Internal Control Failures Research Articles

Epstein-Barr virus qPCR testing on bronchoalveolar lavage fluid from immunocompromised patients

BackgroundEpstein-Barr Virus (EBV) is associated with lung disease in immunocompromised patients, particularly transplant recipients. EBV DNA testing of lower respiratory tract specimens may have diagnostic utility. MethodsThis was a retrospective, observational study of all patients with bronchoalveolar lavage (BAL) fluids submitted for EBV qPCR testing from February 2016 to June 2022 at the Stanford Clinical Virology Laboratory. ResultsThere were 140 patients that underwent 251 EBV qPCR BAL tests (median 1; range 1 – 10). These patients had a mean age of 15.9 years (standard deviation, 15.1 years) and 50 % were female. Transplant recipients accounted for 67.1 % (94/140) of patients, including 67.0 % (63/94) solid organ transplant (SOT) and 33.0 % (31/94) hematopoietic cell transplant. Diagnostic testing was performed more commonly than surveillance testing [57.0 % (143/251) v. 43.0 % (108/251)]; 96.2 % (104/108) of surveillance samples were from lung transplant recipients. Excluding internal control failures, 34.7 % (83/239) of BAL had detectable EBV DNA, encompassing a wide range of viral loads (median=3.03 log10 IU/mL, range 1.44 to 6.06). Overall agreement of EBV DNA in BAL compared to plasma was 74.1 % [117/158; 95 % confidence interval (CI): 66.5 % to 80.7 %], with a kappa coefficient of 0.44 (95 % CI: 0.30 to 0.57). Only 20.1 % (48/239) of results were discussed in a subsequent clinical note, and one result (0.4 %; 1/239) changed clinical management. ConclusionsEBV qPCR testing on BAL offers limited clinical impact. Additional biomarkers are required to improve the diagnosis of EBV-associated lung diseases.

Persistent internal control failures: Examining multiple consecutive years of disclosing material weaknesses

AbstractIn this study, we analyze a sample of accelerated filers that have reported material weaknesses (MWs) in their internal controls for multiple consecutive years. The recent emphasis by the Securities and Exchange Commission on improving accounting and controls within public companies has led to heightened scrutiny of firms with ongoing MW disclosures. Analyzing data from 2004 to 2021, we find that approximately one‐third of MW observations are for 2 or more consecutive years, with the longest duration being 12 years. Our research shows that these firms face progressively higher audit fees and longer audit report lags for each additional year of MW disclosure. Firm–years with long‐standing MW disclosures (5 or more consecutive years) have the highest audit fees and the longest audit report lags. Our findings also reveal a significant increase in the likelihood of misstatements during the first and second consecutive years of MW disclosures, and a consistent and notable rise in discretionary accruals over the initial 4 consecutive years of MW reporting for these firms. Overall, our results highlight the financial repercussions for firms that do not promptly address MWs in their internal controls. These consequences include higher audit fees, extended audit report lags, and declining financial reporting quality.

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.

Internal Control Failure in SARS-CoV-2 PCR, Technical vs specimen Etiology

SARS-CoV-2 (COVID-19) pandemic was global threat and preventing the re-pandemic considered the main target nowadays in many of healthcare commissions. Early and rapid diagnosis was achieved by PCR testing for COVID-19, against this concept was the rejection and or reptation of testing because of failure of processing mainly due to internal control failure (ICF). The objective of our study was emerged to find out the main cause of Internal Control Failure in SARS-CoV-2 PCR, and whether it caused mainly by Technical or Specimen Etiology.50 specimens of SARS-CoV-2 PCR were used with their original testing result were of Internal Control Failure then repeated to conclude whether it caused by Technical (the second reading gave a valid result) or Specimen Etiology (the second reading gave a ICF result). The result was highly significant. (p < .05). comparing the valid second result (technical causes) to ICF second result (specimen causes). We concluded that technical causes of ICF was the main cause of ICF result of PCR testing for COVID-19 with minimal specimen etiological cause that could recommend to interpret the result t of positive or negative from first reading with commenting on ICF with repetition especially in valid run and urgent specimen.

