Effective Internal Control Research Articles

Analisis sistem pengendalian internal prosedur pengeluaran kas: COSO ICIF 2013

Financial management plays a crucial role in the survival and growth of companies. Cash disbursement is a common transaction in companies, necessitating effective internal control systems to prevent fraud or misappropriation. This study aims to analyze the internal control system and evaluate the internal control system over cash disbursements at PT WE, a mining consulting company in Yogyakarta. The research method used is descriptive-evaluative with a qualitative approach. Data were collected through direct observation and interviews with relevant staff. Evaluation was conducted based on the 17 principles within the five main components of the COSO Internal Control—Integrated Framework 2013. The results indicate that PT WE has implemented some internal control principles effectively, but there are still weaknesses in interdepartmental coordination, risk identification, and cash disbursement procedures. Based on the findings, it is recommended that PT WE improve coordination and communication between departments, systematically identify risks, and enhance cash disbursement procedures by establishing clear protocols, segregating related tasks, and periodically evaluating the internal control system.

Факторы, влияющие на обеспечение корпоративной безопасности компаний

Corporate security is a comprehensive system of measures designed to protect an organization's assets, data, employees, and reputation from potential threats. This article discusses various factors that can increase an organization's vulnerability to security threats. The independent and combined effects of internal controls, such as training programs and data protection protocols, as well as external threats such as cyber-attacks, physical intrusions and economic espionage, are being investigated. A key aspect of the analysis is the idea of synergy in the field of security. The article argues that a well-coordinated approach combining various security measures into a single whole creates a more effective protection strategy. The analysis of the interdependencies between the various controls highlights the importance of implementing a strategic threat management program that goes beyond individual solutions. By contributing to a comprehensive understanding of vulnerabilities and the effectiveness of synergistic security measures, the article aims to equip organizations with the knowledge and tools to develop and implement effective threat management programs that protect their critical assets and contribute to long-term success.

The Effect of Internal Audit, Internal Control and Audit Committee on Fraud Prevention (Case Study at Bank Mandiri Jakarta Tanjung Priok Area)

Fraud has often occurred in the corporate environment. Fraud is usually based on personal, group or business interests. The economic crisis has encouraged corporate fraud, especially due to the weak implementation of internal control and corporate governance in the banking industry. In an effort to prevent fraud, companies can consistently empower the role of the company's internal auditors who can trigger the implementation of management risk control, internal control systems, and audit committees which have an important role in various aspects of the organization including fraud prevention. This study aims to examine the influence of the role of internal audit, internal control, and the audit committee on fraud prevention. The population in this study used 7 of the 25 Bank Mandiri Branch Offices in the Tanjung Priok Enggano Area, with a total of 85 respondents. The data collection method used a questionnaire by giving a score value according to the Likert scale measurement system . This type of research used quantitative research with a case study method. The sampling technique used purposive sampling. The data analysis method used is multiple linear regression with the SPSS version 25 application. The results show that internal auditing, internal control, and audit committees have a significant effect on fraud prevention.

Analysis Of The Effectiveness Of The Internal Control System For Cash Receipts And Disbursements At The Modern Entreprenur Darul Musthofa Islamic Boarding School 2021-2022

This research aims to investigate the effectiveness of the internal control system for cash receipts and disbursements at entrepreneurial modern boarding school darul musthofa. The research employs a qualitative descriptive approach with the research subject is the Entrepreneurial Modern Boarding School Darul Musthofa. Data collection techniques including interviews, observations, and documentation. The findings indicate that the Modern Entrepreneurial Boarding School Darul Musthofa has successfully implemented an effective internal control system for cash inflow and outflow in line with accounting principles. The organizational structure, which segregates duties and responsibilities in cash handling, enhances accountability. Concrete steps such as digitization of records, regular monitoring, and authorization by the treasurer and head of the boarding school ensure accuracy, transparency, and efficiency in financial record-keeping. Structural separation, authorization, detailed recording, and risk monitoring through online financial transactions reflect the boarding school's commitment to modern financial management. The alignment of the internal control system with financial principles demonstrates sound practices. The treasurer's crucial role in ensuring the accuracy of financial records and the implementation of online financial transactions highlights the boarding school's innovative approach. Overall, the Modern Entrepreneurial Boarding School Darul Musthofa serves as a best practice example in financial management.

