Internal Control Policies Research Articles

Exploring a Model of Whistle Blowing System for Malaysian Municipal Council

A municipal council is one of the local authorities established under the auspice of Malaysian local government. The objective is to deliver services to a community under its jurisdiction in a sustainable manner, but evidences indicated that the service qualities have deteriorated due to numerous malpractices. The malpractices could be prevented should any of the insiders who witness the incidences whistle blow to those who have power to act. However, not many are willing to report for fear of reprisal, retaliation and even life threatening. Despite that a whistleblowing system is established to encourage whistleblowing, such system has yet to be formed in any of Malaysian municipal councils. Intrigued with the issue, the objective of this study is to explore a model of whistle blowing system for a Malaysian municipal council. A hermeneutic phenomenography study was conducted in which data were gathered through in-depth interviews and focus group discussions. The participants consisted of four top management and sixty officials from a Malaysian municipal council. Data were analyzed qualitatively using Nvivo 14 and triangulated with other source of documents. The findings from emergent themes proposed a model of the whistleblowing system that consisted of four elements namely protection, internal control policies, incentives and ethical culture. This discovery provides useful insights to policy makers, relevant authorities, and academic fraternities of the model of whistle blowing system that will alleviate malpractices and thus elevate the transparency, efficiency and integrity of the municipal council to the fullest.

As Controladorias Municipais em Perspectiva Analítica: diagnóstico da atuação das unidades de controle interno dos municípios de Alagoas

While the number of studies on government monitoring agencies in Brazil is on the rise, little is known about their performance in local governments. To address this gap, we used data from a previous survey of 61 out of the 102 municipal comptrollerships in the state of Alagoas and built an analytical framework to assess their performance and explore their correlations. The data and analysis have shown that 21% of the investigated municipal comptrollerships in Alagoas had a good performance, whereas 30% had a regular performance, and almost half of them (49%) had a bad or nonexistent performance. Moreover, statistical tests indicated that attributes related to material and human resources affect more their performance than legal and organizational attributes do. Although determinants differ from each dimension, we may argue that agencies which have qualified professionals, who work with information systems that fit the activities’ purposes, and operate under internal control policies, tend to perform better than the agencies that do not have those resources. On the other hand, socioeconomic factors as HDI, population size, and revenue amounts of municipalities did not significantly affect the performance of their comptrollerships. Thus, we may derive that the performance of municipal comptrollerships is rather a function of endogenous factors.

Assessment of Internal Control Systems of Technical Universities in Ghana

The relevance of internal control systems in organizations have been duly recognized as a process for assuring the achievement of set objectives in operational efficiency, reliable financial reporting and compliance with regulatory and international standards. For Technical Universities (formerly, the Polytechnics), as public institutions with the attendant problem of limited resources, it is imperative to implement effective internal controls for the judicious utilization, monitoring and management of business processes towards success and sustainability. The study, sets out to assess internal control systems at Accra Technical University, investigating the existence and implementation effectiveness and related challenges of such internal controls. The specific objectives were to find out the internal control systems at Accra Technical University, the extent of employee awareness of the control systems, consistency of the control systems with national and international standards, and the effective implementation of the control systems. The study used both primary and secondary data sources. The primary data was collected with a questionnaire from respondents comprising mainly staff from the Finance, Audit, Administration and Academic departments while secondary data was gathered from review of documentation at the Finance Office. The study reveals that Accra Technical University has instituted policies and procedures to enhance the implementation of internal controls, however, there is low staff awareness regarding such policies and violation penalties. This, it is noted, stems from Management’s inability to communicate information regarding internal control policies to staff promptly and effectively. Further, Accra Technical University exhibits high conformity to international standards and the present national regulatory regime in the preparation of its financial reports and fiscal management. Overall, the implementation of internal control systems at Accra Technical University is rated as “quite effective” and directed mainly towards conducting business in an efficient manner and ensuring financial information are accurate and complete. It is recommended, therefore, that Management improves staff awareness of policies regarding internal controls, and undertake continuous monitoring, identification and assessment of the internal control systems established and implemented to ensure they are functioning properly and meeting expectation.

RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM OF NIGERIA’S BANKING SECTOR

Purpose: This study empirically observed the relationship between risk management and the internal control system of the banks in Nigeria. Methodology: In order to achieve the main objective of this paper, we made use of data from the annual reports of fifteen commercial banks, covering a period of ten years (2007 – 2016). The study is empirical in nature and adopted a cross-sectional research design. Furthermore, the Panel Data Regression estimation technique was employed to estimate the specified model of the study. Result: The results revealed the existence of a negative and significant relationship between credit risk and internal control. Liquidity risk which was measured using liquidity ratio has a positive and statistically significant relationship with internal control of banks in Nigeria. Based on the findings, the importance of strong and vibrant internal control policies across banks in Nigeria cannot be over-emphasized. This is because the more the internal control put in place, the greater the liquidity for banks to carry out their banking operations. On the other hand, the greater the internal control, the lesser the credit risk. Applications: This research can be used for the universities, teachers, and students. Novelty/Originality: Due to the recurring financial distress and eventual liquidation of some banks in Nigeria, this study is very necessary as it stresses the relevance and needs for effective internal control strategies in line with global best practices.

Effect of Training and Development, Recruitment and Selection, and Internal Control Policy on Corruption Risk

The challenging world of business on corruption issues, the organization’s need to improve the rules, regulations, policies and guidelines especially in human resource practices to develop and enhance the quality of employees in terms of ethical, behaviour and moral conduct. The objective of this study is to look at the effects of training and development, recruitment and selection, and internal control policy on corruption risk. This study involves three different organizations which are the federal government, state government and statutory bodies. The respondents involved in this study are whom that have authorities in making decisions for the organization. Stratified sampling technique was used in the selection of sample. The analysis of bootstrapping for this study represents two elements which are recruitment and selection, and internal control policy are accepted with the t-value above 1.65 respectively. However, training and development is not significant. Hence, it shows that, recruitment and selection, and internal control are two important elements that are needed to be strengthened in order to improve the quality of employees in the organization, thus bringing success to the organization as a whole. Result of this study also contributed to the body of knowledge rotten apple theory.

Effect of Training and Development, Recruitment and Selection, and Internal Control Policy on Corruption Risk

The challenging world of business on corruption issues, the organization’s need to improve the rules, regulations, policies and guidelines especially in human resource practices to develop and enhance the quality of employees in terms of ethical, behaviour and moral conduct. The objective of this study is to look at the effects of training and development, recruitment and selection, and internal control policy on corruption risk. This study involves three different organizations which are the federal government, state government and statutory bodies. The respondents involved in this study are whom that have authorities in making decisions for the organization. Stratified sampling technique was used in the selection of sample. The analysis of bootstrapping for this study represents two elements which are recruitment and selection, and internal control policy are accepted with the t-value above 1.65 respectively. However, training and development is not significant. Hence, it shows that, recruitment and selection, and internal control are two important elements that are needed to be strengthened in order to improve the quality of employees in the organization, thus bringing success to the organization as a whole. Result of this study also contributed to the body of knowledge rotten apple theory.

Corporate Fraud: Causes, Effects, and Deterrence on Financial Institutions in Ghana

This paper focuses on finding the causes, effects, and deterrence and prevention of corporate fraud in the financial institution of Ghana. In particular, we examine the effects of fraud on a firm’s financial performance. A cross sectional model was used to find the effects of financial institutions fraud on financial performance. It was revealed that fraud has a significant negative effects on financial performance i.e. Return on Assets of financial institutions in Ghana. However, structured questionnaires were also used to find out the perception of Accountants, Auditors, and management on the main causes of banking fraud and deterrence and prevention methods in curbing the menace. It was revealed that weaker internal control, inadequate training and fraud policies, failed documents, and proper remuneration are the strong arsenal that causes fraud in financial institutions of Ghana. Moreover, organizational use of password protection, good remuneration, employee’s background checks, and adequate fraud training were perceived as the most deterrence and prevention method in fighting fraud in financial institutions. Our results have practical implication for management, accountants, auditors, and all stakeholders in financial institutions on the effects of fraud on firms financial performance and in mounting fool proof methods in curbing this canker and reducing it to its bearest minimum. The study contributes deterrence and prevention methods aimed at improving its effectiveness in reducing fraud in Ghana and West Africa.

