Internal Control Information Research Articles

Specificity of continuous auditing approach on information technology internal controls

Contemporary business world, can not be imagined without the use of information technology in all aspects of business. The use of information technology in manufacturing and non-production companies' activities can greatly facilitate and accelerate the process of operation and control. Because of its complexity, they possess vulnerable areas and provide space for the emergence of accidental and intentional frauds that can significantly materially affect the business decisions made by the companies' management. Implementation of internal controls can greatly reduce the level of errors that can contribute to making the wrong decisions. In order to protect the operating system, the company's management implement an internal audit to periodically examine the fundamental quality of the internal control systems. Since the internal audit, according to its character, only periodically checks quality of internal control systems and information technologies to be reported to the manager, the problem arises in the process of in wrong time reporting the management structures of the business entity. To eliminate this problem, management implements a special approach to internal audit, called continuous auditing.

A Research on the Internal Control Information’s Disclosure of Signal Game Model of the Listed Companies

This paper studied the game theory about that the listed companies used internal control disclosure as signal under the condition of incomplete information, constructed a signal game model to analyze the internal control information disclosure problem under the condition of incomplete information. It also proposed some policy Suggestions to inspire the listed companies to disclose internal control message veritably.

Analysis of the Relationship between Listed Companies’ Earnings Quality and Internal Control Information Disclosure

This article examines the relationship of earnings quality and internal control disclosure information in the sample of 1273 nonfinancial firms in shanghai and Shenzhen Stock Exchange in 2010. Using multiple regression model, we launch an empirical analysis on the relationship between earnings quality and internal control disclosure information. We find a positive relation between earnings quality and internal control disclosure information. The better the earnings quality is, the higher level of the internal control disclosure information will be. This provides a theoretical support to perfect our system of internal control disclosure of information, and to reduce the occurrence of financial fraud.

The Empirical Study on Factors Influencing the Disclosure of Internal Control Information of Listed Companies

The internal control is an important means to realize the purpose of organizations, however, the effectiveness of internal control depends on not only the design, more important, but its rationality, completion and effectiveness of operation. The disclosure of internal control information is usually a way of examining the effectiveness of internal control’s operation for management and evaluating the company’s operational condition and forecasting its development foreground for external stakeholders. Due to the lack of unified standards for disclosure of internal control information, the obscurity of responsibility, centralization of ownership and some others, the disclosure of internal control did not implement effectively. Based on the data of the 19 listed companies of real estate companies during 2007-2009, the article analyzes the influence of equity structure, sales growth, financial leverage, net assets yield, and audit opinion on financial report, enterprise scale, total asset turnover and current ratio to the disclosure of internal control information. It applies the principal component analysis (PCA) and multivariate linear regression

The Causes and Consequences of Internal Control Problems in Nonprofit Organizations

ABSTRACT: This study examines the causes and consequences of internal control deficiencies in the nonprofit sector using a sample of 27,495 public charities from 1999 to 2007. We first document that the likelihood of reporting an internal control problem increases for nonprofit organizations that are in poor financial health, growing, more complex, and/or smaller. We then present evidence that the disclosure of weak internal controls over financial reporting is negatively associated with subsequent donor support received after controlling for the current level of donor support and other factors influencing donations. We likewise report a negative association between internal control problems and subsequent government grants. Our results suggest that donors and government agencies, important sources of capital for nonprofit organizations, react either directly or indirectly to internal control information.

The Causes and Consequences of Internal Control Problems in Nonprofit Organizations

This study examines the causes and consequences of internal control deficiencies in the nonprofit sector using a sample of 27,495 public charities from 1999 to 2007. We first document that the likelihood of reporting an internal control problem increases for nonprofit organizations which are in poor financial health, growing, more complex, and/or smaller. We then present evidence that the disclosure of weak internal controls over financial reporting is negatively associated with subsequent donor support received after controlling for the current level of donor support and other factors influencing donations. We likewise report a negative association between internal control problems and subsequent government grants. Our results suggest that donors and government agencies, important sources of capital for nonprofit organizations, react either directly or indirectly to internal control information.

