The Research On The Internal Control Evaluation Of Commercial Bank

Since the 20th century, the process of the banking industry, innovation, international, market integration accelerates gradually, meanwhile, the risk of banking is increasing. The major cases of commercial banks occur frequently, such as:international credit Commercial Bank incident, the British Barings Bank case, Bank of Japan case and so on, caused huge losses to countries, to a certain extent, slowed the speed of economic development. The financial reform in China has undoubtedly made great achievements, but in recent years, China's commercial banking operations and risk management also revealed defects, various types of internal cases are endless to the states.1997, the PBOC issued "to strengthen internal controls of financial institutions guiding principles", " a number of provisions to further strengthen the bank accounting internal controls and management " and " a number of internal control opinions On further improve and strengthen financial institutions, the construction", which laws and regulations conducive to China's commercial banks to establish internal control system. In September 2002, the PBC issued the "Internal Control Guidelines for Commercial Banks", replacing the "guiding principles." "Commercial Bank's Internal Control Guidelines" absorbs new meaning of the Basel bank agreement at that time, " the framework of the bank's internal control system " and results of COSO report, on behalf of the new stage of the Chinese commercial bank's internal control theory and practice.The internal control research on Commercial Bank of China began relatively late, the study of commercial bank's internal control evaluation is relatively small, and most is qualitative assessment, it is difficult to provide accurate and objective evaluation results. This article attempts to establish a combination assessment of qualitative and quantitative to make assessment results more accurate, objective and reasonable. This has important theoretical significance, helping to guide commercial banks to further strengthen internal control'evaluation, improve internal management, improving, more effective guard against financial risks, protect sound operation of commercial banksThe first chapter introduces the research background, research purposes and research significance of this paper, from which, combs the domestic and foreign literatures on the internal control evaluation.The second chapter introduces the theory of the commercial bank's internal controls and internal control evaluation framework. Among them, the internal control theory, introduced "Internal Control-the overall structure" issued by the Committee COSO, including five elements, control environment, risk assessment, control activities, information and communication and self-assessment The process of internal control is:assesses risk according to the tasks and objectives; designs systems based on risk assessment of internal control system; implements control systems by the relevant departments and personnel; implements appropriate test and evaluation based on standard of internal control design and effectiveness; analyses differences and exceptions; takes appropriate measures for improvement. That is design-implementation-evaluation-to improve. They are an organic whole, is a gradual process. The framework of Commercial bank's internal control evaluation includes the principles of evaluation, evaluation content, evaluation procedures and evaluation methods. The highest level is objectives, namely the ultimate purpose to carry out a comprehensive evaluation of internal control activities; the second level is the principles of evaluation, for the evaluation activities must be developed and strictly follow the clear principles of evaluation to ensure that evaluation goals can be achieved; The third level is a specific process of evaluation activities, including evaluation content, evaluation methods, evaluation procedures and evaluation results, and risk warning rating.On theoretical basis, the third chapter summarizes the problems of Chinese commercial bank's internal controls and evaluate and their causes. There are significant deficiencies on internal control:Due to the late start of internal controls of China's commercial banks bank, managers still have very different management philosophy, which has not yet formed an appropriate internal control culture; since the contract revenue and misallocation of control benefits, as well as distortions in the personnel system, making the incentive mechanism of internal control deficiencies; because of the personnel system is flawed and ignored the staffs are initiative and creativity, leading to the quality of personnel management and employee training in imperfect. Evaluation of internal control problems mainly reflected in:As China's commercial banks scattered data and other reasons, information systems can not meet the requirements of internal control and management; due to internal control evaluation system involving all aspects of banking operations, the evaluation found there is clear grasp of the system The one-sidedness and lag, makes the evaluation results is not accurate enough; government regulatory departments of commercial banks to establish and improve internal controls put forward certain requirements, but not for commercial banks, the effectiveness of management's evaluation of internal control system to provide substantive guidance, the lack of a unified internal control evaluation criteria; the lack of scientific and effective evaluation method, present, many methods on the effectiveness of the implementation of internal control is carried out in general terms evaluation; managers and operators often evaluate the implementation of the rectification a mere formality, the use of evaluation results is inadequate.Chapter IV builds internal control evaluation system of the commercial banks. In this paper, based on the Basel Committee to develop a commercial bank's internal control framework, the bank of the elements of internal control evaluation is defined as the eight areas:corporate governance, control environment, internal audit, capital, assets, management, earnings, liquidity, and should be Select the appropriate indicators correspond to the eight elements. Then for each indicator from the local qualitative evaluation to quantitative statistics; from a partial quantitative statistics to the overall quantitative evaluation; and finally arrive at from an overall quantitative evaluation of the overall qualitative assessment. The weight of the qualitative indicators designed with expert scoring method, while drawing on the principles of fuzzy evaluation to data processing. Then, this paper chooses a certain city bank C's 18 branches to study the object, applying the evaluation system of the empirical analysis, from the control environment, risk identification and assessment, control activities and segregation of duties, information and communication, monitoring activities and correcting defects in the five aspects of its internal control system.,ChapterⅤfocuses on the empirical study on comprehensive evaluation of content control, namely, under the preceding sections of content, implementation steps, evaluation methods and indicators system for a certain commercial banks' eight prefecture-level branches comprehensive evaluation of internal control experiment. For each branch level, an analysis of different levels of branches in its evaluation of internal control evaluation system with different characteristics. Through the empirical analysis of the results, this chapter summarizes the major shortcomings of the internal control system of China's commercial banks:the excessive concentration of ownership structure; corporate governance, sound; corporate culture lagged behind the understanding of internal control biased. Control activities, the existing internal control rules and regulations are not perfect; the implementation of the internal control system is not in place; the internal organizational structure and unscientific; risk control measures is inadequate; staff quality control does not implement. The exchange of information, accounting information distortion; management information system to build settings; information transmission is inefficient. Supervisory review, the independence of the internal audit department is not strong; auditors the quality and technical level of thinking to be improved. Finally, the paper puts forward a sound internal control evaluation of China's commercial banks in the proposal:Stick to carry out shareholding reform, and gradually improve the corporate governance structure; remodeling outstanding entrepreneurial spirit, focus on cultivating a culture of internal control; the reform of outdated concepts and methods of risk management, improve risk assessment system; effective implementation of internal control activities, control of various risks; increase the accounting reform, and strengthen information management, the establishment of smooth information transmission mechanism; to strengthen the internal audit, and improve supervision of the verification regime.This study analyses a comprehensive evaluation methods of internal control system, The innovation is as follows:this paper syntheses existing research results, makes COSO internal control framework as the blueprint, constructs a set of quantitative and qualitative indicators. The index essentially covers the evaluation point, and has the practical operability. This article draws on the relevant mathematical models, scientific solution to the weight of each index distribution, through mathematical means, eliminates the influence. This mathematical approach for the actual business operations in the data processing provides reference experience.This article failed to address:This article solved the weight distribution of the qualitative indicators and quantitative indicators, but failed to pass the science and rational solution to the mathematical model of evaluation index system of qualitative and fixed t the weight of the two indicator system accounting. This paper failed to be more detailed and more specific evaluation criteria. This paper should view from costs and benefits of the efficiency of the internal control system. Limited to research depth, this needs r further research.