Internal Control Practices Research Articles

Discussion and Research on Audit Internal Control and PracticeConstruction Based on Risk Management

With the rapid development of the market economy in China, how to strengthen audit risk management and enable enterprises to improve the internal audit control system to cope with complex and severe market risks has become the focus of current social concern. In foreign countries, although audit internal control and risk management-based practice construction are relatively mature, China’s construction of a risk-oriented internal audit control system has just begun, and needs to be further improved. Therefore, strengthening audit internal control and practice construction based on risk management is urgent for Chinese enterprises. This article starts with the connotation of internal audit control and risk management, expounds the relationship between risk management and internal audit control, and discusses the internal control of audit and practice construction based on risk management. In addition, it also analyzes the current situation of China’s construction, and puts forward practical countermeasures to strengthen the internal control of China’s corporate auditing.

Research on Internal Tax Control of New Energy Saving and Environmental Protection Wind Power Generation Energy Enterprises

With the increasingly severe energy situation, the exhaustion of traditional energy and the increasingly serious environmental pollution, it is of great economic and social significance to vigorously develop renewable clean energy of wind power. After the introduction of a large number of preferential tax policies to support the development of wind power in China, wind power has made great progress, effectively promoting the optimization of energy structure and production layout in China. As an effective measure to reduce the tax burden of taxpayers, the practice of tax internal control has achieved good effect and great potential application value. Reasonable tax planning of wind power generation enterprises is conducive to reducing tax costs, standardized and scientific tax management of enterprises and maximization of financial benefits. In order to facilitate wind power enterprises to understand and make good use of preferential tax policies for wind power, this paper makes an in-depth analysis of the problems existing in the internal tax control of new energy-saving and environment-friendly wind power generation energy enterprises in China, and puts forward effective solutions to specific problems.

Internal control through the lens of institutional work: a systematic literature review

Despite the growing interest in research on the topic of internal control, there is confusion about the concept in both theory and practice. This study addresses this lack of clarity by systematically structuring the literature that uses the concept by investigating what we know from previous studies about the practice of internal control and how it is institutionalized. To examine the existing literature in this field, the paper utilizes the theoretical lens of ‘institutional work’. The review finds that the understanding of internal control is currently divided: one part of the literature understands the concept as internal control over financial reporting, while the other part has a more global and strategic understanding of the term. Internal control is institutionalized by different organizational actors at the micro level in an attempt to implement internal control systems that are not a simple act of compliance but present an added value for the organization. At the same time, it is noteworthy that not all categories of institutional work could be identified in the internal control literature, indicating that the actors are largely limited by their institutional embeddedness. The paper also presents an aggregated understanding of the term internal control, which can therefore significantly supplement the efforts of practitioners and regulators to implement internal control procedures that add value for the corporate governance of organizations.

The Effect of the Board of Directors and Audit Quality on Disclosure of Internal Control Practices: Evidence from European Companies

The Effect of the Board of Directors and Audit Quality on Disclosure of Internal Control Practices: Evidence from European Companies

Efficient Capital Regulation of US Bank Holding Companies: An Integrative Literature Review

Background: Most Bank holding companies (BHCs) sustains significant losses and increased risk exposure which caused them to become insolvent. BHCs that become insolvent have a negative impact on the U.S. economy. There is a lack of effective practice towards capital regulation that causes BHC to incur significant losses. Methodology: This integrative literature review focused on studying current research findings on efficient capital regulation practices in relation to governance, risk management, internal control, assurance and compliance in BHCs. A wide range of search terms was used to extract and select pertinent peer-reviewed literature from numerous search engines and databases, with emphasis on studies published within the past 5 years. Findings: This integrative literature review provides in-depth knowledge of capital regulation, governance, risk management, internal control, assurance and compliance practices in BHCs. An effective practice towards capital regulation may help senior bank managers reduce risky behaviors and investments that causes significant bank losses. Originality: This integrative literature review can be used by future researchers as foundational material to extend theoretical foundations and the results of related studies. It has helped to highlight Compliance and Ethics Group's standard' concepts and inform recommendation for future research that identifies effective practices towards capital regulation in BHCs.

