Control environment is the premise of other elements of enterprise internal control, is the guarantee of the healthy operation of the enterprise, "Sanlu incident" is a typical case of enterprise internal control environment out of control. Based on the Sanlu incident, this paper looks at the internal control environment from three perspectives: management factors, organizational factors and human factors, and argues that enterprises should optimize the internal control environment from all aspects to provide guarantee for the healthy operation of enterprises.　 Sanlu incident; internal control; control environment According to the COSO report's description of the control environment, the internal control of an enterprise is divided into five levels - control environment, risk assessment, control activities, information and communication, and supervision. The internal control environment includes the personal integrity, ethical values, and ability to fulfill organizational commitments of the personnel, the board of directors and audit committee, the management's business philosophy and operating style, the organizational structure, the division of responsibilities, and human resources policies and procedures, and the organization's risk awareness and risk management philosophy. Therefore, the control environment is a kind of atmosphere, which can affect the implementation of enterprise internal control and the realization of the enterprise's business objectives and overall strategic objectives, if there is no effective control environment, other control elements, regardless of the quality, it is impossible to form an effective internal control.　The enterprise control environment can be divided into three categories of factors: first, management factors, including corporate governance, internal oversight and internal audit. Second, organizational factors, including organizational structure, corporate culture and risk warning. Third, human factors, including human resource policies and managerial quality. This paper takes the Sanlu incident as an example, looks at the internal control environment from these three perspectives, and at the same time puts forward targeted improvement opinions.　　First, the Sanlu incident Sanlu Group, the full name of Shijiazhuang Sanlu Group Co., Ltd. is a collection of dairy cattle breeding, dairy processing, scientific research and development as one of the large-scale enterprise groups, for six consecutive years in China's top 500 enterprises. the early 1990s, the company pioneered the "cow + farmers" feeding management model, Sanlu had established a milk source for the peer to follow. In 2007, the group realized a sales revenue of 10.016 billion yuan, a year-on-year increase of 15.3%. However, the internal control and environmental problems behind this high growth have been seriously neglected. From March 2008, Sanlu received complaints from parents of children suffering from urinary stones, and some media started to insinuate that Sanlu was "a brand", but Sanlu did not pay enough attention to this issue and strengthened its internal control, leading to the deterioration of the situation. It is estimated that the huge amount of 902 million yuan of medical fees and compensation has caused the Sanlu Group serious insolvency. December 25, 2008, Shijiazhuang Municipal Party Committee and the municipal government issued the Sanlu bankruptcy news, bankruptcy rulings have been sent to the Shijiazhuang Sanlu Group Co., Ltd., a once as the dairy industry's leading enterprises disappeared overnight. The reason for this, poor internal control environment is one of the main reasons.　　Second, management factors (a) corporate governance and "insider control" phenomenon Corporate governance structure is designed to form a scientific and effective division of responsibilities and checks and balances. Corporate governance is not sound, the company is bound to lack a set of effective supervision mechanism, no matter how perfect the design of the internal control system will be a mere formality, it is difficult to achieve the established results. Therefore, only in a good corporate governance environment, the internal control system can really work. The major shareholder of Sanlu Group is Shijiazhuang Dairy Co., Ltd, which is 96% owned by more than 900 old employees. Sanlu's second largest shareholder is New Zealand's Fonterra Group, which owns 43 percent of Sanlu. Tian Wenhua, the chairman and general manager, served for 21 years, from 1987 to 2008. It can be seen that the company's shareholding is quite dispersed, the checks and balances between the chairman and the general manager can not be mentioned, the phenomenon of "insider control" is self-evident, and the checks and balances of the governance institutions are ineffective, which has laid a hidden danger for the governance of the "tainted milk powder incident", and this kind of bad internal control environment has become the basis for the management's moral failures. This poor internal control environment has become a breeding ground for management's moral failures.　(Internal supervision can ensure the continuous and effective operation of the internal control system. The process of supervision is to assess the design and operation of control by appropriate people at appropriate time and take necessary actions. No matter it is the management or other controllers, as long as they find the deficiencies of internal control, they should report them to the appropriate management in time and make them to be dealt with decisively. The Sanlu Group's internal quality control is based on the establishment of technical service stations in farming areas and the dispatch of station agents to supervise and inspect the breeding environment, the hygiene of milking facilities and the implementation of milking procedures. As a means of internal supervision, the station agents are a crucial part of internal control. However, in the actual implementation process, the supervision and inspection by station agents is not strictly implemented, and there is a lack of effective supervision of milk station operators before the raw milk enters Sanlu Group's production enterprises.　