Analysis of Internal Control Mechanism Problems in Rural Credit Cooperatives and Improvement Measures

For a long time, the contradictions accumulated by rural credit cooperatives due to internal control systems, internal control supervision and other aspects have become increasingly prominent, posing ever-greater risks to their own healthy development. Strengthening the internal control restraint mechanism and improving internal control measures have become key to standardizing the business conduct of rural credit cooperatives, preventing operational risks and ensuring sound operation. In this article, the author attempts to analyze the problems existing in the internal control systems of rural credit cooperatives and proposes some improvement measures and methods.

Existing Problems

In recent years, although rural credit cooperatives have achieved certain results in various areas of work, the situation is not optimistic, and potential unsafe factors still exist, mainly manifested as follows:

The internal control system is not sound. This is mainly manifested in the lack of comprehensiveness, systematicness and scientific rigor in rules and regulations, with monitoring blind spots existing in the operation of some businesses; some rules and regulations no longer meet the needs of business development and must be revised and improved; when new businesses are developed and promoted or new management models are implemented, corresponding supporting rules and regulations are not formulated in a timely manner, and there is a phenomenon of lagging institutional development.

The organizational structure and position setup are not standardized. At present, the organizational structure of rural credit cooperatives has not truly achieved the purpose of mutual checks and balances. Although a board of directors and a board of supervisors have been established in accordance with regulations, their operating procedures and purpose of establishment are far from achieving the prescribed effects. In addition, the internal control responsibilities of business functional departments are not clear, and business management departments have not been placed at the center of internal control self-discipline. Due to differences in personnel allocation, there are also considerable differences in position setup, and some rural credit cooperatives have the problem of one person holding multiple positions and uncontrolled supervision.

⟦NL> Audit supervision is not in place. This is mainly manifested in the fact that, with the acceleration of electronic development, the corresponding internal control of computer information systems has not yet adapted, and there is no effective supervision over the design and operation of computer programs or the process of computer data flow; in supervision and inspection work, post-event supervision predominates, and there is a lack of pre-event and in-event supervision; because inspection personnel do not have comprehensive business knowledge, effective monitoring has been lost in areas such as computers, international business and intermediary business.

The quality of employees needs to be improved. In some places, employees of rural credit cooperatives lack effective ideological and moral education, and a small number of employees have deviated in their outlook on life, morality and values, which has to a certain extent damaged the reputation and interests of rural credit cooperatives.

Accountability is not strong enough. The internal control restraint of rural credit cooperatives has failed to play its role, and due to major mistakes caused by decision-making errors or by moral problems or management failures of principal persons in charge, accountability against management or principal responsible persons appears weak.

Measures and Methods

In order for rural credit cooperatives to strictly implement internal control management systems in business activities, reduce loopholes and hidden dangers in work, and defuse operational risks, the author believes that at present the strengthening of internal control construction in rural credit cooperatives should proceed from the following aspects:

First, with institutional development as the focus, continuously strengthen the internal control management mechanism. To strictly implement internal control systems and reduce work loopholes and hidden dangers, a complete set of internal management mechanisms must be established so that every link and every part of the entire business activity has rules to follow and violations are punished.

First, establish a self-control management network. From top to bottom, establish job responsibilities and a set of scientific responsibility assessment methods, so that departments and departments, specialties and specialties, and positions and positions have clear divisions of labor, each performing its own duties and each bearing its own responsibilities.

Second, establish a mutual-control management network. Establish and improve a fully independent and authoritative internal supervision system, implement all-directional and system-wide internal control management, establish an internal control mechanism of power checks and balances and procedural constraints among relevant business functional departments, and strengthen mutual supervision and restraint between departments and departments, positions and positions, and employees and employees. For heads of functional departments, heads of grassroots rural credit cooperatives and personnel in important positions, strengthen the supervision and restraint mechanism through job rotation, position changes, term responsibility audits and departure audits, among others. At the same time, strengthen business training for inspection personnel, improve inspection standards and inspection coverage, eliminate inspection blind areas, and make inspection work meet the needs of business development.