THE IMPACT OF AUDITING AND INTERNAL CONTROLS ON THE MANAGEMENT OF A BUSINESS ORGANIZATION. A CASE STUDY OF PRUDENTIAL BANK LIMITED (WEIJA BRANCH)

For system-based auditing to work effectively the auditor will like to rely on internal controls to reduce the volume of substantive testing. It is therefore important for the auditor to examine the internal control practice and procedures that are in place in the client’s business. Where weaknesses are revealed, the auditor recommends ways of improving the systems. This research examines the relationship between some components (risk assessment, control environment and control activate) of internal control systems and the effectiveness of audit program in prudential bank Weija branch. The study exploited information by the help of both primary and secondary data from questionnaires and interview schedules. However, the purposive method of sampling was used in this research work. In all 10 respondents were sampled from the fifty (50) respondents under review. The data captured in this study, was analyzed and interpreted through descriptive method by the help of frequency tables, graphical presentation and tables. Based on the investigations carried, the internal control system was seen to be significant in detection of fraud in banks in Ghana; there is therefore the need for an effective and acceptable internal control structure in banking organizations. It was therefore recommended that Prudential Bank Limited set up internal audit units at their various branches all over the country, so that there shall always be internal audit personnel to ensure adherence to the internal controls that exist in the organization. In view of this, the internal audit personnel should also be revolved at regular intermissions to prevent any form of professional misconducts.

EFEKTIVITAS PENERAPAN PENGENDALIAN INTERN PADA USAHA MIKRO, KECIL DAN MENENGAH (UMKM) DI KOTA BANDUNG

Competition during the ASEAN Economic Community (MEA) encourages all business units to be able to optimize their performance. Actors of MSMEs (Micro, Small and Medium Enterprises) which have a large contribution to the nation's economy need to look at internal controls on their entities so they can have competitiveness. This study aims to determine the internal control applied by MSMEs in the city of Bandung. This has become important to observe given the different characteristics of MSMEs with large companies, especially in terms of the number of workers and the division of tasks. A series of questionnaires in the form of a number of questions regarding internal control for small entities will be filled by MSME respondents to find out the description of internal control practices in MSMEs. The method used in this study is a quantitative method with a descriptive approach which in this study will be described regarding internal control of MSMEs in the city of Bandung. The results of the study show that in general the effectiveness of internal controls implemented by MSMEs in Bandung is considered quite good. This allows researchers to propose recommendations as a consideration for planning internal control strategies for MSME activists in general.

Early Internal Control Practices in the United States Army and the Evolution of Internal Control Practices in Businesses

ABSTRACTThis research analyzes, via an examination of documents from a frontier fort, Fort Abercrombie, Dakota Territory, the internal controls the U.S. Army had in place in the mid-1800s. Findings include: (1) that there are controls in place that safeguard assets, encourage efficient and effective use of funds, and comply with appropriations passed by the U.S. Congress; (2) the army's control system is similar in nature to the effective control system identified by the Committee of Sponsoring Organizations of the Treadway Commission; and (3) the army contributed to the evolution of internal controls in business.

A regulação como propulsora de práticas de controle interno na saúde suplementar

A pesquisa analisou a influência da regulação na adoção de práticas de controle interno nas Operadoras de planos de saúde (OPS) do Nordeste brasileiro, com base no framework do COSO ICIF (2013). A amostra foi formada por 43 respondentes (gestores financeiros, contábeis ou de auditoria interna). Utilizando uma metodologia mista, quantitativa e qualitativa, foi aplicado o teste de Kruskal-Wallis e análise de conteúdo das respostas discursivas, confirmando o pressuposto que há influência da regulação na adoção de práticas de controle interno. Acerca da percepção da influência da regulação na adoção das práticas de controle, 95% dos respondentes concordaram e indicaram outros aspectos relacionados à regulação: compliance, sustentabilidade e o caráter punitivo. Além disso, 9% afirmaram que há insuficiência da regulação em relação aos controles internos, sugerindo a criação de regulação específica para controles e 17% apontaram o fortalecimento das práticas de controles como um caminho rumo à sustentabilidade do setor.

