Internal Control Audit Research Articles

Significance and Role of Control Bodies in the Banking System of the Republic of Srpska

The establishment of open financial markets and the provision of financial services outside national borders determined the establishment of international standards in certain segments of banking operations and the obligation to adapt national banking regulations to the requirements of removing administrative restrictions on the freedom of movement of capital and establishing mechanisms that will ensure the safety and stability of the banking system. The aforementioned requirements determined the regulation of the banking system in market-oriented countries and countries that were undergoing or are still in the process of transition. In order to preserve the stability of the banking system, prudential control is particularly important, as one of the basic elements of security regulation, which aims to ensure the stability and security of the banking system, reduce the possibility of risk in the operations of financial organizations that make up the structure of the banking system, and provide appropriate protection to investors and users of banking services. In this sense, a special accent in the regulation of modern banking systems was emphasized in the establishment of a supervisor for the banking system, who directs and improves the work of banks, controls the legality of work and maintains the prescribed standards in work, the establishment of institutional control, which is realized in a combination of the system of internal control and internal audit and, extra-institutional control, which is recognized as external audit. The aim of this work is to investigate the importance and role of control bodies in the banking system of the Republic of Srpska, which operate according to the methodology of the supervision of the banking system, which is entrusted to the Banking Agency of the Republic of Srpska, the control bodies of the bank and the non-institutional control of the financial operations of financial organizations in the structure of the banking system, which is performed by an external auditor.

Functionality of the Three Lines of Defence Model in the Case of Public Financial Audit in the Republic of Moldova

Both, the alignment with the European vector of development, as well as the new challenges and demands made by the public to the public authorities determine the need to take over and adapt some effective mechanisms of public governance in the Republic of Moldova. Among them, the model of the Three Lines of Defence that forms the analytical framework for the integrated approach to internal public financial control and external public audit stands out. This article, applying specific research methods, first of all, the examination of national legislation and international practice, aims to achieve the specifics of the model of the Three Lines of Defence in the public institutions of the Republic of Moldova, identifying the most pronounced constraints and problems in its operation. In order for the monitoring of the activity of public institutions in the Republic of Moldova to be effective, it is necessary to develop and apply an integrated approach to internal control and public external audit.

Analysis of optimization strategy of internal control financial audit under the background of accounting computerization

In the popularization of the theory of computerization technology in China, the internal audit of the enterprise has become more and more convenient. Especially in the era of big data, China's computer technology theory research results are more and more, enterprise internal control and financial audit application of accounting computerized management mode is more and more mature, can not only ensure the integrity and authenticity of information data, but also on a certain basis to standardize enterprise computerized management standards. Therefore, after understanding the relationship between enterprise internal control financial audit and accounting computerization, based on the existing problems of enterprise internal control financial audit under the background of accounting computerization, I mainly explored the current accounting computerization system architecture applied in enterprise construction, and proposed the optimization strategy of enterprise internal control financial audit from the perspective of long-term development. In order to change the current situation of enterprise internal control financial audit.

CORPORATE CONTROL

In the various theoretical sources, the corporation is most often considered as a legal entity that appears as an object of obligations under a certain law and is created by one or more natural persons for a certain purpose. Usually, the owners of the corporation, who are shareholders, hire other people to run it, such as a board of directors. Thus, those who manage and make decisions for the corporation are not shareholders, but managers. Thus, a corporation is a legal entity created to do business and has the same rights as an ordinary enterprise, to own and trade its own shares, to buy raw materials, materials and assets, to produce and sell goods and services, etc.The corporation is managed by a manager or team, such as hired management personnel, who are responsible for the corporate debts, which does not apply to shareholders, and even if there is a risk of loss of liquid assets, this only applies to their invested capital, as per thus, corporate business is characterized by limited liability. In addition, there are no risks and complications in the transfer of rights to shares when they are sold, which means that the sale of shares cannot undermine the entire activity. Regardless of everything, in corporations, corporate management and corporate control come to the fore, the latter having the objectives of protecting the interests of the shareholders, monitoring the rights and obligations of the governing bodies, preventing conflicts of interest, controlling information about interested parties such as customers, suppliers, creditors, competitors, institutions, etc., as well as for its disclosure and transparency, to monitor the existence and application of an anti-corruption policy and an environmental and personnel policy, for the establishment of an audit committee, and internal control systems and audit etc.

Internal Audit Effect on Inventory Control

This research determines the influence of internal audits on inventory control in one of the garment companies in Bandung. This research method uses quantitative research methods with descriptive and verification approaches. First, obtain the questionnaire results from the respondents and then process them through SPSS 20 to be tested and then present the output results. After conducting analysis and discussion, the authors conclude that the effect of internal audit on inventory control carried out at a garment company in the city of Bandung shows quite good results. To see the expertise and accuracy possessed can be obtained from the results of the internal audit. But some are not optimal, which is in the internal audit control, which has not optimally supported the company, so the implementation of audit activities needs to be improved. In addition, the quality assurance program needs to run optimally to support audit performance.

