The 2023 revision of the PRC Company Law establishes a new internal oversight model centered on the audit committee, bringing profound changes to the corporate governance systems of local commercial banks. Using practices of local commercial banks in Zhejiang Province as the sample, this study finds a gradient pattern of development: listed banks have largely completed institutional transition and deepened functional implementation; most non-listed banks are moving from formal compliance toward substantive operation; and county-level rural commercial banks face multiple constraints such as shortages of talent and resources. The study further identifies three key challenges in the current reform: (1) weak linkage among oversight functions and resulting disconnections; (2) inadequate independence and professionalism of audit committees, including the risk of “hollow” organizational arrangements; and (3) an ambiguous positioning of internal audit that leads to weakened functions. Based on Zhejiang’s experience, this paper proposes differentiated implementation paths: at the institutional level, develop classification-based guidance; at the mechanism level, innovate a “two-way embedding” operating model; and at the capability level, strengthen empowerment through digital technologies. The study provides actionable solutions for local commercial banks to transform their oversight systems under the new rules, and offers reference value for advancing the modernization of corporate governance in local commercial banks.

Wenxiao Cao. Operationalizing Audit Committee Functions and Enhancing Internal Audit in Local Commercial Banks under the New PRC Company Law—A Practice-Oriented Analysis in Zhejiang Province. Academic Journal of Business & Management (2025), Vol. 7, Issue 12: 126-131. https://doi.org/10.25236/AJBM.2025.071216.

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