Because all foreign economic activities of affiliated cooperation are carried out in the name of affiliated enterprises, they are independent civil subjects in China and have their own interests. Associated enterprises use their qualifications, brands and reputation to undertake projects abroad, so as to maximize their own interests. Except for paying certain management fees to affiliated enterprises, all construction activities are carried out independently by affiliated enterprises, so it is difficult for affiliated enterprises to implement effective supervision. Once responsible for the outside world, affiliated enterprises should bear legal responsibilities according to law. For example, in the process of construction, project quality, delivery deadline, project payment, salary payment, material payment, work-related injury death, warranty maintenance, etc. Disputes in any link will be accused by affiliated enterprises.

2. Financial risks of affiliated businesses

Because affiliated enterprises are included in the unified accounting of affiliated enterprises, they are independent accounting and responsible for their own profits and losses, and often provide false accounting information for their own interests. For example, in order to achieve the purpose of borrowing money for it, affiliated enterprises may provide false information much better than the actual financial situation, and the financial risks are entirely borne by affiliated enterprises.

3. Tax risks of affiliated operations

In accounting, affiliated enterprises and affiliated enterprises have their own accounts and conduct accounting according to their respective operating conditions. The affiliated enterprises shall submit the internal accounting statements to the affiliated enterprises, and declare and pay taxes to the tax authorities after the merger. Because there is often a certain time difference between the payment time of business tax in construction industry and the actual final settlement time of the project, it will inevitably bring difficulties to the accounting practice operation and tax declaration of affiliated enterprises. In order to pay less or even no taxes, affiliated enterprises will increase their expenditures as much as possible, conceal their income, and even forge or destroy accounting vouchers and materials. Once the tax authorities find the problem of tax evasion, affiliated enterprises will bear such tax risks, resulting in double losses of economy and reputation.

Internal control and risk prevention of related business behavior

Generally speaking, under the current legal framework, we can only (and must) allocate the responsibilities and rights of related parties strategically and reasonably, and be as clear and specific as possible in practice, so as to have evidence to follow when we have to seek legal relief because of disputes and minimize possible risk responsibilities. In practice, we should pay attention to the following points:

First, improve the affiliated management mode and clarify the legal responsibility. Before cooperation, each party must fully understand, analyze and evaluate the other party's business environment, liabilities and economic disputes. The affiliated enterprises shall inspect and evaluate the technical strength, financial strength and management level of the affiliated enterprises. The affiliated enterprises should investigate and analyze the operating conditions, qualification level and economic strength of the affiliated enterprises, and cooperate on the basis of mutual understanding, full trust and clear responsibilities.

Second, strengthen financial management and standardize internal control measures. Affiliated enterprises should take the management of affiliated enterprises in the construction process as their own branches, and monitor all aspects of the construction process from the specific links such as construction organization, material procurement, fund use, safety measures, salary payment and accident handling. , so that supervision does not leave a dead end, so that related parties do not have any opportunity to eliminate potential risks. In particular, major issues such as signing contracts and borrowing from foreign countries by affiliated enterprises must be approved by affiliated enterprises before they can be carried out, and relevant information should be filed for future reference. In particular, it is necessary to strictly control the inflow and outflow of funds. In particular, the use of borrowed funds must be supervised according to the prescribed purpose and progress, so as to prevent misappropriation and evasion of funds and minimize financial risks.

Third, unify accounting standards, standardize accounting and guard against tax risks. The income and expenditure of affiliated projects should be included in the unified financial accounting of enterprises. Associated enterprises should set up a general ledger, and affiliated enterprises should set up a secondary subsidiary ledger, prepare accounting statements according to the general ledger, and uniformly report and pay taxes to the tax authorities. You can't declare and pay taxes to the tax authorities in the form of consolidated accounting statements. For projects organized by affiliated enterprises, financial inventory should be conducted regularly.

Fourth, affiliated enterprises had better assign professionals who know construction technology, material procurement and financial procedures to the construction site to supervise the construction in time. Of course, this should not affect normal construction operations and daily management.