Internal Control System Research Articles

A Study on Enterprise Risk Management in the Chinese Context

Abstract: The establishment of the market economy, accompanied by the emergence of risks, requires enterprises to consider not only the economy and profitability but also the risk. Therefore, enterprise risk management problems arise. Many developed countries see risk management, strategic management, and operation management as the three main management functions of modern economic organizations, which will become a critical factor in the competitiveness of businesses in the future. Therefore, the paper reviews the development of traditional risk management theory, financial risk management theory, and internal control theory, with a focus on Enterprise Risk Management (ERM). After analyzing the current situation of ERM in Chinese enterprises, the paper proposes suggestions for improving risk management methods, strengthening the internal control system, and enhancing staff quality. Finally, the paper emphasizes the importance of Enterprise Risk Management (ERM) development in China and suggests the need for a risk management system tailored to the countrys specific circumstances.

Optimalisasi SIPD dan SPIP dalam Meningkatkan Kualitas Laporan Keuangan: Pentingnya Kompetensi SDM

<p><em><span>This study aims to describe the implementation of Local Government Information Systems (LGIS), Government Internal Control Systems (GICS), and Financial Report Quality (FRQ); evaluate the effect of LGIS and GICS implementation on FRQ; and analyze the role of Human Resource Competence in moderating the relationship between LGIS and GICS on FRQ. The research employs a quantitative approach, focusing on theory testing through numerical variables and data analysis using statistical procedures. The study utilizes the Partial Least Square (PLS) method in Structural Equation Modeling (SEM) with the WarpPLS 8.0 software, involving 128 respondents from various Local Government Agencies. The results indicate that the implementation of LGIS and GICS positively and significantly affects FRQ. Furthermore, Human Resource Competence enhances the relationship between LGIS and GICS with FRQ, suggesting that improving HR competence can increase the effectiveness of LGIS and GICS implementation in enhancing financial report quality. This study is expected to provide input and contribute to the District Government as an evaluation tool for the implementation of LGIS and GICS. This study also combines the variables of LGIS and GICS on FRQ using the Agency Theory approach.</span></em></p>

THE ROLE OF ARTIFICIAL INTELLIGENCE IN TRANSFORMING INTERNAL CONTROL WORKFLOWS

Internal control systems rely heavily on well-defined workflows and procedures in business operations. The fundamental components of internal control systems encompass policies, procedures, and workflows, impacting various aspects such as the accurate establishment of internal controls, employees' adeptness in their application, defining authorities correctly, and ensuring business sustainability. This significance is further underscored by incorporating these elements into internal control standards and relevant legislation. The absence of documented internal control flows directly contributes to audit findings in numerous public institutions and private organizations. Therefore, this research highlights the critical role of policies, procedures, and workflows in internal control. It aims to explore the attributes of artificial intelligence applications across multiple dimensions to emphasize their potential in bolstering internal control systems. This study underscores the significance of internal control processes, emphasizing their crucial role in daily operations and the potential benefits of artificial intelligence in streamlining these processes, thereby making the audience feel the importance of their work.

PENGARUH PENERAPAN STANDAR AKUNTANSI PEMERINTAHAN, SISTEM PENGENDALIAN INTERNAL DAN GOOD GOVERNANCE TERHADAP KUALITAS LAPORAN KEUANGAN PEMERINTAH (STUDI PADA SKPD KOTA BANDUNG)

This research aims to determine the effect of the implementation of government accounting standards, internal control systems, and good governance of government financial reports in SKPD (Regional Work Units) of Bandung City. The research method used in this research is a quantitative method with a descriptive and verification approach, while the data collection technique is carried out by distributing questionnaires to respondents, especially the head of the finance sub-division and finance section staff at SKPD Bandung City, the sample collection technique uses non-probability sampling specifically purposive sampling technique. Based on the calculation results, the coefficient of determination shows that the implementation of government accounting standards, internal control systems, and good governance has a 49% explanation on the quality of government financial reports in SKPD of Bandung City, the remaining 51% is attributed to other variables not examined in this study.

Influence Implementing Accounting Information Systems, Internal Control Systems, Organizational Culture and Commitment on Managerial Decision Making in PT. Nirwana Alabare Garment

Influence Implementing Accounting Information Systems, Internal Control Systems, Organizational Culture and Commitment on Managerial Decision Making in PT. Nirwana Alabare Garment

Analisis Sistem Informasi Akuntansi Penerimaan atas Tagihan Pembayaran Member Parkir Secara Virtual Account

This research aims to find out how the accounting information system for receipt of parking member payment bills using a virtual account which is carried out at PT Securindo Packtama Indonesia Area Rukan PIK is running well or not and what the internal controls are at the company. The research method used is the qualitative analysis method. The data collection techniques used in this research are observation, interviews and documentation. The results of this research are based on analysis of the accounting information system and internal control system, where the system used by the company is good because it has helped record receipts for parking member payment bills quite efficiently in terms of time, while the company's internal control system is also quite good, although still duplicate tasks were found in certain sections.

