The Research of Internal Control System Construction and Evaluate in QiluBank
|Keywords||Internal control Internal control system Internal controlassessment|
In recent years, with the rapid economic development in China, business of banking in China has growing at a high rate, among whom city commercial bank has ranked first. However, behind the high-speed growth, the risk management of the city bank could not improve at the same pace. As a result, a series of cases have appeared one after another, such as "1206" Qilu Bank case in2010, notes fraud incident in Yantai Bank. As a sequence, the city commercial bank is facing an urgent task to build a practical, efficient, and effective internal control system and thus to mitigate risk. It is the same task with Qilu Bank.Using the theory on COSO Internal Control-Integrated Framework, which defines internal control as having five components, the paper developed a noval standard and proecedures of internal control evaluation, based on actual business practices of Qilu Bank. By analyzing the existing internal control evaluation from three domestic representative banks, Industrial and Commercial Bank of China, Agricultural Bank Of China and Nanjing bank, and combining the current internal control activities and risk assessment of Qilu Bank, the paper has introduced a model suitable for Qilu Bank, including evaluation methods and evaluation index system. The model assigns1000points to235evaluation parameters, by combining five parmameters of COSO internal control with management and services of Qilu Bank. Also, the model involves various ways to conduct evaluation, including evaluation in implementation process, limited evaluation, self-assessment among the branch in phases, and re-evaluation by head office. To prove the feasibilty of the theory of internal control evaluation, the paper introduces the methods and procedures of evaluation in detail. By analyzing the data collected from235evaluation parameters, the service and management of Qilu Bank could be clarified. Thus all branches could comply with the law and regulations, follow amounts of regulatory rules and never do violence to the business principles of commercial banks. In addition, risk-management of branches could be improved. At last, the business goal could be achieved and the normal business service could be guaranteed.Due to limit in research depth and objective situation in Qilu Bank, the paper is far from satisfaction. For example, some of evaluation indices are based on qualitative analysis; how to identify the grading criteria; the invovlement of subjective judgment, and thus cannot perform quantitative analysis and revise the index weight.