A Study on Enterprise Internal Control from the Perspective of Interface Management: Conflict,Negotiation and Contingent Optimization

Over a long period of time,studies on internal control mainly concentrated on two horizons: One is theoretic study on internal control's nature,object,elements,structure,and the relation between internal control and corporate governance and risk management,the other is practice study on framework,typical methods and mechanism of internal control.All the two horizons mainly focus on the Balance Supervision function of internal control,and there are few studies focusing on the relation between internal control and enterprise's value-creating activities and how to continuously optimize internal control to adapt to the changes of internal and outside environment of enterprises.The paper considers that internal control has value-creating function as well as balance supervision function.So,conflict and cooperation coexist in internal control system. From the point of system theory,the paper considers that internal control is a system having all the characteristics of manmade systems,and can be decomposed into different functional divisions or process phases layer by layer.Every functional division or process phase has its unified interest,and between any two different functional divisions or process phases,there are conflicts resulting their different interest pursuit as well as cooperation resulting their pursuing common interests.The link between any two different functional divisions or process phases is internal control interface.Among them,the interface between two different functional divisions is lateral interface,and the interface between two different process phases is vertical interface.Coexistence of conflict and cooperation is the basic characteristic of internal control interface. Modern enterprise theory regards that enterprise is a set of contracts among different production factor owners.The difference of property rights subjects,division of labor in enterprise and incomplete sharing of information lead to incomplete contracts that guide property rights subjects to seek interest with their private information,which is the root of conflicts of internal control interface.At the same time,as a market subject and an asset combination,enterprise has its own boundary that is not only the boundary of value creation,but also the boundary of value distribution.The factor owners want to obtain more value than putting the factor to any other use by participating in the enterprise contracts.In order to obtain more and more value,the factor owners' common object is to maximize the value of the enterprise.In recent years,the development of incentive and constraint theory and its application in enterprises made value-sharing as well as value co-creating the important character of modern enterprises,which extended the connotation of internal control,and internal control has transferred to an enterprise operation supporting system with the function of value creation as well as property rights protection.Excessive conflicts will lead to waste of resources and inefficiency of internal control,and probably lead some production factor owners quit the enterprise,even more seriously,make the enterprise end in disintegration.The object of internal control optimization is to take the interface conflict under a tolerable degree and put the value creation function to a good use. Interface management is a set of thoughts and methods to negotiate the conflicts of two sides of the interface deriving factors of interests,information,division of labor,etc.Enterprises operate in a changing environment,but internal control,as a system of regulations,is relatively stable,in order to adapt internal control to the changing inside and outside environment of enterprises,we must manage internal control interfaces according to the latest property right structure,information and labor division,etc. Internal control is a system to appropriately guarantee the realization of enterprises' strategic object.Optimization of internal control should be guided by the object.And,according to the principle of optimization order of system,optimization of internal control interface should be implemented by an order of from inside to outside,and optimize internal control layer by layer.