Present Situation And Countermeasures Of Internal Control Of Commercial Bank

Banking is a business which concentrates high risk, vulnerability and negative external effects of theindustry. It not only has a special business objects, but also a difference in the mode of operation. Andachieving effective internal control is an important means of commercial banks risk prevention. As animportant part of commercial banks, the city commercial banks are the city’s financial security and animportant force to promote local economic development. The internal control of commercial bank is inorder to achieve business objectives, Through the establishment of a complete strict internal control systemto control and coordinate the enterprise internal management activities, and the key is to control andmonitor the risk. Therefore, the internal control of the city commercial banks is particularly important.This paper first outlines the historical development of the internal control, and the principle of theinternal control evaluation and commercial banks, namely comprehensive principle, importance principle,checks and balances principle and cost-effectiveness, and internal control of the three stages ofdevelopment. Then, according to the city commercial banks’ internal controls five sections, namely, theinternal control environment, risk management, internal control activities, information exchange andfeedback, and supervision, this paper elaborates on the status of city commercial banks’ internal controlproblems and causes. Then, with the actual situation of Luoyang banks, the paper analyzed Luoyang citycommercial banks’ measures and internal control, then found both internal and external aspects of thecauses of the problem. Finally, with reference to the status quo in Luoyang bank’s internal control problems,the paper proposed a universal commercial bank’s internal control countermeasures.This article is divided into six parts. The first part is an introduction, mainly introduces the researchbackground, purpose and significance. The second part, the principal-agent relationship and the controltheory is briefly introduced to establish the theoretical basis of bank internal control. And the citycommercial bank internal control, have a preliminary understanding of internal control, elucidate thesignificance of internal control, and the theoretical basis of internal control--that means of internal controland internal control method. The third part introduces the general situation, make a preliminary control ofChina’s city commercial banks internal, paper the weak link. The summary of the problem mainly analyze from the five basic elements of internal control to the interpretation analyze. But the cause of the problemare analyzed from two aspects of internal and external. Discuss on the internal control from the perspectiveof management system and operation system, on the external to examine the effect on the internal controlsystem from the financial perspective. The fourth part, as the focus of this paper, it mainly introduces thebasic situation of Luoyang bank, and focuses on the internal control system of the problem. The studyfound that Luoyang bank control problems in the internal mainly in, From the internal environment, Marketpositioning is not accurate, less service business types, varieties of a single, business innovation ability isinsufficient. From the control activities, The construction of the internal control system is not perfect,control methods are backward. From the information and communication, Between the accountinginformation is not comprehensive, the management system of information is not shared, have no fullycontrol information system.From the internal supervision, The lack of audit computerization, auditpersonnel philosophy behind the lack of professional quality. The fifth part is the reform and suggestions.From the construction of good internal control environment, build a good risk assessment system, carry outinternal control activities effectively, build effective information systems, to improve the supervision andevaluation system of multi level. Through this a series of comprehensive improvement project to improvethe internal control system of Bank of Luoyang.This paper focuses on the macro external environment from the aspects of city commercial banksfaced, competition among banks, and the internal resources of city commercial banks to analyze theinternal control issues of city commercial banks. In cities of our country commercial bank internal controltheory based on the study of the practice course, combining previous research results. In the process of citycommercial Banks in the internal control construction problems analyzed one by one. For the newproblems emerging in the process of its development and puts forward a new solution.The main innovation point of this paper is as following: First, research perspective is different fromthe past. In the studying of the existing city commercial banks, most of the scholars have focused onimproving the risk control system up, few scholars from the perspective of internal control to analyze theconstruction of city commercial banks. Second, depart from the point of view of financial ecologicalenvironment. Combining the internal factors and external factors of the internal control system, examinesthe city commercial banks in which the environment from a new point of view, analysis and summary of city commercial banks in the internal control problems, and finally put forward effective solutions andmeasures.The author hopes that through the study of inner city commercial banks and Luoyang bank internalcontrols，this article will be benefit for the city commercial banks internal control. Meanwhile, the results ofthe study can do provide a reference for internal control system to other city commercial banks.