The effect of internal control on tax avoidance: the case of Indonesia

Purpose The purpose of this paper is to analyze the effect of internal control on tax avoidance analyzing internal (family ownership) and external (environmental uncertainty) factors on the effectiveness of internal control in preventing tax avoidance. Design/methodology/approach First, the authors examine the direct effect of the effectiveness of internal control on tax avoidance. Second, the authors examine the effect of moderation of family ownership and environmental uncertainty on the relationship of the effectiveness of internal control on tax avoidance. Third, the authors divide the full sample into two groups, high and less effectiveness of internal control to examine the direct effect of internal control effectiveness on tax avoidance and when considering moderating variables. Fourth, the authors use two different measures of the effectiveness of internal control. Findings This research found that effective internal control can reduce tax avoidance. Family ownership affects the relationship between internal control and tax avoidance, but environmental uncertainty does not influence the relationship between internal control and tax avoidance. Practical implications Internal control increases compliance with rules and policies, so companies must design and implement effective internal control to prevent tax avoidance activities in violation of tax regulations. Originality/value In contrast to previous studies, this study measures the effectiveness of internal control using the index of internal control practice disclosure and considers internal and external factors that can affect the effectiveness of internal control to prevent tax avoidance.

Internal Control Practices and Financial Performance of County Governments in the Coastal Region of Kenya

Internal control practices have been established to influence financial performance of County Government, though County Government have been facing a myriad of challenges in terms of financial performance. The drive of this study was to establish internal control practices that influence county governments to streamline their operations and perform efficiently and effectively for the benefit of the general interest. Therefore the general objective of the study was to determine the internal control practices and financial performance of county governments in the coastal region of Kenya. Specifically, the study endeavored to establish the effect of audit function, risk management, financial reporting and cash management on financial performance of county governments in the coastal region. The study was based on the following theories: The Agency theory, Attribution theory and procedural justice theory. The researcher adopted a descriptive research design. The target population of the study were 30 employees drawn from 5 departments in the Ministry of Finance, Budget and planning in the county governments of the Coastal region. The study targeted 4 Counties in the coastal region of Kenya, that is Mombasa, Kilifi, Kwale and Taita and the respondents were 40 finance managers obtained from Finance Planning Ministry of the listed County governments. A census of 40 respondents was carried out. Primary data was collected using questionnaires. Data was analysed using descriptive statistics and inferential statistics. The study found a positive and significant effect between risk assessment, monitoring, control environment, information and communication on financial performance. The study concluded that the risk identification and mitigation play the most significant role in influencing financial performance of the County governments. Hence, risk identification can essentially be said to be the key starting point of any risk management program as the Counties cannot manage what is unknown. Monitoring the financial performance of the County creates more certainty and confidence in making both short and long term decisions. This in turn leads to a healthier business and faster growth rate. The control environment provides the basis for carrying out internal control across the organization. Effective adoption of information and communication systems is of vital importance in making sure that the County governments improves their financial performance. The study recommends that the management of the Counties should put in place cost-effective measures for timely risk identification and effective risk mitigation so as to ensure that their financial performance is not impacted negatively. The County governments should have appropriate tools for monitoring their financial performance so as to effectively monitor their goals, the progress they make and all the key performance metrics throughout their financial operations. The County governments should demonstrate a commitment to integrity and ethical values. Specific standards of conduct should be understood throughout all levels of the County, and processes should be in place to evaluate performance and quickly address deviations from expectations. The County governments should communicate successfully with their investors to form stronger relationships with them. Information and communication should be between the County and financial stakeholders about the County’s economic events and their effects within and outside the financial statements.

Updating Accounting Systems: Longitudinal Evidence from the Healthcare Sector

This paper provides evidence on the determinants and economic outcomes of updates of accounting systems (AS) over a 24-year timespan in a large sample of U.S. hospitals. We provide evidence that hospitals update their AS in response to three types of pressures: economic pressures, such as increases in the quality of accounting information driven by vendor rollouts of improved AS; coercive pressures imposed by regulators mandating certain practices, such as internal control practices imposed by Sarbanes–Oxley Section 404; and mimetic pressures for hospitals to conform their AS to those of their peers, such as local county and prominent “celebrity” peers. We find that only economically driven updates lead to economic benefits in the form of lower operating expenses and higher revenues. In contrast, we find some evidence that AS updates prompted by coercive regulatory pressures actually impose economic costs in the form of higher operating expenses.This paper was accepted by Suraj Srinivasan, accounting.

