounting activities and procedures, ensures the complete and accurate records of all legal economic businesses, and timely discovers errors in handling and recording. Basic control is the first condition to ensure the realization of accounting control objectives and the basis of other accounting controls. Mainly includes the following aspects:
1. Voucher control. Voucher control is the control of economic business by using accounting vouchers. Accounting voucher is the original voucher to prove economic business and clarify economic responsibility, and it is also an important tool for enterprises to implement internal control. A good voucher control system is the premise of effective operation of other internal controls.
To do a good job of voucher control, we should generally start from the following aspects: (1) All economic business activities in the unit must be filled in or obtained with legal original vouchers, and all economic business reflected in the original vouchers must be true and effective; (2) Design the format and content of the voucher; (3) stipulate a reasonable and effective voucher transfer procedure; (4) Before bookkeeping, all vouchers shall be strictly examined, and invalid vouchers shall not be recorded; (5) Do a good job in keeping accounting vouchers.
2. Account book control. Account book is an important means to comprehensively, continuously and systematically classify and sort out economic activity data, and it is the basis for compiling accounting statements. Therefore, account book control is of great significance to ensure the quality of accounting statements. Account book control generally includes the following aspects: (1) Account book system should adapt to the scale and characteristics of enterprises and meet the needs of enterprise management; (2) The content and format of account books should be detailed and simple, which should not only ensure the completeness and accuracy of the record system, but also pay attention to the efficiency of accounting work; (3) Accounting should be based on legal vouchers, follow the prescribed accounting procedures, record the economic business classification of accounting vouchers in the account books, and comprehensively, continuously, systematically and timely reflect and control the economic activities of enterprises; (4) All account books must be complete in content and procedures, used in accordance with regulations and properly kept.
3. Report control. Accounting statement is the main carrier of enterprise accounting information, and the quality of accounting statement directly determines the quality of accounting information. Therefore, the function of statement control is self-evident. Generally speaking, statements control should pay attention to the following points: (1) The types, formats and contents of accounting statements should comply with the provisions of the national accounting law, accounting standards and related accounting systems; (2) The preparation of the report must be based on the verified account books, with accurate figures and complete contents; (3) Prepare the required reports regularly and on time; (4) Timely submission to provide relevant information for relevant decision makers.
4. Check the control. It is to control the economic activities of enterprises by using the cross-checking relationship between records and the corresponding relationship between records and objects, including the checking of accounts, accounts and tables. A perfect inspection system is of great significance for effectively protecting the safety and integrity of assets and ensuring the quality of accounting information.
The basic control of discipline control is the premise of accounting control, but to give full play to the role of discipline control, discipline control must be seriously implemented. Discipline control is to ensure that basic control can fully play its role, mainly including internal containment and internal audit.
1. Internal control. Internal containment is a self-inspection system with the core of taking charge of affairs. Through the division of responsibilities and reasonable arrangement of business processes, various business contents can be automatically checked and verified by other operators, thus playing the role of mutual restriction and supervision. It is mainly realized in two ways: vertically, every economic business must be handled by relevant personnel at the higher and lower levels, so that the lower level is supervised by the higher level and the higher level is restricted by the lower level; From a horizontal perspective, every economic business must be handled by at least two departments that are not affiliated with each other, so that the work or records of each department are restricted by another department.
2. Internal audit. Broadly speaking, internal audit includes internal audit conducted by internal audit institutions specially set up by units and internal audit conducted by accounting executives and accountants. Different from internal audit, internal audit is an internal control system in which accounting executives and accountants regularly or irregularly check relevant accounting records before or after the event, and check each other to ensure that accounting records are correct. In addition to internal containment and internal audit, the content of disciplinary control also includes internal supervision from enterprise leaders, other horizontal functional departments and employees.
Physical control Physical control refers to the control to protect the safety and integrity of the enterprise's physical assets. Generally, it includes the following aspects: (1) Establish a strict warehousing process. (2) Establish a safe and scientific storage system. Among them, safe storage needs to have corresponding systems in warehouse location, warehouse defense facilities, safety precautions and so on; Scientific storage requires that property and materials be stored in designated warehouses in different categories and numbered scientifically to facilitate distribution and inventory. (3) perpetual inventory system should be adopted for property and materials, and the balance should be reflected in the accounts at any time. (4) Establish a perfect property inspection system and properly handle the problems found in the inventory. (5) Establish and improve the file keeping system.
Basic control, discipline control and body control are interrelated and inseparable, and the negligence of any one will affect the effective play of other control functions. Generally speaking, basic control focuses on ensuring the quality of accounting information, physical control focuses on protecting the safety and integrity of property and materials, and disciplinary control is the guarantee for the final realization of the first two.