Legal Regulation On Internal Control Of Operational Risk Of Commercial Banks In China

In recent years,China's rapid economic development has also accumulated a lot of risks,especially financial risks.In 2014,the "Golden Decade" of the bulk commodity industry such as coal officially ended.Since then,due to the market environment,the development of the industry has been severely hindered.Banks that had previously lent a large amount of funds to this industry have generated huge amounts of non-performing assets.Due to the imperfect internal control system,some banks did not deal with non-performing assets in a timely manner in accordance with the law.Instead,they set up shell companies to use debt-type acquisitions to whitewash their performance and cover up non-performing assets,which in turn triggered operational risks.The case of Pudong Development Chengdu Branch is more typical.The case led to problems such as a decline in profits,a rise in non-performing loans and an increase in employee turnover rates.The case also revealed that there are many problems with the internal control laws and regulations of commercial banks,including serious failure of the internal control system,weak compliance awareness,inadequate supervision mechanism,and failure of the audit and supervision system to be effectively used.The reform ideas are as follows: First,improve financial legislation.For example,the "Banking Supervision and Administration Law of the People's Republic of China"(hereinafter referred to as the "Banking Regulatory Law")raises the upper limit on the amount of punishment imposed by the responsible person in the "Banking Regulatory Law".Taking the necessity and feasibility as the guiding principle,it is recommended that the Banking Insurance Regulatory Commission and the Ministry of Finance jointly formulate the "Commercial Bank Accounting Implementation Measures" and "Commercial Bank Audit Implementation Measures" to improve the quality of accounting information,enhance audit independence and audit effectiveness;increase banks Provisions on information disclosure such as the appointment of the president of the branch;recommends increasing the unit'scriminal qualification punishment and raising the cost of illegality;improving the operational risk loss data collection system and the operational risk management system audit supervision system.The second is to improve the internal control system.Taking the principle of safety before efficiency and the principle of checks and balances as the guiding principles,we should improve the job rotation system.At the same time,it is recommended that the bank revise the company's articles of association,put the safety principles in the first place,and strengthen the awareness of compliance.The third is to improve the government supervision mechanism.Guided by the principle of respecting autonomy of the will and taking into account the principles of supervision by law and efficiency,we will strengthen the review of the qualifications of senior executives and improve the implementation mechanism of the supervision measures after the risk reminder.Guided by the principles of audit independence and other principles,shorten the continuous auditing period of the same organization by the audit institution;conduct periodic assessments of the effectiveness of the internal control system of the enterprise,such as appropriately increasing the frequency of internal control audits to improve the audit effectiveness.The above ideas are expected to have some reference to legislation and practice.