The Research On Internal Control Environmental Impact Factor Of Small And Medium Sized Banks

In recent years， with the “closures” of small and medium sizedbanks(SMB) in the United states and the violation of discipline casesof SMB such as Guiyang City Commercial Bank and Beijing Rural CommercialBank, the small and medium-sized banks’ internal control and riskmanagement are widespread concerned about. Internal control environmentis an important foundation of internal control systems. Especially underthe dual pressure of the large state-owned banks, foreign banks, SMB needto strengthen its internal control environment.This paper defines the internal control environment of small andmedium banks, and analyzes the basic status of China SMB’s internalcontrol environment, which shows the environment for the development ofdomestic and foreign small and medium banks continued to deteriorate andSMB of violation of discipline to accelerate the improvement of theinternal control requirements of small and medium banks in the frequentcases of objective environmental process. From a broader perspective,this paper analysis to build a framework of small and medium banks internalcontrol environment factors. The internal environmental factors includemacroeconomic environmental and the development of SMB, the interactivedevelopment of SMB and SMEs, financial regulatory policy and supervision,as well as information technology and technological innovation of SMB.The internal environmental factors include diversified system of propertyrights and organizational dimensions, employees dimension and managementof governance dimensions of internal factors, and analysis of the internalenvironmental factors specific to small and medium banks, such as the asset quality and capital adequacy ratio, non-performing loans ratesand the credit risk. Small and medium-sized banks’ internal controlenvironment requires the construction of internal and externalenvironment. The external environment is necessary to strengthen thefinancial ecological environment construction, and promote theinteractive development of small and medium banks "counterpart" of SMEs,the implementation of the differences in regulatory policies for smalland medium-sized banks, and speed up the technological revolution of theconfidence of small and medium-sized banks. The internal environmentneeds to improve the corporate governance structure and organizationalstructure of the Board of Directors, Supervisory Board, Audit Committee,and to emphasize the role of employees in the internal control environment,and improve staff competence and to foster good internal control culture.Finally, based on the normative analysis of the results to Qilucommercial Bank as a case, the thesis analyzed the Qilu bank fraud caseto discover the problems of Qilu Bank ’s internal control environment andbased on normative analysis designed the effective recommendations forthe Qilu bank ’s internal control environment upgrade.