Financial Condition and Internal Control Deficiencies: Evidence From New York Counties

2019 ◽  
Vol 40 (1) ◽  
pp. 45-69
Author(s):  
Youngsung Kim ◽  
David S. T. Matkin
Keyword(s):  
New York ◽  
Internal Control ◽  
Financial Condition ◽  
Internal Control Deficiencies

The Search for Order in Municipal Administration: Herman A. Metz and the New York City Experience, 1898–1909

2020 ◽  
Vol 47 (1) ◽  
pp. 55-74
Author(s):  
Ryan P. McDonough ◽  
Paul J. Miranti ◽  
Michael P. Schoderbek
Keyword(s):  
New York ◽  
New York City ◽  
Internal Control ◽  
York City ◽  
Internal Controls ◽  
Data Availability ◽  
Financial Reports ◽  
The Public ◽  
Operational Activities ◽  
The City

ABSTRACT This paper examines the administrative and accounting reforms coordinated by Herman A. Metz around the turn of the 20th century in New York City. Reform efforts were motivated by deficiencies in administering New York City's finances, including a lack of internal control over monetary resources and operational activities, and opaque financial reports. The activities of Comptroller Metz, who collaborated with institutions such as the New York Bureau of Municipal Research, were paramount in initiating and implementing the administrative and accounting reforms in the city, which contributed to reform efforts across the country. Metz promoted the adoption of functional cost classifications for city departments, developed flowcharts for improved transaction processing, strengthened internal controls, and published the 1909 Manual of Accounting and Business Procedure of the City of New York, which laid the groundwork for transparent financial reports capable of providing vital information about the city's activities and subsidiary units. JEL Classifications: H72, M41, N91. Data Availability: Data are available from the public sources cited in the text.

THE ESSENCE, GOALS AND OBJECTIVES OF THE ANALYSIS OF THE FINANCIAL CONDITION OF AN ECONOMIC ENTITY AND ITS USE IN THE COMPLIANCE CONTROL SYSTEM

2021 ◽  
Vol 3 (11) ◽  
pp. 161-165
Author(s):  
Tatiana M. Rogulenko ◽  
◽  
Valeria V. Mironenko ◽  
Keyword(s):  
Control System ◽  
Internal Control ◽  
Financial Analysis ◽  
Corporate Management ◽  
External Influence ◽  
Compliance Control ◽  
Financial Condition ◽  
Economic Entity ◽  
Goals And Objectives

This article raises the problem of improving the analysis of the financial condition of an eco-nomic entity and its use in the compliance control system. The main tasks of using the analysis in the compliance control system in order to increase the efficiency of corporate management of the economic activity of an economic entity have been determined. It is emphasized that the analysis of the financial condition is one of the mandatory components of both internal control and compliance control, the differences in the use of the analysis results are analyzed. It is concluded that the role of financial analysis and its use in the compliance control system in order to improve the efficiency of corporate governance is constantly increasing in order to prevent compliance risks and regulatory risks due to external influence of supervisors.

scholarly journals Internal Control Deficiencies and Conservative and Opportunist Accounting Choices

2019 ◽  
Vol 22 (3) ◽  
pp. 368-385
Author(s):  
Paulo Roberto da Cunha ◽  
Alini da Silva ◽  
Leonardo Bernardi Rohenkohl
Keyword(s):  
Internal Control ◽  
Accounting Choices ◽  
Internal Control Deficiencies

scholarly journals Causality and multidimensionality of internal controls: Impact on organizations

2011 ◽  
Vol 8 (2-5) ◽  
pp. 502-515
Author(s):  
Joshua Onome Imoniana ◽  
Verônica Moreira Costa ◽  
Mariana Araujo ◽  
Luiza Helena Pereira Alberto ◽  
Patrícia P. Alves
Keyword(s):  
New York ◽  
Financial Reporting ◽  
Internal Control ◽  
Response Rate ◽  
Research Question ◽  
Internal Controls ◽  
Causal Effects ◽  
Chief Financial Officer ◽  
Final Response ◽  
Final Response Rate

