Research On The Internal Control Environment Of Commercial Banks

In the background of domestic economy transformation, Commercial Bank as thepillar of the domestic financial system is facing more complicated risk. In recent years,the commercial Bank has developed the off-balance sheet business frequently; its riskis also transferred from balance sheet to off-balance sheet. Internal control plays animportant role in banks’ risk control, and the effect of internal control is based onbank’s control environment. Therefore, this paper focuses on the analysis of controlenvironment, and according to the particularity of commercial banks, this paperlaunches a specific analysis on bank control environment.Based on the theory of domestic and foreign documents, Internal ControlIntegrated Framework (1992,2013), Basel Commission and domestic supervisiondepartments’ norms and guidelines, this paper analyses the specific content ofenvironmental control of commercial banks as well as the particularity ofenvironmental control of commercial banks. According to the <Basic Standard forEnterprise Internal Control> issued by the Ministry of finance, this paper thinks thatthe control environment includes corporate governance, organizational structure,personnel quality and the enterprise culture. According to the four elements ofinternal environment, this paper dose analysis about the relationship between riskevents and control environment of Ever Growing Bank. After the analysis, the paperdraws the conclusion as follows, this bank’s internal control rules are complete, butthe control environment is invalid. The deficiencies include the chairman’s morallevel is not up to standard, the internal organizational structure is not reasonableenough and the risk management members are lack of professional skills andindependence. All these reasons make contribution to the redemption event.According to the conclusion of case analysis, this paper provides some suggestionsfor Ever Growing Bank and for further research at last.