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Vice President Zhou Qinye of the Shanghai Stock Exchange (SSE) said at the "2007 CFO Forum" co-sponsored by the Shanghai National Accounting Institute and the Chartered Institute of Management Accountants on October 27 that the SSE would take 3 years to get listed companies voluntarily disclose the states and improvement plans of their internal control. Meanwhile, the internal control will pay more attention to the financial reporting and the whole company instead of the accounting only.
According to Zhou, the SSE will introduce the Corporate Governance Index at the beginning of 2008. Listed companies, well performed in internal control, will serve as the constituents of the index. After the index goes to the market, fund management companies, based on the index, can develop new investment products to guide market capital to concentrate on listed companies with better risk management.
So far, over 50 listed companies, including Jiangsu Jiangnan High Polymer Fiber Co., Ltd., China Spacesat Co., Ltd., China Minsheng Banking Corp., Ltd., Citic Securities Co., Ltd., Air China Limited, Huaneng Power International, Inc., have on their own initiatives disclosed in their annual reports of 2006 the directorates' self-evaluation reports of the internal control and the opinions of auditing institutions. Besides, some companies have already volunteered to disclose their internal control in their annual reports of 2007.
According to Zhou, despite the initial success in the pilot disclosure of listed companies' internal control, self-evaluation reports and auditing opinions await to be improved. Besides, some companies still need to change their poor understanding and ineffective implementation on the internal control. Therefore, the SSE will continue to get 11 listed companies as pilots, including 5 America-listed companies and 6 banking or securities companies. Meanwhile, it will motivate blue chip enterprises with good internal control to disclose their internal control voluntarily.