This study analyzes the managers’ (Chief Financial Officer (CFO)) perception of impact of implementation of internal controls. It investigates the causes of adoption in the multidimensionality of internal control of the Brazilian companies traded in the New York Stock market. A survey sent to the CFOs of the 70 companies listed in the NYSE collected empirical data from these companies. The final response rate was 15.16 %. The study uses partial least squares modeling for statistical analysis to test the research question. Our empirical evidence supports the hypotheses that “the greater the level of multidimensionality of controls in an organization the lower the level of causal effects and damage to the control environment. Based on work performed, one is able to infer that overall, there is a significant relationship between causal effects on operating activities, financial reporting and compliance in relation to the multidimensionality of internal controls, thus, when there are uncommon features, depending on the level of multidimensionality special attention should be paid to the causes of adoption of controls to track risks posed to business.

The discovery and reporting of internal control deficiencies prior to SOX-mandated audits

2007 ◽  
Vol 44 (1-2) ◽  
pp. 166-192 ◽  
Author(s):  
Hollis Ashbaugh-Skaife ◽  
Daniel W. Collins ◽  
William R. Kinney
Keyword(s):  
Internal Control ◽  
Internal Control Deficiencies

scholarly journals Voluntary Clawback Adoption and the Use of Financial Measures in CFO Bonus Plans

2017 ◽  
Vol 93 (3) ◽  
pp. 213-235 ◽  
Author(s):  
Peter Kroos ◽  
Mario Schabus ◽  
Frank Verbeeten
Keyword(s):  
Decision Making ◽  
Internal Control ◽  
Audit Committees ◽  
Fiduciary Duties ◽  
Trade Off ◽  
Financial Measures ◽  
Financial Expertise ◽  
Abnormal Accruals ◽  
Internal Control Deficiencies ◽  
Bonus Plans

ABSTRACT Firms trade off CFOs' fiduciary duties against their decision-making duties when designing CFO bonus plans. Decreasing bonus incentives tied to financial measures benefits CFOs' fiduciary responsibilities at the expense of motivating their decision-making duties. As prior research indicates that clawbacks increase personal misreporting costs through the loss of previously awarded compensation, we examine whether clawbacks allow firms to increase incentives in CFO bonus contracts. Based on a sample of U.S. firms between 2007 and 2013, we find that clawbacks are associated with greater CFO bonus incentives. We also find the increase in incentives to be more pronounced for CFOs relative to other executives. Our results are moderated by firms' susceptibility to misreporting. The relation between clawbacks and incentives is weaker when firms experienced internal control deficiencies, have larger abnormal accruals, when CFOs are more vulnerable to pressure from CEOs, and when audit committees have less financial expertise and prestige.

Roger's Dilemma: A Situational Examination of Ethical Behavior in the Presence of Internal Control Deficiencies

2012 ◽  
Vol 28 (2) ◽  
pp. 337-351 ◽  
Author(s):  
Mark J. Mellon ◽  
Robert Marley
Keyword(s):  
Insider Trading ◽  
Internal Control ◽  
Code Of Ethics ◽  
Legal Protection ◽  
Chief Executive ◽  
Sarbanes Oxley ◽  
Ambiguous Situation ◽  
Ethical Conflicts ◽  
Internal Control Deficiencies ◽  
Definition Of

ABSTRACT: This case exposes students to decision making in an ethically and legally ambiguous situation. It also asks them to practice using their ethical sensitivity by identifying situations where ethical conflicts are present. Students will learn the Securities and Exchange Commission's definition of insider trading and gain an understanding of the Supreme Court's recent interpretations regarding the specifics of what constitutes insider trading. Students will also learn about the legal protection afforded to whistleblowers under the Sarbanes-Oxley Act and learn about the code of ethics requirement applicable to public company's senior financial officers and the chief executive officer. Finally, students will be exposed to the definition of an internal control deficiency and learn how to identify two types of internal control deficiencies.