An empirical research on employee welfare and internal control quality.

Internal control is the key to achieve high-quality development of enterprises, but internal control failure cases frequently occur at home and abroad. Therefore, it is particularly important to explore ways to improve the quality of internal control and promote high-quality development of enterprises. Taking non-financial listed enterprises in China from 2015 to 2020 as research samples, this paper adopts empirical research methods to research the impact and mechanism of employee welfare on the quality of internal control of enterprises from the perspective of all-employee governance, aiming to explore ways for enterprises to improve the quality of internal control.The results showed that employee welfare can improve the quality of internal controls significantly. Furthermore, the effect is more significant in non-employee-intensive industries and high-marketization areas. Based on the analysis of internal control elements, the research found that employee welfare affects the quality of internal control mainly through two elements, risk assessment and control activities. However, the effects of employee welfare on the three other elements are insignificant. This paper enriched the relevant research on the economic consequences of employee welfare and the factors affecting the quality of internal control, and has certain enlightenment significance for the popularization of employee welfare, especially supplementary pension, and also provides a reference path for the improvement of the quality of internal control.

Extraction-free clinical detection of SARS-CoV-2 virus from saline gargle samples using Hamilton STARlet liquid handler

As part of the COVID-19 pandemic, clinical laboratories have been faced with massive increases in testing, resulting in sample collection systems, reagent, and staff shortages. We utilized self-collected saline gargle samples to optimize high throughput SARS-CoV-2 multiplex polymerase chain reaction (PCR) testing in order to minimize cost and technologist time. This was achieved through elimination of nucleic acid extraction and automation of sample handling on a widely available robotic liquid handler, Hamilton STARlet. A customized barcode scanning script for reading the sample ID by the Hamilton STARlet’s software system was developed to allow primary tube sampling. Use of pre-frozen SARS-CoV-2 assay reaction mixtures reduced assay setup time. In both validation and live testing, the assay produced no false positive or false negative results. Of the 1060 samples tested during validation, 3.6% (39/1060) of samples required retesting as they were either single gene positive, had internal control failure or liquid aspiration error. Although the overall turnaround time was only slightly faster in the automated workflow (185 min vs 200 min), there was a 76% reduction in hands-on time, potentially reducing staff fatigue and burnout. This described process from sample self-collection to automated direct PCR testing significantly reduces the total burden on healthcare systems in terms of human resources and reagent requirements.

Effect of delay in processing and storage temperature on diagnosis of SARS-CoV-2 by RTPCR testing

PurposeA large number of new molecular or virology laboratories have been established to increase the testing capacity for SARS-CoV-2. Due to heavy workload, there is delay in testing of samples. In order to avoid the negative effect of delayed testing on RTPCR results guidelines are issued from WHO and CDC to transport samples in cold chain. However, in pandemic situations the recommended guidelines for transport and storage conditions are often compromised. This study was conducted to evaluate the effect of sample storage conditions at different temperatures on the results of RT PCR test. MethodsTotal 275 samples were included in this study, among these 126 samples tested positive and 149 samples tested negative. All samples were aliquoted into two and the aliquotes stored in duplicate at 4 ​°C and room temperature. All aliquots stored at both the temperatures were tested by RTPCR every 24 hours up to 5 days. ResultsDiagnostic accuracy decreased from day1 to day 5 at both the storage temperatures i,e 4 ​°C and room temperature in comparison to the initial day results. Positivity decreased on an average of 9.02% at 4 ​°C and at 9.27% at room temperature per day. Among total 126 positive samples on an average false negative and failure of internal control at 4 ​°C and room temperature was 8.86%, 8.22% and 3.64%, and 4.12%, respectively. All the samples with CT value ​< ​30 remained positive at both temperatures up to 5 days. Few samples with >30 CT value showed variable results i.e. positive, negative or internal control failure from day 1 (2nd day after sample collection) onwards. ConclusionsThere was no significant difference between RT PCR results of samples stored at 4 ​°C and room temperature up to 5 days of collection. However internal control failure was more in samples stored at room temperature. Therefore, samples received without cold chain also may be processed by RTPCR and should not be rejected.