Extent of Execution of P.E. Administrators’ Functions as Influenced by Their Leadership Capabilities in an Engineering University in China

This study explores the relationship between leadership capabilities and management functions of Physical Education (PE) administrators at Hubei Engineering University, China. Using a descriptive-comparative-correlational research design, data were collected from PE teachers to assess the effectiveness of administrators in strategic planning, organizing, directing/leading, and controlling. Additionally, leadership capabilities such as organizational direction, collaborative leadership, and instructional leadership were evaluated. The results revealed that administrators are generally effective in their management functions, with organizing and collaborative leadership receiving the highest scores. However, challenges related to resource management and internal control systems were identified. Significant correlations between management functions and leadership capabilities underscore the importance of strong organizational skills for effective leadership. These findings provide insights into the leadership development needs of PE administrators and suggest practical solutions for overcoming administrative challenges.

Bird-View Exploration of Internal Controls and Financial Performance of Selected Savings and Credit Co-Operative Societies in Moyo District, Uganda

This article explores internal controls and financial performance of selected savings and credit cooperative societies in Moyo district, Uganda. Utilizing both qualitative and quantitative methodologies, a descriptive cross-sectional research design was employed. The population consists of 56 participants. Data was collected with surveys and interviews. Findings revealed that internal controls are the pillar of any financial institution and SACCOs are not excluded and good financial performance is the motive for having good internal controls implemented in the SACCOs. In spite of the role played by internal controls, SACCOs have continued to face challenges relating to liquidity, profitability, efficiency; in terms of cost per borrower, and alleged malpractices. The above challenges could be attributed to weak internal control system, as this sets a base for misappropriation of organization’s resources. It is on this note that the study calls for the implementation of a systematic risk assessment process that identifies, assesses, and mitigates risks. Regularly update risk assessments to adapt to changing circumstances. More so, there is need to maintain effective internal control communication and proper flow of information down, across, and up within all sections of the organization. This includes clear communication of roles and responsibilities. Invest in continuous training and education for SACCO staff and members to ensure they have a strong understanding of internal controls, ethics, and risk management. Develop and regularly update comprehensive policies and procedures that clearly outline internal control processes, responsibilities, and expectations. This can serve as a guide for staff and members and ensure consistency in control activities. Keywords: Credits, Cooperative societies, Financial performance, Internal controls, Savings.

Determinants of Government Procurement Fraud Prevention with Organizational Commitment and Ethical Culture as Moderating Variables

This study aims to analyze the various factors that influence the prevention of procurement fraud, including the implementation of the Anti-Bribery Management System (ABMS), Government Internal Control System (SPIP), and the role of the Internal Compliance Unit (UKI), with organizational commitment and ethical culture as moderators. It employs a quantitative causal approach, with data collected through surveys and analyzed using Partial Least Square-Structural Equation Modelling (PLS-SEM). The results demonstrate that the implementation of ABMS, SPIP, and UKI positively impacts the prevention of procurement fraud. Organizational commitment and ethical culture strengthen the influence of SPIP implementation, while ethical culture weakens the role of UKI in preventing fraud. ABMS, SPIP, and UKI are crucial in fraud prevention, but their effectiveness is enhanced by a strong commitment to ethics. While organizational commitment strengthens SPIP's preventive effects, a strong ethical culture may reduce the reliance on UKI in fraud prevention. These findings underscore the importance of comprehensive anti-fraud measures such as the implementation of ABMS, SPIP, and the establishment of UKI in preventing procurement fraud

Moderation Of The Internal Control System On Factors Influencing The Quality Of Regional Financial Reporting

This study examines the Influence of Government Accounting Standards, SIMDA Implementation, and Human Resource Quality on the quality of local government financial reports, taking into account the moderating effect of the internal control system. It was conducted in 34 Regional Work Units (SKPD) in the Bengkulu province with 99 respondents. The results indicate that government accounting standards, SIMDA Implementation, and Human Resource Quality do not have a significant impact on the quality of local government financial reports. The internal control system does not moderate the impact of government accounting standards, but it does moderate the influence of SIMDA implementation and human resource quality on the quality of financial reports. There are limitations in the research sample due to some SKPD having employees who do not meet the research criteria.

