| With the rapid economic development,China’s financial market continues to be diversified.New financial products swarm into the market and becomes quite popular in the investment community.The subsidiary of the fund company features on flexibility of their own financial products and used to occupy most of market share for asset-management-plan market,most of which has aggregated to 100 billion RMB under management.The reason for that is those subsidiaries take advantage of the attributes of channel in the financial market.However,the subsidiaries neglect to develop other financial products for active management with the skyrocketing growth of asset management scale,and is criticized for their shortcoming of capital chain along with high financing cost.From 2014 to 2016,serval cases of redemption crises occur to the subsidiaries due to capital embezzlement.Considering that it is lack of compliance polices,the regulatory has determined to put pressure on those subsidiaries by drawing up new polices in order to put restriction on asset scale under management.Hence,strengthening internal control is helpful to avoid compliance risk when it refers to business transformation.Specifically,weak internal control poses an obstacle on business development while well-established internal control be subject to regulatory policies and evade potential compliance risk.In attempt to study the relationship between internal control and compliance risk in the subsidiaries,the paper firstly analyzes the recent rules and regulations issued by AMC,aiming at the internal control of subsidiaries.In consideration of deficiencies in internal control in the company,the paper contrasts the case of A subsidiary of the fund management company with other subsidiaries suffering from administrative penalty so as to figure out how internal control leads to compliance risk.In the end,the paper concludes there exists inherent compliance risk in terms of asset management plans operated by those subsidiaries,which are able to evade compliance risk through internal regulations、internal audit and risk control mechanism.In addition,the paper put much emphasis on the approach to address the problems of compliance risk based on the current circumstance in the financial market.It can be also summarized that the subsidiary need to strengthen internal control consciousness through internal control system,empower the auditor as the-third-party for internal control and improve professional skills of internal audit in the department of compliance and risk control. |
