The Research On Internal Control Of GS Bank

For a commercial bank, internal control is a dynamic process and mechanism that can be used to fulfill its operational objectives by realizing advance prevention, concurrent control, ex post monitoring and correcting of various risks through the development and implementation of a series of systems, procedures and methods. As an enterprise model engaged specifically in currency, commercial banks assume greater business risks than the general industrial and commercial enterprises. As a foundation for the safe and stable operation of any commercial bank, effective internal control is conducive to assuring the effectiveness of the commercial bank’s operations and the reliability of its financial and management reporting, and it also helps the commercial bank to protect and increase shareholder value and lower the likelihood and severity of unexpected losses and reputational damage. Therefore, it is necessary for any commercial bank hoping to elevate its business development level to establish and consummate its internal control system, which is also an inherent requirement for all commercial banks in China when the implementation of a comprehensive risk management is concerned. In recent years, an appropriate internal control system has been established in many domestic banks, including GS Bank, and they also continuously attach greater importance to the development of internal control, thereby achieving some success across the broad, including the head offices and branches at different levels. However, it has also been exposed by the non-stop emergence of banking law cases in recent years that inefficiency, poor implementation and many other issues with respect to the development and operation of internal control still exist in these commercial banks, thereby making it a highest operational and administrative priority of such banks to strengthen and further improve their internal control development. Starting from a perspective as mentioned above, this article will try to analyze and study GS bank’s internal control based on the problems arising from one of its internal control evaluations and by taking in to account both the basic principles of internal control and GS Bank’s internal control practices, then put forward countermeasures for improving the internal control in GS Bank, so as to provide reference on the development of internal control to China’s commercial banks, including GS Bank.In this article, the literature research methods, inductive and deductive methods are used in combination as the main methodology and the analytical study incorporates both empirical and normative analysis with a bit more emphasis on the former. This article consists of six chapters, among which the first chapter as the preamble mainly introduces the background, significance and research ideas, methods and main points of this study; Chapter Ⅱ reviews the theories on commercial banks’ internal controls, discusses the relationship and difference between the internal control and risk management by first considering the risk prevention of commercial banks, thereby indicating that a comprehensive risk management is required for any of China’s commercial banks when internal control is concerned and risk control will certainly be given more significance in internal control development after such requirement is meet; Chapter Ⅲ introduces GS Bank’s internal control practices in recent years, describing separately the organizational building, framework and evaluation involved, all for the purpose of providing valid reference to be prudently by domestic banks based on the their own business situation and risk profile; Chapter Ⅳ utilizes an internal control evaluation conducted by GS Bank as an example to evaluate the progress, effectiveness and limitations of its internal control and gives introspective thoughts on the evaluation results; Chapter Ⅴ puts forward countermeasures for improving the internal control in GS Bank by analyzing the deficiencies of GS Bank’s current internal control and referencing the advanced practices by commercial banks in developed countries; Chapter Ⅵ concludes the whole text. Chapters Ⅳ and Ⅴ are the focal points of the full text.This article has several main points, including that the awareness of internal control shall be vigorously promoted and it is needed to create a fitting atmosphere; internal control is more of an responsibility of these senior managers, especially the "heads" of the relevant organizations, whose powers needs to be under control; and we need to understand that internal control is never a panacea and we need to pay attention to preventing its own risks. By trying to enrich to some extent the theoretical and practical contents with respect to commercial banks’ internal control through analyzing the problems with actual cases and referencing some practical experience, this article shows some novelty. However, some deficiencies in the text are inevitable to avoid due to limitations in the author’s knowledge level and study time.Commercial banks’ internal control is a highly practical method as the internal control mechanisms used in risk prevention by different commercial banks could be different because they are concerned with different risks; no internal control approach is superior to the other, every bank should try to find a suitable internal control mechanism by constant practice and exploration according to the needs of their own business development, and in the end elevate their respective internal control level.