Evaluating the Effectiveness of the Coordination Between Internal Control and Internal Audit: A Survey-Based Analysis on Turkish Banking Sector

2020 ◽  
pp. 141-160
Author(s):  
Mustafa Tevfik Kartal ◽  
Serpil Kılıç Depren
Keyword(s):  
Internal Control ◽  
Banking Sector ◽  
Internal Audit

ANALISIS HUBUNGAN ANTARA ENTERPRISE RESOURCE PLANNING DENGAN EFEKTIVITAS PENGENDALIAN INTERNAL PADA SEKTOR PERBANKAN

2015 ◽  
Vol 13 (2) ◽  
pp. 1
Author(s):  
Teguh Puspandoyo
Keyword(s):  
Information Systems ◽  
Enterprise Resource Planning ◽  
Internal Control ◽  
Banking Sector ◽  
Internal Audit ◽  
Resource Planning ◽  
Internal Controls ◽  
Integrated System ◽  
Final Conclusion

Development of information technology in the sector of accounting has been think out an integrated system called Enterprise Resource Planning (ERP). In Indonesia, this system has been adopted by some commercial banks. This paper discusses the relationship between ERP with the effectiveness of internal controls through the case study on the banking sector. This is done because of the discovery of the problem regarding the number of cases of fraud and bank percing caused by weak internal controls, although some banks have implemented ERP that one of the benefits is to increase the effectiveness of internal control. The purpose of this paper is to provide evidence related to previous studies that comes from the journal of information systems and accounting journals related to ERP implementation and internal controls. Data collection method in this paper is the study of the documentation from the accounting literature and information systems. From the analysis, there are five factors that play a role similar in the success of the implementation of the ERP system and increase the effectiveness of internal controls. The solution to overcome the problem of internal controls in the banking sector which is using the five critical success factors above coupled with the strengthening of the role of the Internal Audit Unit. The final conclusion is that the factor of leadership support, employees, business processes, employee education, corporate management, and strengthening the role of Internal Audit can improve the effectiveness of internal control of a bank that has implemented ERP.

scholarly journals MODERN ASPECT OF INTERNAL CONTROL AND AUDIT IN RUSSIAN FEDERATION

2021 ◽  
pp. 31-41
Author(s):  
Irina Semenovna Toropova
Keyword(s):  
Control System ◽  
Russian Federation ◽  
Internal Control ◽  
Banking Sector ◽  
Internal Audit ◽  
Legal Regulation ◽  
Economic Activities ◽  
Internal Control System ◽  
The Russian Federation ◽  
Commercial Organizations

The conduct of financial and economic activities of organizations, both budgetary and commercial, is associated with possible risks of non-compliance with the current legislation, making unreasonable management decisions by the top and middle management, which leads to reputational and financial losses. In order to forestall financial and reputational losses, organizations form an internal control system. In the Russian Federation, the formation of normative and legislative regulation of the organization and conduct of internal financial control and audit is taking place, both in relation to commercial organizations and organizations of the budgetary sphere. The article examines the order of organization, types, tasks of internal control and audit in various organizations. The organization of internal control and audit is considered in the article through the prism of legal regulation of this area in the Russian Federation and international regulations. The internal audit system, as an obligatory element of the management system, has been introduced in the banking sector and for public sector organizations. For commercial organizations, this issue is left to the management of the organization and the creation of an internal audit service is optional. The regulatory and legislative framework of the organization and methods of conducting internal control for organizations have been studied. The approaches to the organization and conduct of internal control have been investigated from the point of view of orientation towards possible risks. Based on the results of the study, the article concludes that the presence of an effectively functioning internal control system, which is based on an assessment of possible risks, contributes to an increase in the efficiency of the organization, the prevention of cases of fraud by the organization’s personnel, and an increase in the reliability of accounting, tax and other types of reporting

scholarly journals REGULATION OF ASSESSMENT OF THE RISK MANAGEMENT SYSTEM BY EXTERNAL AUDIT IN THE CONTEXT OF FOSTERING MORE EFFICIENT RISK MANAGEMENT - A REVIEW OF THE BANKING SECTOR OF BIH