Decentralization and Human Resource Quality Drive Inventory Control Efficiency

This study investigates the influence of audit committee variables, decentralization, and human resource competence on internal inventory control implementation at Surya Mart. Conducted through quantitative methods and surveying 32 employees and stakeholders, the research finds that decentralization and human resource quality positively impact internal control effectiveness, while the audit committee variable shows no significant influence. The results emphasize the importance of organizational factors in shaping internal control practices in small-scale enterprises like Surya Mart, offering insights for managerial decision-making and highlighting avenues for future research to expand understanding in this area. Highlights: 1. Quantitative investigation examines organizational factors on inventory control at Surya Mart.2. Decentralization positively influences internal control, enhancing operational efficiency.3. Future research: explore variables, methodologies to advance small-scale enterprise inventory management. Keywords: Internal inventory control, Organizational factors, Small-scale enterprises, Audit committee, Human resource competence

Factors Influencing the Audit Quality of the Municipalities

The study aims to analyze the Audit Quality (AQ) factors that were perceived to be necessary by the accountants and internal auditors in municipalities of Palestine. A survey of 309 accountants and internal auditors from 155 Palestinian municipalities was conducted. The questionnaire data was statistically analyzed using Smart PLS3 software. The study discovered that auditor ethics, independence, and competence were the most significant elements in determining AQ. Meanwhile, Internal Auditing (IA), Accounting Basis (AB), and the Laws and Regulations (LR) have a moderate effect. However, the least crucial factors were Audit Fees (AF) and Audit Firm Size (AFS). The study is limited by the survey questionnaire method’s general limitations and the perceptions of accountants and internal auditors. It offers evidence on AQ from Palestine, helps the audit firms distinguish their marketing and service delivery strategies, and understands the AQ aspects sought by those clients. Moreover, the study provides the municipal councils and the regulators of the municipalities with greater knowledge on how to select the best auditors and maintain internal control measures, notably IA and the use of the accrual basis in accounting procedures. Since the findings are generally consistent with previous studies, more emphasis can be placed on the effectiveness of municipal internal control.

Stopping Hamburglars: Applying Effective Internal Control

ABSTRACT Understanding effective internal control is vital for accounting and business students. Examples of fraud and loss through poor internal control are widespread in practice. The learning objectives of this teaching case focus on improving students’ ability to comprehensively evaluate internal control practices and suggest and justify new practices where applicable. The McDonald’s Monopoly fraud is a real-life example of a situation where multiple internal control failures had substantial financial and reputational consequences for McDonald’s, particularly its outsourcing partners involved in operationalizing the monopoly game. We use this factual case to illustrate control system shortcomings, allowing students to evaluate internal control and suggest internal control techniques with reference to all five components of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control—Integrated Framework. JEL Classifications: A22.

How does supply chain digitization affect green innovation? Evidence from a quasi-natural experiment in China

Digital technology will profoundly impact green innovation by enabling deep supply chain transformation through cost reduction and efficiency gains. Based on a quasi-natural experiment of China's supply chain innovation and application pilot policy, this paper investigates the impact of supply chain digitization on green innovation using data from 1836 listed companies from 2013 to 2021. The results find that: (1) Supply chain digitization significantly promotes firms' green innovation level, a finding that still holds under placebo and other tests. (2) Mechanism tests indicate that supply chain digitization enhances firms' green innovation level mainly through optimizing innovation resource effect, enhancing internal control effect and expanding external demand effect. (3) The green innovation effect of supply chain digitization is greater in regions with low supply chain concentration, capital-intensive, non-polluting industries, and higher digitization degree. (4) Supply chain digitization significantly improves environmental performance through the green innovation effect.

Does ownership structure drive the effect of CEO overconfidence on earnings quality?