Menyingkap Lakon Auditor Internal Pemerintah dalam Melakukan Deteksi dan Pencegahan Fraud di Perguruan Tinggi

Internal control has an important role in accordance with the achievment of good governance, and last but not least for the higher education which internal control is conducted by Inspectorate General (Itjen) and internal audit unit (SPI) in each state own university and polytechnique all around Indonesia. This research uses descrptive qualitative approach with explanatory model in order to deliver the message and analys data from various sources. Since the higher education moved to a new Ministry, the Inspector General put a new paradigm and a brand new internal control mechanism wich involve the internal audit unit in each state own university and polytechnique all around Indonesia as the armth lenghth of their internal control policy, thus, the integrated internal control will be achieved. Role conflict may occur both for Itjen and SPI evnthough in the different context and level. The lack of enacted law regarding the SPI and their rule in detecting and preventing Fraud are triggering the role conflict for them. However, role conflict will not make itjen and SPI give up to their assignment. The model of sinergy is advised in this article and hopefully will give a good contribution for the future integrity working model of Itjen and SPI in the future.

Built the Effective Internal Control System in Local Governments of Developing Countries : A Case Study on Tegal City

The purpose of this paper is to formulate the recommendation to reconstruction the Internal Control Policy in order to embody the Government Internal Control System, a specifically local government in Indonesia that is more effective. The research is using the qualitative method based on literature review and depth interview with a relevant source, including the top management of Tegal City and policy expertise as well. A policy analysis and Grindle theory are used to investigate the factors that contribute to the implementation of Government Regulation Number 60/2008 in uneffective Tegal City. The result shows that the reward and punishment in the policy is certainly needed, a derivative policy as an instrument to operate the must be applied policy, the rules regarding the local government officials should be revised, a professionalism strengthening and an independency of monitoring officials, the coordination and collaboration between local government to build a harmonization partnership in order to implement the policy that has to be improved, a dissemination policy and the integration of the internal control system report into a budgeting system and organization cultural development to create the better control environment in order heading to an effective internal control system.

The Application of Empirical Study in Accounting Education: An Example of Internal Control and Cash Dividend

As an important development trend for accounting higher education, accounting empirical teaching plays a fundamental role in enriching and improving researching methods in accounting fields. This paper starts from the relationship between internal control and cash dividend policy, combines with author’s accounting teaching experience for years, follows the general research ideas of questions raising, questions analysis, questions solving, and from the aspects of theoretical analysis, literature review, research hypothesis, research methods, empirical process and results discussion to make a detail description on accounting empirical teaching methods and process. The results show that there is a significant positive correlation between internal control and cash dividend policy, and this kind of correlation shows different influence intensity according to the difference of company nature. Through the research of this paper, it can make the relevant educator further clarify the process and methods of the accounting classroom empirical teaching, which is of great significance to popularize and enhance the application of accounting empirical research methods in accounting field.

MORALITAS, PENGENDALIAN INTERNAL DAN GENDER DALAM KECENDERUNGAN TERJADINYA FRAUD

Morality, Internal Control and Gender in Fraud.University is an economic entity which is required to be accountable and transparent in funds management. Accountability can be indicated through financial reporting that is free from fraud. Fraud refers to the intentionally accounting errors to mislead the financial statement readers and usersin order to taking advantages. This research conducted with research design experiments 2x2 factorial by adding a gender perspective in examining the tendency of commit accounting fraud between individuals who have a (high or low) level of moral reasoning and (with or without) elements of internal control organization as factors that could cause accounting fraud. Data was analyze with two-ways ANOVA and Mann Whitney test in testing hypotheses. Research results indicate significant differences in the tendency of the accounting fraud due to the level of morality, internal control and gender. The results of this study are expected to provide recommendations in evaluating internal control policy to prevent fraudulent accounting practices and the importance of ethics and character education in the university environment to reduce the intention of fraud.