Assessment of applying internal quality control and it is effect on accuracy of blood glucose measurement in some medical Laboratory in Kosti City, White Nile State, Sudan

Quality control is essential in the clinical laboratory in order to ensure reliability of tests results, with acceptable levels of accuracy and precision. The impact of laboratory analysis in patient care is known as contributing to more than 70% of medical decisions. Internal quality control is an internal verification that the test yields day to day consistent results. The main objective of this study was to assess the effect of applying internal quality control on accuracy of test result in the clinical chemistry laboratories in Kosti City, Sudan. The study involved nine laboratories, stabilized control sera with known concentration (normal and pathological) was used to determine precision and accuracy. Structured questionnaires were also administered to assess the practice of internal quality control. Data were analyzed by using statistical package for social sciences (SPSS) version16. For validation of analytical process: means, standard deviations, coefficient of variations, accuracy and precision were obtained. The accuracy for the nine laboratories was 77% for both normal and pathological control sera and precision was 66.7%. Coefficients of variations for seven laboratories were below 10%. The study found that most of these laboratories do not follow the criteria of internal quality control associated with; calibration /recalibration instruments and pipettes (66.7%), use of control sera (55.6%), control charts (77.8%) and SOPs (77.8%). In conclusion, applying of internal quality control on clinical laboratory may help in the accuracy of test results, therefore, improving public health in developing countries.

A falta de trabalho institucional e mudanças organizacionais incompletas em municípios brasileiros

Resumo Este artigo propõe um modelo para explicar falhas na adoção compulsória de novas práticas no ciclo de gestão financeira em municípios. Empiricamente, aplica-se o modelo à adoção de sistemas de controle interno (SCI) em municípios brasileiros. As evidências da análise qualitativa comparada (qualitative comparative analysis - QCA) em sete prefeituras mostram que, apesar de recursos humanos e de sistemas serem condição necessária, eles não são suficientes para a implementação das práticas de controle interno. O chamado capital institucional é uma condição sine qua non para a adoção de novas práticas de administração e controle financeiro em governos locais no Brasil. A adoção dessas reformas depende da atuação de uma rede de “atores com poder” que realizam trabalho institucional em prol das mudanças.

Exploring the Adaptation of Artificial Intelligence in Whistleblowing Practice of the Internal Auditors in Malaysia

News of high-profile frauds and financial malpractices continue to make daily media headlines after the change of government in May 2018. Whether in the private or government sector, corruptions, financial misconduct and malpractices have always been associated with lack of proper auditing and ineffective internal control systems. Various initiatives have been developed to reduce the negative perception of public sector frauds including the implementation of whistleblowing practices in public sector. However, to date, it is still questionable whether this practice is efficient and effective due to the increasing trend in reported frauds in the government departments. Thus, this study examines the practice of whistleblowing in Malaysian public sector agencies. Total of 500 questionnaires are distributed to the internal auditors in public sector agencies. To achieve the objective of this study, the application of artificial intelligence in the practice of the whistleblowing will be examined to see the effectiveness of this practice. The findings are expected to enhance the new Malaysian government initiatives in fighting frauds and corruptions. The effect of whistleblowing practice will provide further evidence to strengthen the internal control system and practices and improve the public sector accountability and transparency.

АНАЛИЗ ВЛИЯНИЯ ИДЕИ КОРПОРАТИВНОЙ УСТОЙЧИВОСТИ НА СОВРЕМЕННУЮ ПРАКТИКУ ВНУТРЕННЕГО КОНТРОЛЯ КОРПОРАЦИЙ

Цель: уточнить стандартную модель внутреннего контроля экономического субъекта, предложенную Комитетом спонсорских организаций Комиссии Тредвея, с учетом расширения целей корпорации от экономических до экономико-социально-экологических. Обсуждение: сегодня идея корпоративной устойчивости имеет масштабную общественную поддержку. Отход от неоклассических взглядов на миссию корпораций, признание необходимости ставить и достигать социальные и экологические цели приводит к перестройке корпоративного управления, в том числе внутреннего контроля. Стандартные модели внутреннего контроля не отражают специфики целей, вытекающих из идеи корпоративной устойчивости. Бизнес-практика диктует необходимость их уточнения. Результаты: дано эмпирическое доказательство внедрения идеи корпоративной устойчивости в практику внутреннего контроля российских корпораций; на основе синтеза моделей внутреннего контроля и управления рисками Комитета спонсорских организаций Комиссии Тредвея предложена уточненная модель внутреннего контроля корпоративной устойчивости.

National survey on internal quality control for tumour markers in clinical laboratories in China.