Research on Process Optimization and Unified System Content in Big Data Network Information Sharing Environment

In the context of big data and data sharing, companies are strengthening internal control to enable companies to develop healthily and sustainably. Business process planning is the key to the success or failure of internal control. This article takes S Group as an example to discuss the optimization of its expense reimbursement business planning, which has certain reference value for enterprise expense reimbursement business control.

Auditor Evaluation of Manager's Competence After a Failure in Internal Control

SUMMARY Audit guidance requires auditors to assess management's competence with respect to internal controls over financial reporting (ICFR) based on the recommendations of COSO's integrated framework. The omission bias theory suggests that after internal control failures, auditors may assess managers' competence in a manner inconsistent with these requirements. Results from four experiments using 313 experienced audit and accounting professionals support this concern and a means of mitigating it. I find that auditors view the manager to be most competent when prior to the failure in the key control the manager did nothing to prevent the failure versus reinforced the key control. I do not find this effect when auditors had shared their concerns about the key control with the manager prior to the control's failure. My results also show that auditors incorporate their competence judgments about management into evaluations of the ICFR, as required by the audit guidance.

A Case Study of Internal Control of *ST Baoqian

Since the establishment of Shanghai and Shenzhen Stock Exchanges, there are more than 3,400 listed companies in China, but there are not a few companies delisting due to various problems every year. The research shows that the lack of effective internal control of listed companies is the deep-seated reason for their delisting. Once there are problems in the company's internal control, it will be difficult for the company's business activities to be effectively supervised, and the safety of assets will not be guaranteed. Good internal control is an important link for listed companies to seek sustainable and stable development and achieve business objectives. As an essential part of modern company management, internal control also plays an important role in improving company management level and business performance. *ST Bao Qian is a typical case of failure of internal control and lack of supervision and management of enterprise operation, which has been suspended from listing and is in a precarious state. Taking*ST Bao Qian as an example, based on the internal control theory, this paper deeply explores the internal control problems of *ST Bao Qian and analyzes their causes, and then gives some improvement suggestions, in order to improve the internal control problems of *ST Bao Qian and provide suggestions for other companies.

Corruption at Rolls-Royce: can it happen again?

Purpose This study aims to analyse Rolls-Royce’s (RR) recent corruption case, its 2017 global anti-bribery and corruption (ABC) manual, and its 2017 annual report to assess whether it has put the best corruption prevention strategies into place. Design/methodology/approach This is a legal case study based on RR’s 2017 deferred prosecution agreement (DPA) with the UK serious fraud office. It uses the new ISO 37001 standard as a theoretical framework. Findings RR’s DPA suspends an indictment covering 12 counts of conspiracy to corrupt, false accounting and failure to prevent bribery. RR’s ABC manual exhibits significant shortcomings as compared to ISO 37001’s requirements. RR’s ABC manual does not provide any reference to the setting, reviewing and achievement of measurable anti-bribery objectives; does not state that anti-bribery training is provided at planned intervals to employees and external business associates that pose more than a low risk of bribery; does not explain the authority and independence of its head of ethics and compliance; does not state any maximum for gifts and hospitality given or received; does not provide clear assurances that reports made through its main internal channels will be treated confidentially and that complaints about senior management will be investigated by an outside firm; and does not subject its advisers to a formal due diligence process. RR’s annual report notes that it operates in an industry prone to corruption. Finally, internal control failure and compliance fatigue mean that no anti-bribery management system can be completely effective. Research limitations/implications This paper extends previous research by analysing the best corruption prevention strategies that organizations can implement. It does not endeavour to certify whether RR is ISO 37001 compliant, and it analyses only publicly available documents. Practical implications This study’s prevention strategies will help deter corruption and improve internal controls within organizations. Originality/value No previous study has used the new ISO 37001 standard as a framework for such corruption case analysis.