(C) the lack of risk early warning risk management and control is the basic requirements of enterprise internal control. The establishment of risk early warning mechanism is an important component of modern enterprise internal control, but also the basis of enterprise risk management. The longer the industrial chain of enterprises, the more risk points. For the food industry, quality control is undoubtedly the key to risk control. Through the early warning system, enterprises once the first signs of risk, can be prevented and blocked, nip the risk in the bud to avoid or reduce the degree of damage to the enterprise. 28 June 2008, the Ministry of Finance and other five ministries and commissions jointly issued the "basic norms of internal control of enterprises," Article 37 provides: "Enterprises should establish a major risk warning mechanism and emergency response mechanism, clear risk early warning and handling mechanism. Enterprises should establish a major risk warning mechanism and emergency response mechanism for emergencies, clarify the risk warning standards, and formulate contingency plans for possible major risks or emergencies, clarify the responsible personnel, standardize the disposal procedures, and ensure that emergencies are handled appropriately and in a timely manner". Sadly, risk control is not in place is the last straw that overwhelmed the Sanlu Group, from March 2008, Sanlu response to the crisis is "push, delay, concealment", leading to the deterioration of the situation.　　Organizational factors (a) Organizational structure and blind expansion Internal control comes from within the organization, adapting to the changing external environment and organizational changes is the main line of internal control development. Organizational transmutation is the development of internal control triggers, it promotes the continuous development and improvement of internal control. Since Sanlu Group has brand name but lacks milk source, and some local small dairy factories have milk source but lack brand name, the Group has created the development mode of combining "brand name and milk source" internally. Along this model, Sanlu Group to property rights as a link, with the brand as a banner, has merged more than 30 small and medium-sized enterprises on the verge of bankruptcy in Shandong, Hebei, Shaanxi, Henan, Gansu and other provinces, making the organizational structure of the Sanlu has undergone great changes. For example, Xingtang Sanlu Dairy Co., Ltd. is 51% owned by the Sanlu Group, while the other 49% is controlled by the Xingtang County Government. Essentially, this merger increased the size of the company to a certain extent, expanding its market share and favoring the development of the Sanlu Group, but after being merged by the Sanlu Group, it did not add any new equipment or capital, and started producing powdered milk with old machines, leaving the factory in a dilapidated state. Sanlu Group's branches or subsidiaries like this abound. This kind of expansion has led to the reality that the capital investment cannot keep up with the machinery and equipment and the internal management cannot keep up with the reality, which has buried a lot of safety hidden dangers.　(B) corporate culture and "responsibility to show" corporate culture is an existing intangible force, is an enterprise in the long-term business practices condensed in a cultural atmosphere, corporate values, entrepreneurial spirit, business realm and the majority of employees agree with the moral norms and behavior. The development of corporate culture can promote the continuous development of internal control, maturity, excellent corporate culture can fundamentally improve the control environment. For example, the enterprise through the establishment of ethical norms and code of conduct in line with the unit's own situation, set up all the staff's right and wrong judgment standards, the formation of formal written documents, to convey to the staff of the unit's responsibility, honesty, moral values of the expectations of the unit. At the same time, senior managers should pay attention to their own words and deeds, play an exemplary role in guiding employees to do things within the scope of morality. Sanlu Group has declared that the soul of its corporate culture is to make unremitting efforts to improve the nutritional health of the public. Its publicity materials show that Sanlu Group over the years to fulfill its social responsibility as its own responsibility: raising 800,000 cows, leading more than 80,000 farmers out of poverty to become rich, absorbing 50,000 laid-off workers and more than 800,000 rural surplus labor; support for farmers to raise cows, flood relief, fighting SARS, poverty alleviation in the old districts, helping the disabled to help educate and donate to the families of multiples and so on. Sanlu Group has won wide praise from all walks of life by donating funds and materials; the enterprise has won more than 200 honorary titles above the provincial level, such as National "May 1st" Labor Certificate, National Top Ten Enterprises in Light