Research On Internal Control Of Commercial Banks

For enterprises,internal control is a systematic management mechanism implemented internally.The specific implementation forms include the setting of organizational structure,the formulation and implementation of development plans,and the design and operation of work flow.As a special kind of enterprise,the internal control of commercial Banks has certain liability and particularity,which is mainly reflected in the external environment faced by commercial Banks and their objective requirements for survival and development.Commercial Banks face risks in the operation process,such as credit risk,market risk,liquidity risk,legal risk,operational risk,country risk and reputation risk.The diversity and complexity of these risks make the risk control of commercial Banks become a crucial part of the business philosophy of commercial Banks.In recent years,the commercial banking industry has paid unprecedented attention to the legal risks mentioned above.The most important reason is the arrival of the era of strong regulation.In recent years,the "macro-prudential supervision system" established by the regulatory authorities has been gradually improved,and the "strong supervision and severe punishment system" is gradually moving from the stage of constructing rules to the stage of "perfecting rules" and "implementing rules".Most of the problems can be finally attributed to the internal control of commercial Banks according to the penalty results of the inspection of commercial Banks by the regulatory authorities.Therefore,it is necessary to analyze the internal control system and actual operation of commercial Banks which have serious problems in multiple business areas.The research object of this paper is the internal control of bank H.In recent years,the bank and its branches have been repeatedly punished or notified by the circ,local banking and insurance regulatory bureaus and the state administration for industry and commerce.From the perspective of penalty results,the problems involved include equity management,corporate governance,risk management,business management,information disclosure and so on.Among them,"serious loopholes in internal control management" is clearly listed as one of the main violations of laws and regulations in no.30 [2017],the former administrative punishment decision of China banking regulatory commission.In 2017 alone,bank H received two fines from the China banking regulatory commission,involving 35 violations of laws and regulations,and the fine was as high as 174,921,363 Yuan.Since 2018,the bank has been punishedmany times,and its business operation and reputation have been seriously affected.H for privately held national shareholding commercial bank,it is not only have internal control mode of the joint-stock Banks,and has the characteristics of local Banks in many aspects,such as bank financial institutions,in the case of unlisted also face higher external supervision and information disclosure requirements,as a national banking institutions,its internal control effect for the entire financial market and its development has great influence on its own.Therefore,by studying this problem,this paper analyzes the problems of H bank in the aspects of internal control environment,risk assessment,control activities,information communication and internal supervision and puts forward solutions,which has certain reference significance for the bank and similar institutions to optimize the internal control management.The first part of this paper is the introduction,which mainly introduces the research background and significance,literature review of related issues,research ideas and research methods.The second part is an overview of internal control theory of commercial Banks,including related concepts,implementation,evaluation and theoretical basis of internal control of commercial Banks.Related theories include principal-agent theory,insider control theory and ownership structure theory.The third part first introduces the operation situation and organizational structure of H bank,and then introduces the internal control mechanism of H bank,the specific methods of realizing internal control and the cases of H bank’s internal control problems.The fourth part is this article key,this part,according to the five elements of internal control of H bank internal control problems from multiple aspects to analyze the cause of this paper,H bank internal control reasons mainly include the senior appointments and shareholder background problems,risk assessment system and backward management ability,limited control activities and difficult to play their role,lack of internal and external information communication and internal supervision failure problem.The fifth part puts forward Suggestions for H bank to optimize its internal control,including comprehensively optimizing the internal control environment of the bank,establishing and improving the risk assessment mechanism,reasonably setting up the internal business management organization,actively promoting the construction of information communication mechanism and implementing the internal control evaluation and accountability mechanism.The sixth part is the conclusion.Review the full text and hope that the case studied in this paper can provide ideas for similar commercial Banks to improve the effect of internalcontrol,through the analysis and evaluation of their own internal control system and implementation,in the future business activities,improve the level of internal control management,meet their own development and regulatory requirements.