The Practice Research On Chinese Commercial Banks' Internal Control

Since the end of 2006, In accordance with the commitment we made when our country became one of the members of WTO, the domestic market has been completely opened to all foreign banks. Our commercial bank has been an important component of the world financial market, meanwhile, it also suffer from the shock of the world financial turbulence. In the progress of taking part in the international competition, the congenital internal control defects of our commercial banks have become the biggest latent danger. In recent years, Chinese commercial banks have faced an endless stream of serious incidents caused by internal control failures. According to the situation, the banks has realized the significance of internal control, and began to establish a sound internal control system in response to the various financial risks, but the perfect of the control system is still in the stage of exploration and the internal control system established still exist many problems.Based on the existent theories of internal control and related research results, The article analyzes the reasons why the cases caused by internal control failures occur inside bank A in the recently four years range from 2006 to 2010, before and after the adjustment of internal control organization structure in bank A aiming to find out the problems currently existing in bank A's internal control management. The analysis on the case of misappropriation fund mainly focuses on the deficiencies of its internal control organization. The cases of bill defraud mainly emphasize the vulnerabilities on risk identification. Fraudulent loan case reflects the problem, such as the bank values the development, neglects the risk and the internal control system is not in its place. According to the three cases we can summarize the bank A's deficiencies in its internal control management. Bank A is a microcosm of Chinese commercial banks, so we can know the whole sack by a handful. After analyzing the bank A's problems in its internal control management, the article maintains that the commercial banks in china on the one hand should think of all the five elements of internal control, on the other hand they should shoot the arrow at the target and lay stress on the key points in the process of improving their internal control system. In the terms of internal control environment, Commercial banks should focus their attention on the following two areas:the first one is internal control culture and the other one is internal control organization. In the terms of risk identification and assessment, they should bring in advanced technology and quantitative methods. In terms of internal control measures, they should avoid establishing many, complex and scattered measures, card clearly internal control measures and update the measures timely and make great efforts to strengthen implementation of the internal control measures. In the terms of information exchange and communication, they should improve and perfect the information exchange platform, ensure the authenticity of the information and make sure the information channel is unimpeded. In terms of monitoring and redressing, they should ensure that internal control supervision and inspection department are independent and authoritative, and solid the final line of defense.