A Study On The Internal Control Of The State-owned Commercial Bank

The state-owned commercial bank has took 20 years reform, now, entering the substantial and fundamental stage. For China bank industry, the year 2004 is very important and pivotal. Just like president WEN said, the banking transformation in this year cannot lose, but succeed.However, with the development of finance and derivative, financial risk is more complicated and more multiform. Under the pressure of global competition in international financial industry, state-owned commercial banks always excessively focus on the enlargement of the management scales and the expansion of the location, but ignoring the establishment and consummation of the internal control systems. The commercial bank is a special industry with high debt, high risk, run the currency and easy to be the aim of the crime. In order to keep out and resolve the financial risk, accelerate the financial system reform in our country and promote our commercial banks' prudent operation, it's critical to built a perfect inner-control regulation which appropriate to the business and scale.Internal control is a sort of dynamic process and mechanism to avoid, control, monitor and modify risk through establishing and implementing a series of systems, procedures and measures. Good banks such as Citybank and America bank all establish a strict and efficient internal control system in their organizations. In the paper, I used the advanced experiences and disastrous lessons of western countries' internal control for reference.In contrast with western banks' internal control, there are many deficiencies in our state-owned commercial banks'. So our commercial banks are not strong enough in achieving their operational targets and avoiding financial risk. It is urgent to establish efficient and complete internal control system in order to improve our commercial banks' management. This is the reason that this article is written.So, I provide some suggestions for strengthen the state-owned commercialbanks' internal control. From the aspects of the internal environment, we should: promote the financial system transforming, especially the transforming of property right to establish efficient corporate governance; consummate the organizational structure; improve internal control's thoughts; perfect banking culture; strengthen the independence and authority of internal control organization; reinforce human resource management. From the aspects of the working construction, we should improve the management of credit risk, the control of accounting system, the control of authorization, the system of information communion, internal monitor, the construction of science and technology and rules. By adopting these measures, I wish we can set up reasonable environment and establish efficient internal control system. Then we can implement the internal control system efficiently and correspond with the financial system reform in our country and quicken the process of our state-owned commercial banks' modernization.The thesis is divided into 4 chapters. First, introducing the theory of internal control, including its developing process, the goal and significance, the meaning and factors. Second, using the success and failure of some western commercial banks in their internal control establishment. Third, describing the present situation of the internal control in China's state-owned commercial banks and analyzing the reason of its invalidation. Last, giving some improving advice and measures aimed at the weakness of internal control system.