Bank of China yesterday said irregularities uncovered in a
regular government audit will not affect its financial results.
"The audit findings have no impact on the bank's overall
operational results and do not affect its financial statements that
have been issued," the bank said in a statement to the Shanghai
Stock Exchange.
According to the statement, the National Audit Office conducted
an inspection between April and September 2006 of the 2005
accounting books of the bank's head office and certain
branches.
The audit found evidence of a failure of branches to adhere to
the central government's macroeconomic controls and the bank's own
credit approval policies, the bank said.
The investigation also uncovered management problems such as
improper recording of income or expenses in certain branches and
sub-branches that need to be rectified.
Risks were identified in a small number of highway construction
loans and the disposal of non-performing assets, the statement
said, without giving any detail. It said the National Audit Office
will release its major findings after July.
The government has been urging domestic banks to improve
internal controls and risk management to root out fraud, scandals
and embezzlement, to boost their competitiveness.
A year ago, the National Audit Office released its audit report
on the Agricultural Bank of China. The report said irregularities
to the tune of 8.68 billion yuan were uncovered in the bank's 2004
accounts.
It has also audited the Industrial and Commercial Bank of China,
China Construction Bank and the four State-owned asset management
companies over the past few years. It also plans to audit some
other listed banks.
Many banks themselves are also making efforts and comply with
stricter regulations to improve their management after they sold
shares to the public.
"Most problems found during the audit occurred before the bank's
joint-stock reform in 2004," said Bank of China, adding the bank's
executives have attached great importance to these issues, many of
which have been effectively rectified and the persons responsible
punished.
The bank has recovered or settled the non-complying loans and
made adequate provisions vis-a-vis the unrecovered non-performing
loans.
As for the accounting issues, the bank made the necessary
adjustments last year.
(China Daily June 26, 2007)