Internal Control Weaknesses and Information Uncertainty

We analyze a sample of 330 firms making unaudited disclosures required by Section 302 and 383 firms making audited disclosures required by Section 404 of the Sarbanes-Oxley Act. We find that Section 302 disclosures are associated with negative announcement abnormal returns of -1.8 percent, and that firms experience an abnormal increase in equity cost of capital of 68 basis points. We conclude that Section 302 disclosures are informative and point to lower credibility of disclosing firms' financial reporting. In contrast, we find that Section 404 disclosures have no noticeable impact on stock prices or firms' cost of capital. Further, we find that auditor quality attenuates the negative response to Section 302 disclosures and that accelerated filers - larger firms required to file under Section 404 - have significantly less negative returns (-1.10 percent) than non-accelerated filers (-4.22 percent). The findings have implications for the debate about whether to implement a scaled securities regulation system for smaller public companies: material weakness disclosures are more informative for smaller firms that likely have higher pre-disclosure information uncertainty.

Internal Control Weaknesses and Information Uncertainty

We analyze a sample of 330 firms making unaudited disclosures required by Section 302 and 383 firms making audited disclosures required by Section 404 of the Sarbanes-Oxley Act. We find that Section 302 disclosures are associated with negative announcement abnormal returns of −1.8 percent, and that firms experience an abnormal increase in equity cost of capital of 68 basis points. We conclude that Section 302 disclosures are informative and point to lower credibility of disclosing firms' financial reporting. In contrast, we find that Section 404 disclosures have no noticeable impact on stock prices or firms' cost of capital. Further, we find that auditor quality attenuates the negative response to Section 302 disclosures and that accelerated filers—larger firms required to file under Section 404—have significantly less negative returns (−1.10 percent) than non-accelerated filers (−4.22 percent). The findings have implications for the debate about whether to implement a scaled securities regulation system for smaller public companies: material weakness disclosures are more informative for smaller firms that likely have higher pre-disclosure information uncertainty.

Auditor recall and evaluation of internal control information: does task‐specific knowledge mitigate part‐list interference?

Part‐list interference occurs when reading a few items from a previously viewed list interferes with recall of the remaining items. The purpose of this study is to examine if the review of an incomplete flowchart, following the review of a complete narrative, interferes with auditors’ recall and evaluation of internal control information. The potential interaction between auditors’ internal control knowledge and the extent of part‐list interference is also investigated. The results indicate there was a significant interaction between knowledge and part‐list interference, suggesting that interference related to an incomplete flowchart occurred primarily with less knowledgeable auditors. Therefore, higher levels of knowledge may reduce interference when recall cues are organized schematically, as found in flowcharts.

Reduction of Systematic Dosing Inaccuracies During the Application of Highly Viscous Substances

The automated application of adhesives and sealants on three-dimensional components requires that the application profile produced by constant medium dosing along the processing line has to be as uniform as possible in order to ensure adhesive and sealing functions. Incorrect dosing occurs especially frequently during the dosing of highly viscous substances at application points with a high degree of curvature and these inaccuracies later affect the function of the component. Incorrect dosing occurs partly due to the way in which the speed of the handling system responds. For this reason, we have developed a means of compensating for dosing errors arising from the kinematic response of the handling machine by methods of calculated control predictions for the dosing unit based on internal control information.

Green Strategy Costing: Early Days

Environmental impact and management is becoming a major priority for corporate strategists. while considerable information on corporate environmental disclosure practices in annual reports is now available, little is known about the internal environmental decision and control information systems in use, and corporate attitudes particularly to environmental costing. This paper reviews international green strategy developments and their implications for management accounting practice and examines environmental information and costing approaches and attitudes in a small number of Australian companies.

Distributed planning of collaborative production

Collaborative production is viewed in two related dimensions: collaboration among machines to achieve increased reliability, quality and productivity; and collaboration between machines and human supervisors to combine internal and global control information. A structure, combining centralised planning and human-machine integration, is developed for distributed planning of such collaborative production. The centralised planning relies on game-theoretic optimisation techniques supported by knowledge-based rules for coalition formation of cooperating production operations. The product of the centralised planner is a general, common production plan. The feasibility of this model is demonstrated mathematically. If the centralised planner cannot reach a solution, then human input is sought. For integrating the human and machine knowledge to reach effective solutions, a neural network model is demonstrated. A simulation demonstrates that the distributed human and machine inputs can be combined under this framework. Such a distributed planning structure can overcome the major difficulties encountered in computerised production systems that seek full automation.