Commercial Banks' Internal Control

Internal control has been giving priority by the management ofbusiness and being regarded as a tool and a mechanism of self-discipline and self-control due to the intensi1~ying market competitionand necessities of vigorous self-development. It is especially the case forcommercial banking industry that manages money and other venturousderivatives with high-profile risks. Nowadays with hefty banking losses,so many banking default, and frequent financial crises cry out to bedealt with, the Barcel Banking Committee concluded, afterimplementing a systemic research on various problem banks, thateffective internal control system is both an indispensable pait of bankingmanagement and a guarantee of banks' safety and well performance,which are helpful of making assurance of the realization of managementtargets. Based on the above understanding, this paper attempts to designan integrated and effective internal control system of commercialbanking after taking lessons of commercial banks in marketingeconomies and the unique status quo of China's commercial banking, aswell as the guidelins set by People's Bank of China, the central bank ofChina, into consideration. The internal control framework presented inthis paper is designed from the perspectives of control environment, riskassessment, control activity, information and communication, andsupervision and evaluation, and is effective to react to changing`conditions, and to realizing the best target of internal control whichenable the goal of management.