Guidelines for Internal Audit of the Financial Institutions in the Banking Industry
Guidelines for Internal Audit of the Financial Institutions in the Banking Industry
Guidelines for Internal Audit of the Financial Institutions in the Banking Industry
Yin Jian Fa [2006] No.51
June 27, 2006
Chapter I General Provisions
Article 1 In order to facilitate the improvement of corporate governance for the financial institutions in the banking industry, strengthen internal control, and perfect the internal audit system, these Guidelines are hereby formulated in accordance with the Banking Supervision Law of the People's Republic of China, the Law of the People's Republic of China on Commercial Banks, the Company Law of the People's Republic of China, the Audit Law of the People's Republic of China, the Regulations on the Implementation of the Audit Law of the People's Republic of China and other laws and regulations.
Article 2 For use on these Guidelines, "financial institution in the banking industry" shall mean any policy bank and commercial bank incorporated within the territory of the People's Republic of China.
These Guidelines shall also apply mutatis mutandis to any other financial institution approved by the China Banking Regulatory Commission (hereafter referred to as the "CBRC") to be established.
Article 3 For use on these Guidelines, "internal audit" shall mean an activity of supervision, evaluation and counseling conducted in an independent and objective manner, which is a significant part of the internal control for the financial institutions in the banking industry and which examine, evaluate and improve the operational activities of the financial institutions in the banking industry and their status of risk, internal control and effect of corporate governance, through a systematic and standardized method, so as to facilitate the steady development of the financial institutions in the banking industry.
Article 4 The object of internal audit for the financial institutions in the banking industry is to ensure that the laws, regulations, policies, and administrative rules of the competent supervisory authority with respect to economy and finance are implemented, within the range of risks for the financial institutions in the banking industry, brought under acceptable risk control and the operation of the financial institutions in the banking industry and their value improved.
Article 5 the internal audit work for a financial institution in the banking industry shall be independent of its operational management, be directed at risks and ensure the objectivity and impartiality of the work.
Article 6 The CBRC shall inspect and evaluate the internal audit work for the financial institutions in the banking industry in accordance with these Guidelines.
Chapter II Institution and Personnel
Article 7 The board of directors of a financial institution in the banking industry shall be responsible for establishing and maintaining sound and effective internal audit system. In the absence of the board of directors, the senior management thereof shall perform the corresponding functions and duties.
The board of directors shall set up an audit committee under itself consisting of at least three members, the majority of which shall be non-executive directors. An independent director shall hold the office of the chairmen of the audit committee. In the absence of the board of directors, the senior management thereof shall determine the composition and the responsible person for the audit committee.
Article 8 A financial institution in the banking industry shall establish an internal audit department to audit the operational and managerial acts throughout the entire system thereof and may appoint a principal auditor to be in charge of the audit work for the entire system thereof.
......