PurposeThe purpose of this paper is to examine the effect of chief executive officer (CEO) overconfidence on earnings quality and the moderating role of ownership structure as a crucial corporate governance device.Design/methodology/approachThe paper uses the generalized method of moments (GMM) estimation method to test our models on a sample of 335 French companies between 2009 and 2020, i.e. 4,020 observations.FindingsThe results show that CEO overconfidence negatively affects earnings quality. This result supports the predictions of behavioral finance theory and suggests that CEO overconfidence is a behavioral bias that affects the quality of earnings. The authors also examined the effect of different types of ownership structures on this relationship. The results show the significant role of controlling shareholders, owner-managers, families and institutional investors in mitigating the negative effect of CEO overconfidence on earnings quality.Research limitations/implicationsThis paper has some limitations. First, other types of ownership structures could have been analyzed such as state ownership. Second, we ignored the role of the board of directors as an important governance mechanism in controlling overconfident CEOs’ actions.Practical implicationsCompanies should be aware of the potential risks associated with CEO overconfidence, which can compromise the faithful representation of earnings. This highlights the importance of effective monitoring and internal controls to detect and prevent such practices, which involve the role of ownership structure.Originality/valueThis paper addresses the effect of CEO overconfidence on earnings quality and provides new evidence on the role of different ownership structure types in shaping this relationship. Additionally, this paper sheds new light on how overconfident CEOs may behave in challenging times.

The Effect of Internal Control Effectiveness, Compensation Suitability, Management Morality, and Unethical Behavior against the tendency of Accounting Fraud

The Effect of Internal Control Effectiveness, Compensation Suitability, Management Morality, and Unethical Behavior against the tendency of Accounting Fraud

KECURANGAN AKUNTANSI: PENGENDALIAN INTERNAL, KOMITMEN ORGANISASI, DAN ASIMETRI INFORMASI

This study aims to influence the effectiveness of internal control, organizational commitment, and information asymmetry on accounting fraud in Banda Aceh City with the census method so that the entire population is sampled. The data in this study were collected using a survey distributing questionnaires. Respondents in this study were structural officials involved in the preparation and implementation of the budget consisting of heads of agencies, heads of finance, and treasurers in 46 SKPK of Banda Aceh City. Data analysis in this study used multiple linear regression analysis with the help of statistical software SPSS version 26. The results showed that (1) the effectiveness of internal controls, organizational commitment, and information asymmetry have a simultaneous effect on accounting fraud, (2) the effectiveness of internal controls affects accounting fraud, (3) organizational commitment affects accounting fraud, and (4) information asymmetry affects accounting fraud.

The Moderating Effect of Internal Controls on the Relationship Between Supplier Pre-Qualification and Procurement Performance in Public Universities in Kenya

As publicly funded institutions, public universities are expected to follow a competitive and systematic tendering process when procuring goods or services. Despite legislation and regulations aimed at ensuring adherence to international best practices and promoting integrity and accountability, there have been instances of inefficiencies in the tendering process, particularly within public universities. The purpose of this study was to assess the moderating effect of internal controls on the relationship between supplier pre-qualification and procurement performance in public universities in Kenya. The study was anchored on stakeholder theory. A positivist research philosophy and a correlational research design was adopted. Target population of the study was 1,016 employees from the selected public universities. The study adopted stratified and simple random sampling to select a sample of 287 respondents. Primary data was obtained using a structured questionnaire, which was self-administered using a drop-and-pick later technique. The validity of the research instrument was ensured through an extensive literature review and consultation with subject experts and supervisors from the procurement department. The reliability of the instrument was examined through a pilot study involving 29 respondents from the University of Kabianga where a Cronbach alpha coefficient of 0.834 was obtained. The obtained quantitative data was analysed descriptively using means, frequencies, and standard deviation, and inferentially, correlation and regression analysis were used. The study established that internal controls had a positive moderating effect on the relationship between pre-qualification (R2, change of 0.075; p<0.05), and procurement performance. The study concluded that pre-qualification of suppliers, was an important factor in determining the procurement performance in public universities because it significantly explained the change in procurement performance. Therefore, the study recommends that public universities improve internal controls to ensure efficiency in the supplier pre-qualification process as well as the procurement performance in public universities in Kenya. The study findings could be significant to the management of public institutions and policymakers in public procurement, enhancing knowledge in academia and theory development in procurement activities

