A Case Study Of The Lack Of Internal Control Of CGB And The Issuance Of Qiaoxing Bonds

As the reform and opening-up policy of our country goes on,Chinese financial industry develop rapidly,especially the commercial banks.However,with the rapid development,some serious problems also exist in our country's commercial banks.Making a general survey of the various financial events which happened in recent years,there are many problems about corporate governance in most banks of our country,and internal control problems are taken as the principal things.In order to achieve good corporate governance of commercial banks,the internal control must be paid more attention to.At the same time,today's world is the era of information?technology and network.How to improve the corporate governance of commercial banks combining the Internet technology is an important problem which Chinese banking industry is faced with.In 2014,Qiaoxing group issued private offering bonds about 1 billion yuan,but the group cannot repay the bonds in 2016,then China Guangfa Bank(CGB)which was a main body in this issue was found that it provided false guarantees whose amount of money was about 12 billion to the Qiaoxing Group.In this financial case,there were serious problems about the lack of internal control in CGB.Therefore,I chose CGB as the object of study and the “The Bonds of Qiaoxing Group”issue as the case of study,in the terms of corporate governance,analyzing the lack of internal control in CGB,and the influence which it take to the aim reaching of corporate governance.First of all,I make a brief exposition about the theory of corporate governance and internal control of commercial banks.On the basis of the two theories I find the relationship between them and puts forward the effect mechanism of internal control to corporate governance.This mechanism shows that under the environment of internal control,internal control,on the one hand,affect the safety of the operation and the accuracy of the information transmission through the risk assessment and control and the information exchange and disclosed respectively,and influence the stability of the commercial bank management through the balance mechanism.On the other hand,internal control,through the internal control's supervision and evaluation,judges and determines the effectiveness of internal control,and influence the sustainability of the development of commercial banks through the running mechanism.Only when commercial banks achieve sustainable development on the basis of steady operation,can they achieve the goal of corporate governance which is preventing and resolving the financial risks and protecting the stakeholders in the meantime.Secondly,I analysis the domestic and foreign researches about the commercial banks' internal control and corporate governance,and I found that foreign scholars started to study on internal control more earlier than domestic scholars,and most of the scholars concentrated the studies on internal control and corporate governance respectively rather than combined the two.This is a deficiency of the studies in this field,and is also this paper's innovation.Then I make a detailed introduction about the case of “Qiaoxing Debt”,and making CGB as the research subject,combining with the tickets punished by CBRC,I analyze the internal control problems in CGB.In the aspect of internal control environment,CGB has some defects,such as lack of attention and training for employees.In terms of risk management,CGB did not put credit risk control in place and failed to carry out due diligence effectively.In addition,there is a lack of necessary information exchange between superiors and subordinates? head office and branches as well as various departments,and the quality of internal control information disclosure is insufficient;In the aspect of internal supervision,the establishment of internal audit department is unreasonable and the implementation of internal audit is insufficient.and how these problems affect the goal achieving of corporate governance on the basis of the effect mechanism of internal control to corporate governance.Finally,According the problems in CBG,I put forward some relevant suggestions to CBG to promote the improving of internal control and the more efficient corporate governance.Actually,the internal control problems of CGB are widespread in the commercial banks of our country.Although there still are many problems about the internal control and corporate governance in Chinese commercial banks,the significant result achieved by Chinese banking industry in the 40 years of the reform and opening-up shows that there is large developing potential in our country's commercial banks.And today the degree of attention to the internal control and corporate governance is being improved.I believe that under the unremitting efforts,the commercial bank can improve the internal control more effectively,so as to realize the goal of corporate governance...