Internal Control Weaknesses and the Demand for Financial Skills: Evidence from U.S. Job Postings

Ineffective internal controls over financial reporting often relates to a lack of qualified personnel with sufficient accounting and technical expertise. In this study, we examine whether firms respond to internal control failures by increasing their demand for specific accounting and finance skills. Using unique data containing an extensive collection of job postings, we document significant increases in firms’ demand for employees with financial skills following the disclosure of an internal control weakness. This demand effect is more pronounced among jobs requiring accounting skills or accounting software knowledge, but also extends to non-accounting personnel that interface with accounting functions, suggesting an important role for all firm personnel in remediating internal control failures. We also find that increased financial skill demand is associated with a higher likelihood of internal control remediation, especially for firms with restatements. We also provide additional evidence consistent with increased financial skill demand relating to the disclosure of a material weaknesses rather than a proactive firm response to internal control issues. Overall, our findings shed new light on how firms internally respond to ineffective internal controls by increasing their demand for financial skills in their workforce.

Determinants of Timely Adoption of the 2013 COSO Integrated Framework

ABSTRACTIn 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) released an updated version of its widely utilized Internal Control—Integrated Framework. The update responded to two decades of changes in the business environment and increased focus on technology in business operations and reporting. While the old framework is no longer supported by COSO (effective December 15, 2014), some SEC filers continued to utilize the old framework past its phase-out date. This placed such companies at increased risk for internal control failure compared to other companies and SEC scrutiny. We examine determinants of timely adoption of the 2013 COSO framework update. We find evidence that timely adoption is related to absence of reported internal control weaknesses, auditing firms, and interlocking directorates. Our study contributes to literature on how social networks and operational characteristics affect internal control governance decisions.

Shareholder Activism and Changes in Audit Committee Composition

We examine whether governance related shareholder activism is associated with changes in audit committee composition. Audit committees are the “ultimate monitors” of firms’ financial reporting processes. The SEC is interested in whether audit committees have financial experts and prior research has documented benefits associated with accounting-specific financial expertise. Governance activism expresses investors’ dissatisfaction with corporate governance; audit committees are an important governance mechanism. Therefore, we predict that governance activism will affect audit committee composition. We document consistent associations between both general and accounting related governance activism and increases in audit committee accounting expertise. These associations are strongest when a firm concurrently announces a restatement, experiences an internal control failure, or has low pre-activism expertise. Further, in the post period, there is a considerable drop in activism for firms that have added accounting experts. Our study documents an important determinant of audit committee composition.

Can Short Sellers Detect Internal Control Material Weaknesses? Evidence From Section 404 of the Sarbanes–Oxley Act

We examine whether short sellers are interested in, and capable of, identifying firms with an upcoming revelation of internal control material weaknesses (ICMW). We show that short sellers accumulate positions in firms that are about to disclose ICMW under Section 404 of the Sarbanes–Oxley Act for the first time when internal control problems are severe. We find that the short-interest buildup is mainly due to the use of private rather than public information, which suggests that their trades contain incremental prediction power of the upcoming internal control failure. Furthermore, the ability of short sellers to predict ICMW is more pronounced in firms operating in poor information environment. Finally, we find no evidence that trades by short sellers prior to the ICMW disclosure create a cascade of selling that leads to an overreaction of ICMW. Overall, we present evidence that corporate governance information in the form of ICMW is part of the short sellers’ information set, and we establish a path through which ICMW impacts equity investors.

The Effectiveness of the Internal Control: A Research from Inside Auditing Environment Perspective

With the high speed development of the social economy, it brings a series of problems of financial fraud which are resulted by the fail of the internal control. In older to decrease those kinds of matters, it is urgent for corporations to ensure that their inside auditing and internal controlling are actually valid. As a basic element of the internal control, the inside audit environment should have a good regulation. In this paper, it will discuss the importance of the intern environment in corporation's inside control, and then will build up an evaluation index tabulation. We analyzed some correlative elements which would affect the inside controls to build up a more detailed evaluation index tabulation, because the current evaluation index system are not really complete in China. According to the research results, it will be clear for companies to predict and conclude whether the inside control in the corporate have an effective impact. It also can help to verdict the reasons for the failure of internal control.