INTERNAL CONTROL SYSTEMS AND FINANCIAL PERFORMANCE OF COMPANIES LISTED IN NAIROBI SECURITIES EXCHANGE

<p>Internal control systems involve various methods and measures the organisation takes to safeguard assets, accurately check financial reports, enhance operational efficiency and execute managerial policies to achieve their financial objectives. The study sought to determine how internal control systems influence the financial performance of Nairobi Securities Exchange (NSE) listed companies in Kenya. Specifically, the study sought to assess the effect of risk assessment, internal control environment and information and communication systems on the financial performance of the listed companies in NSE. The study adopted a descriptive research design. The target population comprised 63 listed companies in NSE as of 30th June 2023. A sample of 39 companies was drawn from the target population using a stratified random sampling technique. The study used primary data collected using structured questionnaires. Data analysis was carried out using descriptive and inferential statistical methods. The results were presented using tables and charts. The study found that internal control systems positively and significantly influenced the financial performance of the listed companies in NSE. The study recommended that to improve the financial performance of these firms, the management needs to determine and implement the optimal combination of effective and efficient internal control mechanisms.</p><p> </p><p><strong>JEL</strong>: G20; L10; L20; M10</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0737/a.php" alt="Hit counter" /></p>

Pengaruh Tata Kelola Perusahaan, Komite Audit, Dan Kualitas Audit Terhadap Kinerja Perusahaan

Corporate governance, audit committee, and audit quality are important factors that can influence company performance. Good corporate governance can create an effective internal control system, increase transparency and maintain company accountability. The audit committee, as part of corporate governance, plays a role in overseeing the financial reporting process, evaluating the internal control system, and monitoring external audit performance. High audit quality can increase stakeholder confidence in the company's financial reports and provide guarantees for the accuracy and reliability of financial information. This research aims to analyze the influence of corporate governance, audit committee, and audit quality on company performance. Corporate governance variables are measured using corporate governance scores, while audit committee variables are evaluated based on the characteristics and effectiveness of the audit committee. Audit quality is assessed by the reputation and experience of the external auditor. Meanwhile, company performance is measured using financial ratios such as return on assets (ROA) and return on equity (ROE). This research uses data from companies listed on the Indonesia Stock Exchange (BEI) during a certain period. Data analysis was carried out using the multiple linear regression method to test the influence of independent variables on the dependent variable. It is hoped that the findings of this research will contribute to the development of corporate governance practices, audit committee management, and improvement of audit quality in Indonesia, as well as provide insight for companies in efforts to improve their financial and operational performance.

Internal Audit Coso Framework Pada Fungsi Keuangan Berbasis Digital Untuk Menilai Kinerja Keuangan Di CV. Inti Bumi Multigrup

This research aims to determine how the role of digitalization on internal control How digitalization is used to assess the effectiveness of internal control in the financial function, how digitalization can make financial performance more efficient. This research is a descriptive qualitative research that measures and describes a certain social phenomenon by collecting facts, but without testing hypotheses using a triangulation approach, namely documentation, observation, and interviews. 1. The financial system still does not use digitization or is still manual 2. Competency mismatches can affect the results of the company's financial statements 3. Not confirming to suppliers or to their customers 4. Mixing company accounts with personal accounts. Based on the results of the discussion, it can be seen that the number and competence of human resources is very important, so internal control over the financial function at CV. Inti Bumi Multigrup is very necessary. Based on the COSO Framework, it can be concluded that internal control in CV. Inti Bumi Multigrup is not good enough, where: 1. The financial system still does not use digitization or is still manual 2. Competency mismatches can affect the results of the company's financial statements 3. Not confirming to suppliers or to their customers 4. Mixing company accounts with personal accounts The author's research suggestion for CV. Inti Bumi Multigrup is that it can pay more attention to the conditions of the financial and administrative sections or financial functions so that they are in accordance with applicable accounting standards and can also make it easier to analyze data for decision making.

Coso-Based Control With The Belief in Karmaphala In The Business Sustainability of People's Credit Institutions (LPD)

Objectives: Village Credit Institutions (LPD) are unique financial institutions that exist only in Bali. In 2021, two LPDs in Denpasar, the provincial capital of Bali, experienced significant problems due to ineffective internal controls, resulting in the embezzlement of funds. This research focuses on internal control based on the Committee of Sponsoring Organization of The Treadway Commission (COSO) framework within LPDs, incorporating aspects of Balinese beliefs, specifically Karmaphala, to evaluate their influence on the sustainability of LPD businesses. Methods: The research methodology follows several stages: identifying the issue, collecting relevant theories and hypotheses, observing the population and sample, collecting data, conducting tests, analyzing the data, and reporting the results. The study aims to test the interaction between COSO-based internal control and the business continuity of LPDs, particularly through the lens of karmaphala beliefs held by LPD supervisors. Results: The testing phase indicates that the interaction of COSO-based internal control positively and significantly influences LPD business continuity. The belief in karmaphala among LPD supervisors strengthens the relationship between COSO-based internal control and the sustainability of LPD businesses, suggesting that supervisors who adhere to the law of karma contribute effectively to maintaining robust internal controls and ensuring business sustainability. Conclusion: The study concludes that effective internal control based on the COSO framework, combined with the Balinese belief in karmaphala, significantly enhances the sustainability of LPD businesses. Supervisors who incorporate these beliefs into their oversight practices provide a stronger, more positive impact on the continuity and stability of LPD operations.