2020 ◽  
Vol 8 (19) ◽  
pp. 11
Author(s):  
Dragana Vujičić - Stefanović
Keyword(s):  
Risk Management ◽  
Internal Control ◽  
Management System ◽  
Audit Committee ◽  
Banking Sector ◽  
Supervisory Board ◽  
Internal Audit ◽  
External Audit ◽  
Risk Management System ◽  
The Impact

In this study, regulatory requirements are elaborated regarding external audit in the assessment of the risk management system and the impact of the regulation of risk management system using independent external audit is investigated in the context of encouraging effective risk management in the banking sector of Bosnia and Hercegovina. The research was conducted through a questionnaire, which included a representative sample consisting of all the banks in BiH, within which employees at control functions are included (risk management, internal audit and internal control), along with members of bank boards (Supervisory board, Audit Committee, Bank Management), and relevant external auditors conducting audits in the banks  in BiH, as well as professional academic public. The results of the research show a high degree of correlation of the regulation of risk management system by independent auditors and risk management efficiency, but also identify additional mechanisms which encourage more efficient risk management in banks and, consequently, reveal new research areas.

Fraud and Bank Performance in Nigeria – Var Granger Causality Analysis

e-Finanse ◽  
2020 ◽  
Vol 16 (1) ◽  
pp. 20-26
Author(s):  
Taiwo A. Muritala ◽  
Muftau A. Ijaiya ◽  
Olatanwa H. Afolabi ◽  
Abdulrasheed B. Yinus
Keyword(s):  
Control Systems ◽  
Granger Causality ◽  
Internal Control ◽  
Banking Sector ◽  
Bank Performance ◽  
Causality Analysis ◽  
Vector Autoregressive ◽  
Granger Causality Analysis ◽  
Long Run ◽  
Multivariate Cointegration

AbstractThis paper examines the causality between fraud and bank performance in Nigeria over the period 2000-2016 for quarterly financial data using Johansen’s Multivariate Cointegration Model and Vector Autoregressive (VAR) Granger Causality analysis. The results show a long-run relationship between the variables. Bank performance was found to be linked to Granger fraud variables and vice versa at 10% significant level. This study reveals that there was a direct causal relationship between bank performance and fraud because increase in fraudulent activities in the banking sector leads to reduction in bank performance. Hence, this study recommends that internal control systems of banks should be strengthened so as to detect and prevent fraud. In this way, bank assets would be protected.

Effect of Financial Control Mechanisms on Performance of Income Generating Units in Selected Public Universities in Kenya

2019 ◽  
Vol 3 (V) ◽  
pp. 286-304
Author(s):  
Shadrack Musunkui Towett ◽  
Isaac Naibei ◽  
Williter Rop
Keyword(s):  
Risk Management ◽  
Internal Control ◽  
Public Universities ◽  
Management Strategies ◽  
Internal Audit ◽  
Simple Random Sampling ◽  
Target Population ◽  
Control Measures ◽  
Financial Control ◽  
Control Mechanisms

In an attempt to bridge the gap between the budgetary allocations and actual expenditures most universities have started income generating units with the aim of boosting their operational expenses. Whereas there is the potential of the use of Income Generating Units (IGUs) to generate additional funds, most universities still experience challenges in full implementation and realization of the revenue goal. This study therefore sought to determine the financial control mechanisms affecting performance of income generating units among selected public universities. The study sought to determine the effect of internal controls, credit policies, financial risk management and internal audit on performance of income generating units in selected universities. Targeted population was all the 290 employees in the IGU departments of selected public universities. The respondents were sampled using simple random sampling so as to enable equal representation of the target population without any biasness. Data collection was done using the questionnaire to ensure sufficient data was collected from the respondents. Descriptive statistics assisted in the determination of respondent’s views and opinions on every variable. Qualitative data was analysed using content analysis into meaningful, precise and comprehensive statements and presented in quotations. Data analysis was done using SPSS version 21 and data presented in form of figures and tables. The study ensured that all ethical considerations were considered by the study. The findings were that most employed Income Generating Units in Public Universities were Collection of rental fees, Evening and executive programs and Trainings of both short and long courses while the least was established to be Sales of memorabilia and books. All the financial control mechanism investigated namely internal audit, internal control measures, risk management strategies and credit policies had large extents of adoption in the selected universities. The results of the regression analysis showed that the financial control mechanisms investigated had a significant positive relationship on performance of the IGUs. Specifically, 47% of the variation of the performance of IGUs was established to be explained by the studied factors. The study concluded that the performance of the IGUs among the selected public universities was largely accounted for by the implemented financial control measures. Therefore effective financial control mechanisms is concluded to lead to better IGU performance whereas shortcomings in the financial control mechanisms is concluded to lead to diminished returns in the IGUs. The study recommended that the management in charge of the IGU department in the public universities to prioritize the formulation, implementation and monitoring of financial control mechanisms in the IGUs. To facilitate effective financial controls, the study recommended that the management especially those in the audit section to conduct regular checks and inspections on the IGUs. Additionally, frequent reforms were recommended to address the shortcomings experienced in integrating financial control measures in IGUs.