Evaluación del Modelo Estándar de Control Interno (MECI) y desarrollo de un modelo diferencial para el nivel territorial en Colombia

<p>La presente investigación tiene como propósito establecer las dificultades que presentan las entidades territoriales pertenecientes a los municipios de 3ª a 6ª<br />categoría en la implementación del Modelo Estándar de Control Interno–MECI, teniendo en cuenta que este modelo es la herramienta que permite el desarrollo<br />de la Política de Control Interno en Colombia y se constituye en el eje fundamental para el logro de los objetivos de las instituciones. Con base en el diagnóstico se determinan los aspectos para mejorar o ajustar a dicho modelo, con el propósito de corregir su implementación y que a mediano plazo estas entidades puedan mejorar su gestión institucional. La investigación toma conceptos de la Nueva Gestión Pública –NGP (o New Public Management –NPM); de este enfoque se observan y analizan aspectos relacionados con el buen gobierno y la vocación por el servicio público por parte de los funcionarios del estado, los mecanismos para la democratización de la administración pública y finalmente los principios básicos sobre la responsabilidad social. La investigación es aplicada y utiliza como metodología el modelo C.I.P.P. (contexto-insumosprocesos- productos) por lo que los resultados, análisis y recomendaciones se muestran a través de sus cuatro etapas o niveles. Los principales hallazgos y conclusiones apuntan a confirmar la hipótesis planteada; se determinaron fallas en la implementación del modelo, debido a aspectos metodológicos, sobre los cuales se generan puntos de mejora o ajuste.</p>

Institutionalising Human Governance Determinant: Steering Organizations towards Sustainability

This paper discusses past researches on human governance elements. Eight elements of human governance are proposed in this paper: leadership, integrity, religiosity, spirituality, culture, recruitment, training and internal control policy. Empirical study shall be conducted in the future study to confirm the eight elements of human governance proposed in this paper. It is expected that these elements may enhance the human governance practice in the organizations.

ANALYSIS OF INTERNAL CONTROL COSO THE FUND MANAGEMENT ZAKAT, INFAQ AND SHADAQAH (ZIS) (A Case Study Foundation Social Fund Al-Falah branch of Jember)

<p><em>Accountability is often required community of a public institution. Community felt the need to know the flow of funds and the performance of the institution. LAZ and BAZ interested in reporting funds are transparent in order to maintain public trust and its existence by implementing internal control as well. Own internal control policies and procedures are used in operating activities to provide reliable information and ensure compliance with applicable laws or regulations in an organization. Internal control is absolutely necessary in an organization to avoid fraud and is used to ensure the effectiveness and efficiency of resources in order to avoid the loss or waste so that optimal utilization of funds. In addition, internal control is useful in preventing deviations from the implementation of activities as well as corrective actions when deviations have occurred. The purpose of this study was to investigate the application of internal control over management of funds, identify the strengths and weaknesses related to internal control </em><em>i</em><em>s</em><em> </em><em>applied, </em><em> </em><em>and provide recommendations on the implementation of internal control systems in the Foundation fund management Social Fund Al-Falah branch of Jember. The method used is descriptive qualitative method and the object of the study is the management of the fund's internal control procedures. This study analyzed the internal control in accordance with the internal control components according to COSO and weaknesses found in internal control Foundation Social Fund Al-Falah branch of Jember. The conclusion is that internal control over existing</em><em> </em><em> fund management activities </em><em>on </em><em>Yayasan Social Fund Al-Falah branch of Jember have some weaknesses, but overall control has been operating effectively.</em><em></em></p>

Williams Community Hospital: An Internal Auditing Case

ABSTRACT The internal audit function is a critical part of an organization's control and governance structure. This case introduces students to the complete internal audit process for a company, including identification of risk, audit planning, execution of fieldwork, and reporting. In this exercise students are asked to assume the role of an internal auditor for a community hospital and perform risk assessment, perform testing, and documentation based on an audit program, and prepare an audit report, detailing findings and recommendations. The case includes both testing for compliance with laws and regulations, and tests of compliance with internal control policies and procedures. In response to an ever-changing business environment and the expectations of stakeholders, the internal audit profession identifies compliance with laws and regulations as one of the top risks frequently cited by both audit committee and executive management. The hospital setting is one of particular interest for addressing this topic. This case is appropriate for undergraduate and graduate students in internal auditing and external auditing classes.

