The Research On Internal Audit Procedures And Systems Reengineering Of Small And Medium-sized Banks

As one important part of financial services, banking playing vital roles in the development of society and economy, is an economic lifeline and takes an irreplaceable role in the country. At the same time, especially in the procedure of financial liberalization and economic globalization, the risk of commercial banks which,as the specific company of operation risk have the factors of lower rate own-funds and longer financial leverage, has been amplified sharply. In the events of bank failures since1980s, there are some impacts of external factors for example international finance environment, financial liberalization and monetary policy of government. However the final reason is the loss of control over risk management in the period of business risk in banking, for example, neglecting the duty of internal audit.As an important way of risk prevention and control in Small and Medium-sized Banks, internal audit acts as "third line of defense" supporting inner-control system of commercial banks. After the development of more than several decades, the government of commercial banks have been improved gradually and made great achievement in asset scales and asset qualities. In fact, to most Chinese banks especially small and medium-sized banks, because of a relatively short span of time in embarking on real commercial banking operations, there are lots of flaws and weakness in risk control, especially in the fact of theoretical research on internal audit, system construction and staff quality.By combing the study on home and overseas internal audit theories and practices, this paper analyzes the content and effect of internal audit in Small and Medium-sized banks and researches on internal audit procedures and systems of small and medium-sized banks by borrowing those of key foreign commercial banks and investigating on the current situation of banking development and internal audit in China. Based on the theory of risk-oriented internal audit, this paper focuses on two facts. One is the establishment of internal audit system and safeguard measures with independence, authority and verticality, the other is the improvement and innovation of internal audit procedures and systems. We hope that the research of this paper can promote small and medium-sized banks to do a better job in protecting internal audit to supervise, evaluate and assure independently and objectively. And what’s more, it can help them identify, warn and control the risk earlier, and then, take some effective measures to overcome the risk in order to meet the business objectives and the safety of investment any property.