IntroductionThis survey was initiated to obtain knowledge on the current situation of internal quality control (IQC) practice for tumour markers (TMs) in China. Additionally, we tried to acquire the most appropriate quality specifications.Materials and methodsThis survey was a current status survey. The IQC information had been collected via online questionnaires. All of 1821 clinical laboratories which participated in the 2016 TMs external quality assessment (EQA) programme had been enrolled. The imprecision evaluation criteria were the minimal, desirable, and optimal allowable imprecisions based on biological variations, and 1/3 total allowable error (TEa) and 1/4 TEa.ResultsA total of 1628 laboratories answered the questionnaires (89%). The coefficients of variation (CVs) of the IQC of participant laboratories varied greatly from 1% (5th percentile) to 13% (95th percentile). More than 82% (82 - 91%) of participant laboratories two types of CVs met 1/3 TEa except for CA 19-9. The percentiles of current CVs were smaller than cumulative CVs. A number of 1240 laboratories (76%) reported their principles and systems used. The electrochemiluminescence was the most used principle (45%) and had the smallest CVs.ConclusionsThe performance of laboratories for TMs IQC has yet to be improved. On the basis of the obtained results, 1/3 TEa would be realistic and attainable quality specification for TMs IQC for clinical laboratories in China.

The Effect of Internal Control Disclosure on Financial Information Quality and Market Performance distinguished by the Corporate Governance Index

Corporate disclosure practice of internal control in Indonesia remains non-mandatory and limited in nature. This study was conducted to analyze the level of internal control disclosure in the annual reports of Indonesian public corporations and identify its consequences on the firm’s market performance and financial information quality, which was differentiated by corporate governance index. This index refers to the Corporate Governance Perception Index released by the Indonesian Institute for Corporate Governance in 2014 and 2015. Based on the conducted content analysis, it can be concluded that the disclosure of internal control by public corporations in Indonesia is still at an intermediate level. The influence of extensive internal control information disclosure on market performance is strengthened by the accounting information quality. And the influence of the relationship between extensive disclosure and firm performance is different between CGPI-indexed companies and those which are unindexed by CGPI. The findings of this research contribute to future researches related to internal control disclosure. Limitations and suggestions can be found at the end of this study.

Examination of the effects of some variables in internal control and organizational stress management via multiple regression on perception of risk and uncertainty

Internal control is an essential element of successful and effective management. Internal control which plays a role as a proactive and integral element in organizations’ adapting to changing and changes also plays an important role in the realization of organizational strategy. In some cases, change brings risks along with uncertainties. One of the most effective tools against the stress occurring in cases where the risks and change cannot be managed is, without doubt, internal control practices. Risk management practices are dealt with within the scope of internal control. Risk management is directly related to perception of risks and uncertainties of the employees and the organization. The effect of some variables on the perception of risk and uncertainty has been investigated since the risks and uncertainties in the organizations are constantly in interaction with stress and internal control applications. The study was conducted face to face by asking 348 entrepreneurs operating on the textile industry to fill in the survey form in Kayseri in Turkey. The effects of total work experience, age, gender and strength on perception of risk and uncertainty have been determined.

Boost Up Quality Assurance through Regular Evaluation of Proficiency Testing Performance

Background: Participation in External Quality Assessment (EQA) program with practice of Internal Quality Control (IQC) is the excellent indicator of good laboratory practice (GLP) to assure quality services. EQA is an essential component of Quality Assurance to assess the analytical performance compared within same methods of other laboratories. It is also important to detect equipments failure, identifying reagent problems, reviewing staff training as well as to initiate and evaluate corrective action timely.Methods: This is descriptive analysis of the feedback received from EQAS body for twenty routine biochemical parameters which are most commonly performed in the Clinical Biochemistry Laboratory of Dhulikhel Hospital. Variation Index Score (VIS), Overall Mean VIS (OMVIS) and Standard Deviation Index (SDI) of all parameters for the year 2014 and 2015 were analyzed statistically.Results: On the analysis of twenty routine biochemical parameters regularly participated in EQAS, over all mean variation index score (OMVIS) of individual tests found 55%, 30% and 15% under good, very good and satisfactory category respectively.Conclusion: Participation and periodic evaluation of EQAS indicators along with practice of internal quality control has been galvanizing good laboratory practice and scientifically it boost up quality service in clinical laboratories.