Determinants of Internal Control Compliance in Public Organizations; Using Preventive, Detective, Corrective and Directive Controls

Abstract

ABSTRACTInternal control is relevant in every entity, regardless of the objectives. However, its effectiveness varies greatly across jurisdictions. From a Ghanaian institutional perspective, this study presents evidence of internal control compliance from selected public organizations, based on 395 sampled observations. The relationships were measured using a structural equation modelling approach – SEM, and conclusion based on a set of hypothesis developed to test for reliability and model fitness. The findings suggest that preventive, detective, corrective and directive controls are good determinants of compliance. Each explanatory construct measured significant across all thresholds based on the statistical estimates reported in the confirmatory factor analysis, regression weights and the goodness of fit indices. The study further observed that internal control is more effective among organizations practising preventive measures. The study implied that over reliance on detective controls may not significantly influence compliance in the long term, as they are instituted to identify risks and events after they occur, a practice that is common among public organisations. The emergence of new risks relative to increasing accountability requirements, from quality perspective may require more preventive measures than any other type of control. Lastly, policymakers in the public sector must ensure, the cost of implementing controls does not outweigh its benefits. Preventive controls are efficient, proactive and cost effective. However, detective controls and other controls are relevant, to support and provide evidence on how effective preventive controls are functioning.