CURRENT STATE OF REGULATION OF INTERNAL FINANCIAL CONTROL AND INTERNAL FINANCIAL AUDIT IN THE BUDGET SECTOR

2020 ◽  
Vol 1 (9) ◽  
pp. 119-124
Author(s):  
D. R. GINIYATULLINA ◽  
◽  
◽  
Keyword(s):  
Internal Control ◽  
Internal Audit ◽  
Regulatory Framework ◽  
International Standards ◽  
Financial Control ◽  
Budget Process ◽  
Federal Law ◽  
Government Sector ◽  
General Government ◽  
Financial Audit

Since 2013, there has been an active transformation of the regulatory framework related to the implementation of international standards of internal audit in Russian practice, which regulates the organization and implementation of internal financial control and internal financial audit in the general government sector. However, the regulatory framework is constantly undergoing changes that are associated with the need to take into account the specifics of the functioning of these organizations. Particular attention is paid to the development of the methodological foundations of internal financial control and audit on the basis of amendments made by the Federal Law of July 26.07.2019, 199-FZ to the Budget Code of the Russian Federation. In particular, internal financial control was removed from the budgetary powers of participants in the budget process. When these changes were implemented, a lot of questions arose, such as the exclusion of internal financial control as a separate budgetary authority means that this type of control can be omitted, journals and internal control cards are not kept.

External Auditors' Involvement in the Internal Audit Function's Work Plan and Subsequent Reliance Before and After a Negative Audit Discovery

2016 ◽  
Vol 35 (4) ◽  
pp. 159-173 ◽  
Author(s):  
Byron J. Pike ◽  
Lawrence Chui ◽  
Kasey A. Martin ◽  
Renee M. Olvera
Keyword(s):  
Internal Control ◽  
Internal Audit ◽  
Internal Controls ◽  
Professional Standards ◽  
Data Availability ◽  
Internal Auditors ◽  
External Auditors ◽  
Internal Audit Function ◽  
Anchoring Bias ◽  
Before And After

SUMMARY To reduce redundancies and increase efficiency in the evaluation of internal controls (PCAOB 2007, 402–403), professional standards encourage coordination between external auditors and their clients' internal audit function (IAF). Recent surveys of internal auditors find that a component of this coordination is external auditors' involvement in developing the IAF's audit plans. Nevertheless, it is not known how such involvement affects external auditors' reliance on the internal control test work of the IAF, either before or after a negative audit discovery. Based on an experiment with 107 experienced auditors, we find that external auditors involved in the development of the IAF's audit plan perceive the IAF as more objective and that both objectivity and involvement contribute to these auditors' placing more reliance on the IAF as compared to external auditors with no involvement. This initial reliance results in the involved auditors' proposing reductions to the audit budget and re-performing less of the IAF's work. Consistent with an anchoring bias, we find that involvement leads to external auditors' continuing to place greater reliance on the IAF's work, even after they become aware of a negative audit discovery that should not have occurred had the client's controls been effective. Data Availability: Data are available from the authors on request.