Reducing budgetary slack through government internal control system: insights from structural equation modelling and artificial neural network approach

Research aims: This study investigates the important role of Government Internal Control System (GICS) elements in reducing budgetary slack in Public Higher Education Institutions (HEIs).Design/Methodology/Approach: Partial Least Squares Structural Equation Modelling (PLS-SEM) and Artificial Neural Network (ANN) were used to test the significance and strength of the relationship between GICS and budgetary slack. Survey data was collected from managers of Public HEIs in Indonesia. Statistical analysis was conducted using WarpPLS 8.0 for PLS-SEM, while ANN was implemented using SPSS.Research findings: Government Internal Control Systems are effective in reducing budgetary slack. However, the relationship between elements of ICS and budgetary slack is not always linear and can be influenced by interactions between elements.Theoretical contribution/Originality: This study contributes to the literature on management accounting by providing insights into a more complex process that explains the vital role of effective implementation of GICS in Public HEIs in reducing budgetary slack in the budgeting process.Practitioner/Policy implication: This study demonstrates that the Government's Internal Control System effectively reduces budgetary slack in Higher Education Institutions. Therefore, practitioners should strengthen GICS implementation, particularly focusing on the control of the environment and recognizing the complex interplay between GICS elements. Furthermore, policymakers should prioritize strengthening regulations and oversight, encouraging innovation, and integrating GICS with other systems to enhance accountability and resource allocation.Research limitation/Implication: Collecting data through questionnaires may lead to common method bias. This can be mitigated by the implementation of a longitudinal design and the collection of data at a number of points in time.

The Effectiveness of Internal Control Systems in Preventing Financial Fraud: A Case Study of Multinational Corporations

This case study examines the effectiveness of internal control systems (ICS) in preventing financial fraud, with a focus on the Volkswagen (VW) emissions scandal known as ‘Dieselgate’. This paper discusses the internal control problems reflected in this case, including a series of problems such as insufficient division of labor, insufficient supervision, insufficient communication and imperfect approval. These deficiencies allowed the fraud to continue for nearly a decade, resulting in significant financial penalties and reputational damage, reflecting the role of internal control failures in asserting financial fraud. As a result, the study highlights the importance of cultivating an ethical corporate culture, strengthening risk management and ensuring strong internal controls to prevent similar incidents in multinational companies.

The modern industrial revolution, exit, and the failure of internal control systems

The modern industrial revolution, exit, and the failure of internal control systems

Impact of Internal Control in the Management of Payments to Suppliers of Construction Companies

ABSTRACT Purpose: Determine to what extent internal control affects the management of payment to construction company suppliers. Theoretical Framework: Focuses on the importance of streamlining and avoiding delays in payment to suppliers through improving internal control in construction companies, based on COSO 2013 and the theory of Arthur Holmes. Method: A quantitative study of causal correlation type was carried out in a population of less than 50 individuals (38), so that we worked with a list of 38 workers related to the tax management of construction companies, given the small population, all of them. people were included in the study. Results and Discussion: The results obtained reveal a heterogeneous perception of internal control among the workers involved. A minority of consumers (5.3%) value it positively, while a slightly larger group (10.5%) consider it negative. Regarding the management of payment to testers, 73.7% of the participants rated it as regular. These findings suggest the existence of areas of opportunity in the implementation of internal controls, particularly in relation to payment processes. Research Implications: The results of this research highlight the importance of strengthening internal control systems in construction companies, especially with regard to the management of payments to suppliers. Given the dependence of these companies on their suppliers for the acquisition of supplies and services, efficient payment management is a key factor for the success of their projects. Originality: It presents a point of view on the role of construction companies in building efficient payment to suppliers through internal control. Conclusion: Internal control has a significant impact (80.2%) on the management of payment to suppliers of Construction Companies, which supports the formulated hypothesis of the study. It is necessary to encourage the active participation of employees through a clear understanding of their roles in tax management to achieve supplier payment management with efficiency and commitment.