Explaining EU Effectiveness in Multilateral Institutions: The Case of the Arms Trade Treaty Negotiations

AbstractThis article examines the EU's participation in multilateral institutions on the example of the UN Arms Trade Treaty. The central question of the study is to what extent and under what conditions the EU can be seen as an effective actor in multilateral security negotiations. It is argued that overall the EU was an effective player during the multilateral negotiations on the ATT, but the degree of its effectiveness varies along different dimensions. The EU was rather successful in the achievement of its goals and in maintaining external cohesion, but it scored relatively low in its efforts to commit the key stakeholders to sign up to the ATT. The EU's internal export control policy, together with the high level of institutional co‐ordination and Member States' interest convergence, facilitated the EU's effectiveness in the ATT negotiations, whereas the international context proved to be the major constraining factor.

Continuous auditing: Developing automated audit systems for fraud and error detections

Indonesian Institute of Certified Public Accountants, American Institute of Certified Public Accountants and the Canadian Institute of Chartered Accountants(SAS 99 sec 110, par 2) establishes auditors responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis- statement, whether caused by error or fraud to plan and perform audits to provide a reasonable assurance that the audited financial statements are free of material fraud. This study proposed the development of Automated Audit System model to assist auditors in bridging them to the challenges in detecting fraud. This approach firstly provides a framework to have better understanding about the business process and data structures of information systems which is required in establishing an effective audit program. These ingredients are mapped in the audit process, including audit objectives, internal control and audit rules by using the Use-Case Diagram, Data Flow Diagram and Entity Relationship Diagram. Second, this study employs Ben- fords Law and Automatic Transaction Verification for the detection of anomalies and irregularities to design the framework. It also presents a systematic case study of ac- tual continuous auditing in department stores that using ERP systems. It is expected to detect frauds and errors. It proves that Continuous Audit and Benford Law can establish strong framework in Automated Audit Systems for Fraud Detections and finally provide a big contribution to internal control and company policies.

Internal Control and Accounting Policies and Procedures Practices: An Institutional Perspective

The present studies demonstrate the importance of organizational routines and institutions in shaping the internal control and accounting policies and procedures practices in two Saudi firms operate in the real estate sector. An attempt has been made to distinguish the control environment, which represents management’s overall attitude, awareness and actions, from control policies and procedures, which are the detailed set of guidelines and procedures that management stabilities over information and transactions processing. Key words: Internal Control, Accounting Policies and Procedures, Accounting Practices, the Institutional Economic Perspectives, Organizational routines and Institutions.

Koss Corporation Case: Trouble in Brew City

ABSTRACT This instructional case provides auditing students an opportunity to examine an interesting real-life embezzlement and financial statement fraud occurring at a publicly traded company in the post-Sarbanes-Oxley (SOX) era. The case focuses on independent auditors' and senior management's reporting responsibilities related to internal control over financial reporting involving smaller public companies (nonaccelerated filers). While all public companies are subject to external auditor and management attestation on the effectiveness of internal control over financial reporting following SOX, the Securities and Exchange Commission (SEC) granted nonaccelerated filers numerous extensions for the effective date of required auditor attestation. In 2010, President Obama signed legislation to permanently exempt nonaccelerated filers from auditor attestation. The case also highlights inherent risk assessments by the independent auditor when one individual holds multiple C-level titles (Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, etc.) within the organization concurrent with membership on the board of directors, and requires students to recommend internal control policies and procedures designed to prevent or detect the embezzlement.

Compliant Control of Multicontact and Center-of-Mass Behaviors in Humanoid Robots

This paper presents a new methodology for the analysis and control of internal forces and center-of-mass (CoM) behavior, which are produced during multicontact interactions between humanoid robots and the environment. The approach leverages the virtual-linkage model that provides a physical representation of the internal and CoM resultant forces with respect to reaction forces on the supporting surfaces. A grasp/contact matrix describing the complex interactions between contact forces and CoM behavior is developed. Based on this model, a new torque-based approach for the control of internal forces is suggested and illustrated on the Asimo humanoid robot. The new controller is integrated into the framework for whole-body-prioritized multitasking, thus enabling the unified control of CoM maneuvers, operational tasks, and internal-force behavior. The grasp/contact matrix is also proposed to analyze and plan internal force and CoM control policies that comply with frictional properties of the links in contact.