Organizational identity, professional identity salience and internal auditors’ assessments of the severity of internal control concerns

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ian Burt ◽  
Theresa Libby
Keyword(s):  
Professional Identity ◽  
Internal Control ◽  
Organizational Identity ◽  
Internal Audit ◽  
Identity Salience ◽  
Content Type ◽  
Internal Auditors ◽  
Internal Control Weaknesses ◽  
The Impact ◽  
Benefits And Costs

Purpose This paper aims to examine whether increasing the salience of the internal auditor’s professional identity, defined by the expectations of their professional group, increases internal auditors’ judgments of the severity of internal control concerns when their organizational identity is high. Design/methodology/approach This paper tests the hypothesis using a laboratory experiment with internal auditors as participants. Findings The results support the hypothesis that professional identity salience moderates the relation between organizational identity and the assessed severity of identified internal control weaknesses. Increasing the salience of professional identity results in a more severe assessment of identified internal control weaknesses when organizational identity is high than when it is low. Originality/value Prior research in the lab and in the field provides mixed results about the impact of organizational identity on internal auditors’ judgments of the severity of identified internal control concerns. This paper contributes to the discussion on this issue. In addition, the results have implications for the debate about the benefits and costs of in-house versus out-sourced internal audit functions.

The Role of Accounting Mechanisms for Corporate Governance in Reducing Creative Accounting Practices in Telecommunications Sector Companies in Riyadh City: An Empirical Study: دور الآليات المحاسبية لحوكمة الشركات في الحد من ممارسات المحاسبة الإبداعية في شركات قطاع الاتصالات بمدينة الرياض: دراسة ميدانية

2020 ◽  
Vol 4 (15) ◽  
Author(s):  
Lamis Jameel Banasser, Maha Faisal Alsayegh
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
Internal Auditors ◽  
External Auditors ◽  
Riyadh City ◽  
Creative Accounting ◽  
Telecommunications Sector

The study aimed to identify the role of accounting mechanisms for corporate governance in reducing creative accounting practices in telecommunications sector companies in Riyadh city. A descriptive analytical approach was followed to conduct the field study. Sample of the study consisted of members of the audit committee, internal auditors, accountants from the surveyed telecommunications’ sector companies, and the external auditors in the audit offices that specialized on auditing the examined sample of companies. Questionnaire was used as a data collection method. Results showed that activating the role of accounting mechanisms for corporate governance can greatly contribute in limiting creative accounting practices. As they are controlling mechanisms that capable of protecting companies, shareholders and stakeholders from any manipulation or misleading information in the financial statements. Further, internal audit plays a major role in limiting creative accounting practices by examining and evaluating the effectiveness of the internal control system. Furthermore, the independence and competence of the external auditor and his commitment to the rules of conduct and ethics of the profession contribute greatly in limiting creative accounting practices in the examined companies. The study recommended the necessity of holding specialized training courses for members of audit committees, internal auditors and external auditors on methods of detecting creative accounting practices to combat and reduce them.

HISTORICAL STAGES OF FORMATION AND DEVELOPMENT OF INTERNAL CONTROL

2021 ◽  
Vol 296 (4) ◽  
pp. 14-20
Author(s):  
AnnА KOZACHENKO ◽  
Keyword(s):  
Internal Control ◽  
Private Property ◽  
Internal Audit ◽  
Economic Life ◽  
Capitalist System ◽  
Historical Aspect ◽  
Economic Relations ◽  
History Of ◽  
Economic Formation ◽  
Means Of Production

The article highlights the views of scientists on the allocation of periods (stages) in the history of internal control, which differ in the following features: the emergence and development of socio – economic relations that existed at different times; diversification of objects and subjects of control; complicating the tasks of control over the different levels of development of productive forces and equipment of each society; specific methodological techniques. Thus, the first manifestations of control are observed during the period of primitive communal system. The period of slavery is considered the stage of the emergence of internal control. Characteristic of this period was physical coercion to work. In the period of the feudal system, the peculiarities of the development of socio-economic formation of European states are the distinction between external and internal audit, and accounting registers to reflect the facts of economic life, which served for entries in the accounts of the General Ledger. In addition, control activities were manifested in the movement of credit and settlement transactions between buyers, in settlements between buyers and banks, in production processes and private ownership of the means of production. The capitalist system of production did not require many special control bodies, and its functions were carried out directly by the owners of the means of production. The basis of capitalism was the private property of the bourgeoisie on the means of production, but not on the worker, who at that time received more freedom. It was during the communist formation that thorough work was carried out on the methodological support of internal economic control, but its active development began after the declaration of independence of Ukraine, by borrowing the foundations in foreign countries. Thus, the periodization presented in the article helps to trace the historical aspect of the development and formation of internal control as a control system as a whole, in a certain period of time in which.

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