Pengaruh Penerapan Standar Akuntansi Pemerintahan Berbasis Akrual & Sistem Pengendalian Internal Pemerintah Terhadap Kualitas Laporan Keuangan SKPD Di Pemerintah Kota

Management of state finances is carried out on an ongoing basis to ensure orderliness, efficiency, effectiveness, transparency and accountability, as well as meeting demands for public accountability and submission of financial reports in accordance with regulations. Regional Governments are obliged to submit Regional Government Financial Reports (LKPD) as a form of transparency and accountability, which are assessed for credibility by the Financial Audit Agency of the Republic of Indonesia, with the quality of financial reports that are relevant, reliable, comparable and can be understood as a measure of good regional financial management. This research aims to test and analyze whether the quality of implementing Government Accounting Standards (SAP) and the Government Internal Control System (SPIP) has an effect on the quality of financial reports. This research uses an explanatory research method to understand known phenomena, with descriptive verification research to test causal relationships between variables through hypothesis testing. The implementation of Government Accounting Standards and the Government Internal Control System has a positive and significant effect on the quality of the Bandung City Government's financial reports partially, in accordance with the proposed hypothesis. The findings of this research are in line with previous research, which shows that good implementation of SAP and SPI improves the quality of local government financial reports

Factors affecting employee performance in regionally owned enterprises in Indonesia

This article analyzes the factors that can influence employee performance at Regional Owned Enterprises (ROE), Klaten Regency, Indonesia. The factors tested in this research are the influence of religiosity, organizational culture, internal control, discipline, and incentives on employee performance. This research focuses on all active employees at Klaten Regency Regional Owned Enterprises (ROE). The sample in this study consisted of 110 respondents from various departments and various types of employees and was analyzed using the Partial Least Squares (PLS) program. The results of this research indicate that the religiosity and incentive variables have no impact on employee performance. It can be said that the influence of religiosity will not be able to improve employee performance, and this research found that the problem of religiosity is a personal problem that is not related to work. Meanwhile, incentives are not able to boost employee performance because employees feel satisfied with what they have received. The variables of organizational culture, internal control and discipline, will significantly improve employee performance. So, this research provides implications regarding the importance of emphasizing a good organizational culture by management for all members of the organization as well as continuing to implement a good internal control system and not ignoring employee work discipline.

Analisis Sistem Informasi Akuntansi Penggajian Dan Pengupahan Dalam Upaya Pengendalian Internal Pada PT. Srijasa Brika Perkasa Palembang

This research aims to determine the internal control of PT. Srijasa Brika Perkasa as well as payroll and business wage accounting data systems. Descriptive analysis was used in this research. Three approaches were used to obtain data: documentation, observation, and interviews. The analysis findings show that, although there are several weaknesses, internal control has generally been implemented well. One of them is the finance department which still handles many tasks, such as paying salaries and wages to employees, making payroll, and recording attendance. Apart from that, employee attendance list data is still modified manually, so that the list only contains attendance times. In addition, the lack of supervision of staff attendance records shows the company's vulnerability as a result of inadequate internal control systems in payments.

The Impact of Internal Control Systems on Financial Performance in the Ghanaian Community-based Credit Union Sector

The Impact of Internal Control Systems on Financial Performance in the Ghanaian Community-based Credit Union Sector

THE ROLE OF POLITICAL COMPETITION BETWEEN AUDIT FINDINGS AND AUDIT OPINIONS

Research Purposes. This study aimed to determine the influence of audit findings on audit opinion involving the moderating variable of political competition among regencies/city governments in Indonesia. Research Methods. The secondary data are analyzed quantitatively utilizing binary logistic regression and MRA (Moderated Regression Analysis), processed by SPSS version 25 software. The population involves the entire 508 local governments of city-regencies in Indonesia, from which 395 sample cities/regencies in Indonesia in fiscal year 2016 were selected using purposive sampling. Research Results and Findings. The results showed that audit findings on internal control system weaknesses and non-compliance with legislation have a negative and significant effect on audit opinion, which means that more audit findings lessen the chance for the government to obtain an unqualified opinion. In addition, political competition strengthens the effect of audit findings of non-compliance with legislation and weaknesses in the internal control system on audit opinion. It implied that local governments in Indonesia should enhance internal controls and compliance and account for political factors to improve audit opinions.

The Adoption of Blockchain Technology on Company’s Internal Control System in Sales and Purchasing Cycle

ABSTRACT This paper explores the use of blockchain technology to enhance internal control systems for fraud prevention within the sales and purchasing cycle. Despite existing internal controls, significant weaknesses persist in these systems, leading to issues such as poor performance, missing orders, underpricing, rebates, false charges, falsification of order information, late delivery, and order/performance shifting. Using the design science research approach (Hevner, March, Park, and Ram 2004), we propose a conceptual framework that allocates the verification, storage, and management of events to each authorized blockchain node, preventing tampering with verified data. By integrating blockchain’s secure, traceable, and decentralized features with smart contracts, oracles, and the Internet of Things (IoT), our framework aims to automate workflows, track goods in real-time, and measure operational performance accurately. This approach enhances internal control systems, reduces audit workloads, and mitigates the risk of business fraud and misconduct. JEL Classifications: M42; M49.