Influence of Internal Audit Control and Integrity System as Predictors towards a Strong Good Governance

This study aimed to determine if internal audit control and integrity system were predictors of good governance. 325 teaching personnel of the Department of Education, Division of Tagum City were the respondents of this research. The statistical tools used were Mean, Pearson-r, and Regression Analysis. Quantitative non-experimental research utilizing correlational technique with regression analysis was the research design of this paper. Results revealed that the level of internal auditing in terms of risk management, internal control, and compliance and consulting was very high. The level of integrity system obtained a descriptive equivalent of very high in terms of strategic alliance, strategic planning, and fraud control. For the level of good governance, it obtained a very high level of results in terms of rule of law, responsiveness, transparency, and vision and mission. There was a positive significant relationship between internal audit control and integrity system to good governance. Overall, the two independent variables are predictors of good governance.

PENGARUH PENGENDALIAN INTERNAL DAN AUDIT INTERNAL TERHADAP PENCEGAHAN FRAUD DENGAN ANTI-FRAUD AWARENESS SEBAGAI PEMODERASI PADA INDUSTRI PERBANKAN INDONESIA

This study aims to examine the effect of internal control and internal audit on fraud prevention, as well as investigate whether anti-fraud awareness can moderate the relationship between internal control and internal audit on fraud prevention in the Indonesian banking industry. This study used 138 respondents consisting of Indonesian banking employees. These respondents came from Indonesian commercial banks. The data collection used in this study is a questionnaire distributed using Google Forms to the respondents starting from July to August 2022. This study uses PLS-SEM (Partial Least Square Structural Equation Modeling) as a method of data analysis and uses WarpPLS software version 7.0 as a data processing tool. The findings of this study indicate that internal control and internal audit have a positive relationship to fraud prevention and the anti-fraud awareness variable is able to moderate the relationship between internal control and internal audit with fraud prevention. These findings are expected to be a perspective for Indonesian banks in preventing potential fraud in their organizations.

Does the Presence of an Internal Control Audit Affect Firm Operational Efficiency?*

ABSTRACTThis study examines whether auditors' evaluation and reporting of firms' internal control over financial reporting (ICFR) affects firm operational efficiency. Prior research indicates that the strength of internal controls is positively associated with economic benefits. However, notwithstanding the underlying strength of controls, whether the mere presence of an ICFR audit provides similar economic benefits is unclear. We predict and find that small firms with ICFR audits have significantly higher overall operational efficiency than small firms with only management ICFR reports, even after controlling for underlying internal control strength. We find this effect manifests through improvements in inventory turnover and innovation, and through increased relative product market share. Separately, we find ICFR audits are associated with lower efficiency in SG&A expenses. Cross‐sectional analyses indicate that the mechanism by which ICFR audits affect overall operational efficiency is through auditor detection of internal control problems and through knowledge spillover from auditing other highly efficient firms in the audit office's metropolitan statistical area. These results provide additional evidence on the ongoing cost and benefit debate of ICFR audits for small firms.

Is It Better to Kill Two Birds with One Stone? Internal Control Audit Quality and Audit Costs for Integrated versus Nonintegrated Audits

ABSTRACTAudits of internal control over financial reporting (ICFR) are typically “integrated” with the audit of the financial statements (FSs)—both audits are conducted by the same audit firm, which designs procedures to satisfy the objectives of both audits simultaneously. A common assumption is that integrating the two audits is more effective and efficient than performing them separately. However, this assumption has not been tested empirically. Using a sample of Chinese companies that employ different audit firms for their FS and ICFR audits (i.e., nonintegrated auditors), we find evidence that challenges this assumption. Specifically, we find ICFR audit quality is higher for nonintegrated audits compared to integrated audits. Moreover, total audit fees are lower for nonintegrated audits, despite higher ICFR audit fees.

Pengendalian Internal, Budaya Organisasi, dan Audit Internal terhadap Fraud di Pemerintah

This study aims to test and prove the impact of internal control, organizational culture, and internal audit on fraud in the Sidoarjo district government. The research method used is quantitative method, the data used is primary data. Data collection method in the form of a questionnaire. The population in this study were 26 agencies and offices in Sidoarjo district. The sample in this study used a simple random sampling technique using the slovin formula so that a sample of 96 was obtained. The processing method used was multiple linear regression. The results showed that the internal control variables showed sig. of 0.009 which means <0.05; b) organizational culture variable shows sig. of 0.001 which means <0.05; c) the internal audit variable shows sig. of 0.000 which means <0.05. In conclusion, internal control, organizational culture, and internal audit contribute to reducing fraud. The biggest impact is internal audit, the better the internal audit is carried out, the lower the fraud will be.
 