Industry, National Advanced Enterprise in Quality Management, and so on. There is no denying the social responsibility and various honors Sanlu Group has achieved. However, corporate social responsibility is mainly realized by providing the society with high-quality products. The large amount of melamine in Sanlu Group's products has caused physical and mental harm to infants and children as well as to those who consume them, and has caused great losses to China's dairy industry, especially the way it handled the problem after it was discovered, which has caused a very bad social impact. This way of undertaking and fulfilling social responsibility should be sanctioned by morality and law. Human factors (a) Human resource policy and improper employment mechanism The establishment of a good human resource policy is of great help to the training of the enterprise's employees, improving the quality of the enterprise's employees, better carrying out and enforcing the internal control, and also ensures that the personnel carrying out the enterprise's policies and procedures have the competence and integrity. Many dairy farmers and professionals do not believe that Sanlu Group has no knowledge of raw milk being adulterated with melamine in the purchasing process for more than three years. Thousands of employees of Sanlu Group's Milk Source Department are mostly rural people from the source of milk, which shows that Sanlu's inappropriate hiring mechanism is one of the outstanding manifestations of the imperfect formulation of human resource policies.　　(B) the concept of managers and business practices management authorities in the establishment of a favorable control environment plays a key role in the quality of managers directly affects the behavior of enterprises, which in turn affects the efficiency and effectiveness of the enterprise's internal control. Any system formulated by the enterprise cannot exceed the person who set up these systems, and the effectiveness of the enterprise's internal control also cannot exceed the integrity of those who create, manage and supervise the system. Management thinking is the soul of the enterprise operation, is the enterprise's values, business philosophy, the concept of responsibility to society and employees, etc., the concentration of the embodiment; management personnel on the control of the attitude determines the whole company's attitude and behavior. The management philosophy and management style of the management class, including the type of business risk that the enterprise bears, the management's attitude towards business risk and the method of controlling business risk, greatly affects the control environment.　In the Sanlu incident, the management of the enterprise was induced by profits to add melamine, an industrial raw material, to the milk powder, disregarding the health of consumers and completely breaking the moral norms. This kind of short-term behavior in pursuit of economic interests, at the expense of the business objectives, so that the implementation of the system because of the subjective will of the people and the existence of undue flexibility, resulting in the function of the internal control is greatly weakened, resulting in the whole enterprise "group transgression" phenomenon, resulting in the deterioration of the control environment, resulting in serious consequences. Therefore, as an enterprise manager, first of all, should improve their own quality, including theoretical cultivation and moral cultivation, and constantly improve the management level and form advanced management ideas and clear management goals. In addition, in addition to their own role model, senior management should also guide their employees to moral standards to control their own behavior, which in turn affects the efficiency and effectiveness of the internal control of the enterprise. Managers should take internal control as an important management tool, while trying their best to maintain its effective operation with power, make up for and improve the control omissions and functional deficiencies, so that the internal control serves for the realization of business objectives.　　V. Conclusion of the study "Sanlu" incident exposed the dairy industry problems, for the most prominent Sanlu Group, with reference to the "basic norms of enterprise internal control" basic requirements, insinuating the various shortcomings of the enterprise's internal control environment. Sanlu Group for China's enterprises sounded the alarm: the creation of a harmonious enterprise internal control environment, about the enterprise's prosperity, decline, honor and disgrace, and the survival of life and death. The enterprise's internal control environment is the key to internal control, determines the tone of an enterprise, it affects the entire enterprise internal control consciousness of all personnel, in the case of Sanlu Group, if the enterprise has a good internal control environment, it is possible to reduce the possibility of the "incident". Therefore, the enterprise should optimize the internal control environment from all aspects, so that the enterprise can improve the efficiency and efficacy, to prevent problems before they occur, and to provide a guarantee for the healthy operation of the enterprise. The strengthening of internal control is not something that can be accomplished in a short period of time, nor can it be achieved solely by the efforts of enterprises themselves. The state should also create a macro environment for enterprises to emphasize, develop and study internal control. [1] Yang Yufeng, Cao Qiong. 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