How does local debt expansion affect earnings management? Evidence from China

ABSTRACT This paper explores the impacts of local government debts (LGD) on earnings management strategy and moderation effects of internal control. Using a purpose-build database incorporating Chinese LGD and listed firms, we find that firms engage in income-increasing earnings management in response to local debt expansion. The results remain stable to endogeneity tests and various robustness checks. Furthermore, the impacts of LGD are markedly pronounced in non-SOEs, firms audited by Big 4 auditors, young and declining firms, and firms located in less-marketized regions. Moreover, this study reveals that internal control exerts moderation effects on the relation between LGD and earnings management.

CEO power, internal control quality, and entrepreneurial innovation spirit in family enterprises

Using listed manufacturing enterprises in China from 2013 to 2020 as a sample, we find that CEO formal power, CEO integrated power, and internal control quality are positively and significantly related to the entrepreneurial innovation spirit of family businesses. CEO informal power, although not directly correlated, can enhance entrepreneurial innovation spirit by strengthening CEO formal power. In addition, internal control quality negatively regulates the relationship between CEO formal power and integrated power, and entrepreneurial innovation spirit. These findings highlight the incentive effects of CEO power and internal control on entrepreneurial innovation spirit in family enterprises, as well as the supervisory and inhibitory role of internal control over CEO power. This study contributes to the understanding of factors influencing entrepreneurial innovation spirit in family enterprises, focusing on CEO power and internal governance.

Informativeness of Internal Control Weakness Disclosure on Acquirers’ M&A Decisions

SYNOPSIS We empirically examine the relevance of the disclosure of internal control weaknesses (ICWs) by target firms for acquirers in making their merger-and-acquisition (M&A) decisions. We find that acquirers offer lower premiums for targets that disclose ICWs (ICW targets) before acquisition in comparison with targets that disclose effective internal controls (non-ICW targets). We also find that acquirers offer less cash (versus stock) for ICW targets in comparison with non-ICW targets. Overall, results indicate that ICW disclosure by targets is informative to acquirers. Practically, we contribute to the literature by identifying the relevance of ICW disclosure as a reliable public source of information that can help mitigate the negative impact on acquirers acquiring target firms with poor financial reporting quality. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G34; D81; M41; M4.

Analisis Penerapan Sistem Informasi Akuntansi Dalam Menunjang Efektivitas Pengendalian Internal Pemberian Kredit Pada Bank Pembangunan Daerah Jawa Barat Dan Banten, Tbk KCP Jampang Kulon

This study aims to find out 1) know the application of accounting information systems, 2) know the application of accounting information systems for lending 3) know the application of effective internal control systems at PT. Regional Development Bank of West Java and Banten, Tbk KCP Jampang Kulon. The type of research used is a descriptive qualitative method, where this research data is obtained from direct observation and interviews with Bank BJB and obtained from documents related to this study. The results of this study show that the accounting information system at Bank BJB KCP Jampang Kulon has been implemented and most of them are good enough according to the provisions at Bank BJB and have fulfilled the elements of the accounting information system components. However, there are weaknesses in the system used, namely there are still problems that occur such as errors and also the sharing of accounts with other users so that it can result in errors in transactions and the blame party is the owner of the account. As for the accounting information system for lending, it has also been implemented in accordance with the lending procedure at Bank BJB KCP Jampang. In addition, the internal control system of Bank BJB KCP Jampang Kulon has also been implemented and most of them are effective and have fulfilled the internal control components according to COSO. In practice, the components that are run are effective, but the LMS system used is still not effective because there are still errors and there are still sharing SLIK accounts with other KCPs so that it can hamper the SLIK submission process.