 Keywords: Internal Audit, Organizational Culture, Fraud, Internal Control

A Full Population Auditing Method Based on Machine Learning

As it is urgent to change the traditional audit sampling method that is based on manpower to meet the growing audit demand in the era of big data. This study uses empirical methods to propose a full population auditing method based on machine learning. This method can extend the application scope of the audit to all samples through the self-learning feature of machine learning, which helps to address the dependence on auditors’ personal experience and the audit risks arising from audit sampling. First, this paper demonstrates the feasibility of this method, then selects the financial data of a large enterprise for full population testing, and finally summarizes the critical steps of practical applications. The study results indicate that machine learning for full population auditing is able to detect, in all samples, abnormal business whose execution does not adhere to existing accounting rules, as well as abnormal business with irregular accounting rules, thus improving the efficiency of internal control audits. By combining the learning ability of machine-learning algorithms and the arithmetic power of computers, the proposed full population auditing method provides a feasible approach for the intellectual development of future auditing at the application level.

Accounting reporting of institutions as a source of evidence in the process of departmental control of financial and economic activities

Subject. This article discusses the issues related to the development of requirements for the accounting statements of institutions as a source of evidence in the process of departmental control of financial and economic activities. Objectives. The article aims to develop requirements for the accounting statements of institutions used as evidence of the results of departmental control of financial and economic activities. Methods. For the study, I used the methods of grouping, comparison, and generalization. Results. Based on the analysis, the article substantiates the original position on the need to comply with the identity of the requirements for accounting (financial) reporting and other evidence of the conclusions and results of departmental control of financial and economic activities, internal State financial control and external government auditing, which can be used to develop the methodological provisions of the type of control under study. Conclusions. Analysis of research works of domestic and foreign authors and a number of regulations helped determine the basic requirements for evidence used in the process of departmental control of financial and economic activities and identify groups of such evidence depending on the purpose of implementation of the control measures carried out. This may contribute to the development of the concept of the type of control under study.

Совершенствование внутреннего финансового контроля и аудита как механизмов повышения эффективности использования бюджетных средств

The article deals with the organization and implementation of internal financial control and internal financial audit in the public administration sector. This issue is of particular relevance due to regularly taken decisions to restrict (moratorium) the activities of internal state financial control bodies. At the same time, the current socio-economic situation in the country requires an increase in the amount of budget funds allocated to address important state objectives. Under such conditions, the importance of internal control mechanisms, allowing for targeted and effective use of budget funds, increases. At the same time, the results of analytical activities carried out by the Federal Treasury indicate a significant number of shortcomings and difficulties on the part of the chief administrators of budgetary funds in the organization and implementation of audit. In this regard, the author, using methods of analysis of results, analysis of statistical data and analysis of official documents, conducted a study of the current system of internal financial control and internal financial audit. The empirical base of the study was formed by the results of analytical activities of the Federal Treasury, the results of monitoring the quality of financial management carried out by the chief administrators of federal budget funds, as well as regulatory legal acts of the Russian Federation and departmental legal acts of federal executive bodies regulating internal financial control and audit. According to the results of the study, proposals were developed to improve the efficiency of the internal financial control system and internal financial audit in the public administration sector.

Accurate Management Practice of Medical Consumables in the Whole Process Based on SPD Supply Chain

Establish a hospital logistics information SPD system, carry out internet cloud procurement, and interface with the hospital HIS system, surgical anesthesia system, internal control management system, etc, to form an information system covering the entire process of external logistics, internal logistics, and internal control audit. Accurately classify consumables in multi-dimensions, improve the consumables dictionary field information dictionary database, refine supplier management, and realize the whole process of implanting interventional and high-value consumables into three codes (material code, medical insurance consumable code, charge code) traceability management, and data visualization. At the same time, it reduces hospital inventory and cost pressure, reduces the intensity of nursing staff's management of consumables, reduces the risks and loopholes of consumables management, and improves the level of digital and intelligent management of medical consumables.

Pengaruh Audit Manajemen Dan Kualitas Pengendalian Intern Terhadap Kinerja Manajerial Dengan Good Corporate Governance Sebagai Variabel Moderasi

This study aims to analyze the effect of management audit and the quality of internal control on managerial performance with good corporate governance as a moderating variable. The population of this study were 106 managerial level officials and auditors at PT Bank NTB Syariah. The data analysis tool uses an interaction test. The results show that management audit and quality of internal control have a significant effect on managerial performance, but good corporate governance if it is a moderating variable does not strengthen the influence of management audit and quality of internal control on managerial performance, but good corporate governance has a direct and significant positive effect on managerial performance. This research has implications for the authorities to determine further steps and policies related to managerial performance.