The Effects of Employer and Client Identification on Internal and External Auditors' Evaluations of Internal Control Deficiencies

2012 ◽  
Vol 31 (1) ◽  
pp. 39-56 ◽  
Author(s):  
Chad M. Stefaniak ◽  
Richard W. Houston ◽  
Robert M. Cornell
Keyword(s):  
Internal Control ◽  
Audit Quality ◽  
Data Availability ◽  
Internal Auditor ◽  
Internal Auditors ◽  
External Auditors ◽  
Audit Efficiency ◽  
Public Company ◽  
External Auditor ◽  
Internal Control Deficiencies

SUMMARY The Public Company Accounting Oversight Board's (PCAOB) Auditing Standard No. 5 (AS5) encourages external auditors to rely on internal auditors to increase the efficiency of lower-risk internal control evaluations (PCAOB 2007). We use post-SOX experimental data to compare the levels and effects of employer (client) identification on the control evaluations of internal (external) auditors. First, we find that internal auditors perceive a greater level of identification with the evaluated firm than do external auditors. We also find some evidence that, ceteris paribus, internal auditors are less lenient than external auditors when evaluating internal control deficiencies (i.e., tend to support management's preferred position to a lesser extent). Further, while we support Bamber and Iyer's (2007) results by finding that higher levels of external auditor client identification are associated with more lenient control evaluations, we demonstrate an opposite effect for internal auditors—higher levels of internal auditor employer identification are associated with less lenient control evaluations. Our results are important because we are the first to capture the relative levels of identification between internal and external auditors, as well as the first to compare directly internal and external auditor leniency, both of which are important in light of AS5. That is, we provide initial evidence that external auditors' increased reliance on internal auditors' work, while increasing audit efficiency, also could improve audit quality by resulting in less lenient internal control evaluations, due, at least in part, to the effects of employer and client identification. Data Availability: Contact the first author.

scholarly journals Corporate governance characteristics of firms reporting internal control deficiencies

2011 ◽  
Vol 8 (2) ◽  
pp. 363-390
Author(s):  
Kathleen Rupley
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
High Growth ◽  
Audit Committees ◽  
Market Reactions ◽  
Sarbanes Oxley ◽  
Internal Control Deficiencies ◽  
Nominating Committees

From a sample of firms reporting internal control deficiencies (ICD), I compare corporate governance structures to industry, exchange, and size – matched firms. I examine market reactions to reports of ICDs in 8-K filings. Additionally, I examine shifts in corporate governance characteristics since the Sarbanes-Oxley Act of 2002 (SOX). Results indicate that weaker boards, larger audit committees, less independent nominating committees, and high growth companies are associated with ICDs. Market reaction is negative to ICD disclosures when they are associated with controls over revenue. Firms have made changes post-SOX including reduced non-audit services, more frequent audit committee meetings, formation of nominating and governance committees, creation of internal audit functions, and implementation of corporate governance policies.

scholarly journals Methodological Aspects of the Internal Control Organization at the Enterprise and Financial Stability Analysis

2021 ◽  
Vol 11 (2) ◽  
pp. 1795-1813
Author(s):  
Nodira B. Abdusalomova
Keyword(s):  
Internal Control ◽  
Financial Stability ◽  
Scientific Article ◽  
Accounting System ◽  
Economic Activities ◽  
Financial Condition ◽  
Definition Of ◽  
Key Indicators ◽  
Methodological Aspects

The author analyzes the internal control organization in the management accounting system in this scientific article. In addition, the article is devoted to the definition of internal control and determination of the role of internal control in the financial and economic activities of the enterprise. As a result of the research, the author has developed proposals to analyze the key indicators, financial condition and profitability indicators reflected in the financial statements of the enterprise and to implement the process of planning internal control on the basis of improved stages. Moreover, the theoretical and methodological bases of the internal control system have been identified, ways to improve its reliability have been determined, and the method of organizing internal control in reliance upon the information system to raise production and sales, as well as to reduce costs has been proposed.

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