Study On Internal Control System Of Commercial Banks In China

Financial industry is the lifeline of the national economy. Commercial banks accounted for a dominant position in the financial industry. Banking, as a high-risk, high debt industry, because of its high relevance to the whole national economy, it has been the focus of the whole society. Therefore, how to guard against risks of banking has become the important subject of banking and academic circles. Since 1980's, financial crises that have occurred constantly in the world have aggravated failures of some major banks. There was no exception that those crises and failures originated in vital problems in internal control of the banks. By December 2006, China's banking industry has been fully opened to the outside world and the transition period of China's Entry to WTO has been ended. Therefore, the international competitions are escalating. Thus commercial banks in China speed up the process of reform. However, in the process of the reform, many major cases of bank failures emerged and exposed their weaknesses in internal control. Some international cases, such as the collapse of the Bahrain Bank due to internal failure and the shares slump of the Bank of Ireland have proven that internal control has become the core competitiveness of commercial banks. The failure of internal control will bring disastrous consequences. So the study of the internal control of commercial banks has far-reaching significance.Based on the case of the internal control system establishment in Shanghai Pudong Development Bank, this thesis studies on internal control of commercial banks in China, abundantly expounds the development of internal control theory, introduces the mode of internal control in western commercial banks-- mainly on the internal control system of German multi-functional banking system and the internal control model of the United States management separation, analyzes the difference on the internal control system and environment between western commercial banks and our country, and finally concludes the revelation from western commercial banks internal control system to our internal system establishment. Then the thesis discusses the present situation and existing problems of internal control of Shanghai Pudong Development Bank referring its internal control environment, management, organization structure, inspiration system and executive power, puts forward advices to reinforce company management by perfecting inspiration and regulation system, improve organization coordination, perfect internal control system, strengthen internal audit and system of abiding by regulations, establish and perfect risk recognition and evaluation system, establish a regular announcement system of "internal control report". The thesis also advises that internal control system establishment should be based on the strategic target of the commercial bank and requirement of Bank Regulatory Commission, and needs the attention and participation of all the staff and hence the internal control can play a role substantially.The innovation of this thesis lies in: focused on low efficiency originated in organization structure adjustment in internal control system establishment in Shanghai Pudong Development Bank, it proposes to balance the internal control and efficiency by means of process management and modern information technology and puts forward the regular announcement system of "internal control report" for commercial banks with reference of "Sarbanes-Oxley Act".