The Effect of Professional Skepticism, Independence, Audit Experience, and Understanding of the Internal Audit Control System on the Ability of Auditors in Detecting Fraud Surveys of Internal Auditors of Ministry/Institutions in Indonesia

This research aims to discover how effective the professional scepticism, independency, audit experience, and the knowledge of internal control system on the ability of auditors to detect some frauds. The population in this study are the Internal Auditor of Minister/Institutions of the Republic of Indonesia. The sample size of the population on this research using the statistical method with purposive sampling technique.Data were collected by giving questionnaire to the respondents. Data were analyzed using the smartPLS 3.2.7’s software Structural Equation Modelling (SEM) that method is used to improve the weaknesses of the regression method.The results of this research are professional scepticism, independency, audit experience, dan the knowledge of internal control system that are positively and significantly affected to the auditor's ability to detect fraud. Keywords: Professional Scepticism, Independency, Audit Experience, Knowledge Over the Internal Control System, Fraud Detection DOI: 10.7176/RJFA/13-18-04 Publication date: September 30 th 2022

The conceptual dilemma between internal control and internal audit in Egyptian public organizations

The conceptual dilemma between internal control and internal audit in Egyptian public organizations

Determinant of Audit Quality: The Guardian and Justice Organizations (Target 16.6 SDGs)

External auditors play a major role in supporting governments and global organizations in implementing their plans for achieving sustainable development goals. The current research determines the factors that affect audit quality of a company. The authors reviewed research articles related to the topic published in the last 30 years (1980– 2020) to identify the factors that affected audit quality. Data were analyzed using the Leximancer software. It was found that the internal control system and audit tenure are the two variables that had a significant effect on audit quality. The internal control system had a relationship level of up to 92%, while the audit tenure had a level of 22%. Additionally, work rotation, workload, reputation, audit committee, and provided services were variables that had a high level of relevance with a level range of 16–19%.
 Keywords: audit quality, Leximancer, determinant of audit quality

Regulatory Framework and Performance of Saving and Credit Co-Operatives in Rwanda:A Survey of Selected Saving and Credit Co-Operatives in Gasabo District

A regulatory framework is regulation, law, rule or other orders prescribed by authority, especially to regulate the conduct of SACCO in Rwanda. Hence, the study sought to examine the impact of the regulatory framework on the performance of SACCOs in Rwanda with specific reference to the Survey of selected SACCOs in the Gasabo District. The research used a descriptive research design. The study targeted 110 drawn from two categories SACCO staff /employees and SACCO members. The study used both primary data and secondary data. The primary data was collected using structured questionnaires both open and closed. The data was analyzed using a qualitative and quantitative method using MS excel SPSS. Research findings showed there is a very high correlation (r=0.943) between internal control and performance. In addition, the study findings indicated a very high correlation (r=0.823) between saving mobilization and the performance of Sacco. It was revealed there is a very high correlation (r=0.749) between credit risk management and the performance of Sacco. The study reported the correlations between liquidity requirements and performance of SACCO is very high (r=0.923). Moreover, the results established that the regulatory framework is satisfactory in determining the performance. The adjusted R square was found to be 0.887. This implied that the regulatory framework could explain 88.7% of the variations in the performance. All four variables of the regulatory framework: Internal control, saving mobilization, credit risk management and liquidity requirement, were positively correlated to the performance. Furthermore, regression indicates that any change (increase) would have a significant change in the performance of Selected SACCO in the GASABO District. The recommendation is that the RCA and other policymakers of saving and credit cooperatives in Rwanda should clear that internal control, saving mobilization, credit risk management and liquidity requirement, and performance of selected Saccos in Gasabo District, Rwanda. There should be structuralization of permanent internal audit control and verification for all income and expenses of SACCOs and should set the boundaries for some members who ask for loans to limit payment loans. Keywords: Internal control, Saving mobilization, Credit risk management, Liquidity requirement, Performance

CONTROLLERS' INSTRUMENTS USED BY ENOGASTRONOMIC WINEMAKERS IN SERRA GAÚCHA, RIO GRANDE DO SUL, BRAZIL

This study aimed to identify internal control instruments used by enogastronomic wineries in Serra Gaúcha, Rio Grande do Sul, Brazil. The research had a qualitative approach, data were collected through an interview with semi-structured questions. The interviews were recorded and then transcribed. The data collection by easy access, i.e., the interviews were conducted online, with the managers of 5 wineries from the fifteen existing in Serra Gaúcha, Rio Grande do Sul, Brazil, who were willing to participate in the research. As a result, one can see that cash flow and internal control auditing are the tools most used by the companies surveyed, after all, all of them stated that they use them, coming second the ROI return on investment, the budget and the financial economic indexes being used by 4 of the companies surveyed, only one does not, in third place was the ROE return on equity, 3 companies use it and 2 do not, while ROA return on total assets, EBITDA and internal control auditing is used by only 2 companies.