State-owned Commercial Banks' Internal Control

I．The purpose and significance of the research in this thesisThrough researching the internal control theory and the current situation of internal control in the state-owned commercial banks of our country (SOCBS), using the controlling experience that is practised in the foreign commercial banks for reference, and according to the actual condition of the SOCBS, the thesis puts forward the corresponding suggestion to perfect the internal control in the SOCBS.The reason why I choose this topic is the following.With the development of the financial reform, the risks of China's banks, especially the state-owned commercial banks accumulate constantly. A large number of unsafe factors exist, which threat the stability of the bank system and even the whole financial system and economic order of our country directly. Under the new environment of present economy and finance, how can SOCBS take effective precautions against bank risks, and keep sound and stable operations? One of the answers is to set up and perfect the internal control of SOCBS to improve its internal management and its ability of resisting risks. So, setting up and perfecting internal control has extremely important realistic significance to commercial banks especially state-owned commercial banks in China. And the case of usurping enormous bank fund in Guangdong branch bank, Bank of China that happened in March 2002 has urged me to choose this title as my topic directly.Through studying the internal control theory in the commercial banks, combining the actual conditions of the state-owned commercial banks in our country, I put forward some suggestion, hoping it can do some reference function on the construction and perfection of the internal control in the SOCBS. That is the actual significance of the research inthis thesis.II．The basic thought of the thesis The research into internal control of the state-owned commercial banks in the thesis proceeds from general theory of internal control in the commercial banks, based on some new explanation for internal control on the Basel Agreement. According to the Basel Agreement, the internal control can be divided into 5 parts: control environment, risk assessment, controlling activities, information and communications, monitoring. For outstanding the systematization and integrality in internal control of the commercial banks, in the following two chapters, the thesis links these five sides closely, observes the existing problem in these five sides in the current situation of state-owned commercial banks in our country separately since the end of the 1980s, and the experience of internal control of the foreign commercial banks. In chapter four of the thesis, directly against the weak point in these five sides of state-owned commercial banks in our country, I have put forward suggestion to set up and perfect the internal control in the state-owned commercial banks.III．Main content and viewpoint of this thesisThe thesis is divided into four chapters altogether.Chapter One introduces the intension of internal control of commercial banks, and analyses its intension and necessity with theories. This chapter is divided into three sections. According to the Basel Agreement and COSO committee's latest definition to the internal control, the first section expounds the meanings of internal control in the state-owned commercial banks and the composition of its five parts. Section two analyzes the inherent instability due to the particularity of themanagement and function of the commercial banks, and the enormous negative effect, which prove the important significance in maintaining the stability of commercial banks. Then, how to maintain commercial banks running stably? The thesis points out that there are three pillars, namely, internal control, official monitoring and market restricting, but the internal control is the most important and essential institution. In section three, the author analyzes the importance and necessity of setting-up and perfecting t...