Evaluation of the Abbott RealTime HCV genotype II plus RUO (PLUS) assay with reference to core and NS5B sequencing

BackgroundHCV genotyping remains a critical tool for guiding initiation of therapy and selecting the most appropriate treatment regimen. Current commercial genotyping assays may have difficulty identifying 1a, 1b and genotype 6. ObjectiveTo evaluate the concordance for identifying 1a, 1b, and genotype 6 between two methods: the PLUS assay and core/NS5B sequencing. Study designThis study included 236 plasma and serum samples previously genotyped by core/NS5B sequencing. Of these, 25 samples were also previously tested by the Abbott RealTime HCV GT II Research Use Only (RUO) assay and yielded ambiguous results. The remaining 211 samples were routine genotype 1 (n=169) and genotype 6 (n=42). Genotypes obtained from sequence data were determined using a laboratory-developed HCV sequence analysis tool and the NCBI non-redundant database. ResultsAgreement between the PLUS assay and core/NS5B sequencing for genotype 1 samples was 95.8% (162/169), with 96% (127/132) and 95% (35/37) agreement for 1a and 1b samples respectively. PLUS results agreed with core/NS5B sequencing for 83% (35/42) of unselected genotype 6 samples, with the remaining seven “not detected” by the PLUS assay. Among the 25 samples with ambiguous GT II results, 15 were concordant by PLUS and core/NS5B sequencing, nine were not detected by PLUS, and one sample had an internal control failure. ConclusionsThe PLUS assay is an automated method that identifies 1a, 1b and genotype 6 with good agreement with gold-standard core/NS5B sequencing and can aid in the resolution of certain genotype samples with ambiguous GT II results.

Detection of Phytophthora ramorum in Nurseries and Forest Lands in California in 2004 to 2009.

From December 2004 through May 2009, samples were collected from California nurseries and wild lands to survey for Phytophthora ramorum and comply with federal regulations of nursery stock. Samples were prescreened by an enzyme-linked immunosorbent assay (ELISA) that detects Phytophthora spp. and tested by culture, P. ramorum-specific real-time polymerase chain reaction (PCR), and nested PCR. Yearly percentages of infected samples ranged from 0.6 to 2.3%. Camellia spp., Rhododendron spp., Magnolia spp., Pieris spp., and Laurus nobilis tested positive the most frequently in the nurseries and Lithocarpus densiflorus, Umbellularia californica, and Quercus agrifolia tested positive most often from wild lands. Of the 118,410 samples isolated onto PARP media, 0.8% was identified as P. ramorum. Of 115,056 samples tested by ELISA, 5.9% tested positive for Phytophthora spp. Of the 6,520 samples tested by PCR, 12.4% tested positive for P. ramorum. The false-negative, positive, and internal control failure rates of the assays are discussed. After removing the seasonal effect of sampling strategy, isolation of the pathogen into culture was found to be seasonally dependent whereas detectability by PCR and ELISA was not. To our knowledge, this is the first evaluation of a regulatory testing program for a plant pathogen on this scale using standardized assays.

HP's Purchase of Autonomy: 'Hubris at the Top' and Failure of Internal Controls

This case study illustrates how hubris at the top caused a breakdown in internal controls and allowed Hewlett Packard’s management to embark on a disastrous acquisition. We refer to COSO’s 2013 internal control framework which defines internal controls as “policies and procedures to ensure that an organization meets its objectives”. COSO’s first principle calls for a “tone at the top” of ethics and integrity. The control environment should consist of a culture that follows policies and procedures and acknowledges mistakes. In the case of its acquisition of Autonomy, HP failed to conduct basic financial analysis and due diligence. Rather than admit to weakness in its own internal controls, HP laid the blame on Autonomy’s former managers. HP’s auditor similarly failed to acknowledge internal control failures. Post Sarbanes-Oxley, accountants and auditors must think broadly about the relationship between internal controls and corporate governance.For an accompanying undergraduate presentation of this case study, please see:http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2360487

P2.054 Optimal Processing of Chlamydia Trachomatis Simulated Samples from Proficiency Testing Panels by Dilution with Cobas© PCR Media

BackgroundProficiency materials are designed to resemble true clinical samples, yet challenges exist in procuring sufficient quantity of patient material. Simulated samples are often provided for this testing. Matrix effect with...