The coordination of internal controls: the single audit – towards a European Union internal control framework

Purpose The purpose of this study is to provide theoretical guidance that enables local governments to deal with occupational fraud. Design/methodology/approach The quantitative approach is used to examine the efficacy of the Committee of Sponsoring Organisations of the Treadway Commission (COSO) internal control framework in tackling occupational fraud in local government. To achieve the goals, the authors performed a survey of the Indonesian auditor institutions. Findings It is not appropriate to argue that all types of local government fraud can be deterred by a single internal control. The study suggests that COSO internal controls are not effective for dealing with corruption cases. However, the authors do find the efficacy of those controls are obvious for controlling asset misappropriation and financial statement fraud. This result indicates that if the COSO internal control framework is only designed for routine financial control and asset protection, it significantly and negatively influences its efficacy to deal with occupational fraud. This study has both theoretical and managerial implications, discussed separately. Originality/value In the field of prevention, the authors cannot make generalised theories and approaches for dealing with occupational fraud. Whilst previous authors have offered fraud deterrents in terms of internal controls, they have failed to realise the need to understand their effectiveness for particular forms of fraud. This paper sheds light on the effectiveness of internal controls in achieving their goals. This has both practical applications and stimulates theoretical insights.

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An Analysis of Revenue Cycle Internal Controls in Ghanaian Universities

Case Studies in Business and Management ◽

10.5296/csbm.v2i2.7320 ◽

2015 ◽

Vol 2 (2) ◽

pp. 1

Author(s):

Justice Ray Achoanya Ayam

Keyword(s):

Internal Control ◽

Empirical Studies ◽

Internal Controls ◽

Primary Data ◽

Educational Institutions ◽

Control Effectiveness ◽

Control Framework ◽

Research Outcome ◽

University Colleges ◽

Revenue Cycle

While corporate organisations in recent years have experienced increasing demands for more effective and efficient internal controls aimed at strengthening and enhancing the reliability of financial statement there exist very little empirical studies focusing on the application of the five components of the COSO control framework in Revenue Cycle Internal Controls in Ghanaian University. The study is relevant in increasing the understanding and evaluating internal control effectiveness of Ghanaian Universities. The purpose of this research paper is to assess the level of effectiveness of the Revenue Cycle Internal Control Systems of Universities in Ghana using the Committee of Sponsoring Organisation of the Treadway commission (COSO) control framework in order to provide the basis for streamlining and improving controls in the Universities in Ghana. The study uses primary data collected through a survey instrument from respondents sampled from Universities and University Colleges. The results indicate that all five components of the COSO framework were in place and functioning effectively. The sampled population consist of Ghanaian Universities only, consequently the research outcome may not necessarily represent all Universities in the world. Only selected Universities and University Colleges in Ghana were included in the research, therefore the findings of this study cannot be attributable to all Higher Educational Institutions in Ghana.

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Using a Movie to Study the COSO Internal Control Framework: An Instructional Case

Journal of Information Systems ◽

10.2308/jis.2008.22.1.63 ◽

2008 ◽

Vol 22 (1) ◽

pp. 63-76 ◽

Cited By ~ 10

Author(s):

Arline Savage ◽

Carolyn Strand Norman ◽

Kathryn A. S. Lancaster

Keyword(s):

Internal Control ◽

House Of Representatives ◽

Financial Institution ◽

Internal Controls ◽

Publicly Traded ◽

Accounting Firms ◽

Publicly Traded Companies ◽

Sarbanes Oxley ◽

Control Framework ◽

Accounting Graduates

Following enactment of the Sarbanes-Oxley Act (SOX) of 2002 (U.S. House of Representatives 2002), public accounting firms and publicly traded companies are much more focused on internal controls. Accordingly, many accounting graduates will be asked to evaluate, document, and perhaps test the adequacy of an organization's internal control structure. The Committee of Sponsoring Organizations' (COSO 1992) Internal Control—Integrated Framework is the most widely used tool for this purpose. This instructional case, based on the movie, Rogue Trader, gives students the opportunity to see the consequences of lax corporate governance and weak internal controls at the Barings Bank. Students view the movie and then use the COSO framework to critically analyze the collapse of a well-established financial institution.

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Sunshine Center: An Instructional Case Evaluating Internal Controls in a Small Organization

Issues in Accounting Education ◽

10.2308/iace.2010.25.4.709 ◽

2010 ◽

Vol 25 (4) ◽

pp. 709-720 ◽

Cited By ~ 8

Author(s):

Sandra K. Fleak ◽

Keith E. Harrison ◽

Laurie A. Turner

Keyword(s):

Child Care ◽

Financial Reporting ◽

Internal Control ◽

Care Center ◽

Internal Controls ◽

Fraud Triangle ◽

For Profit ◽

Not For Profit ◽

Control Framework ◽

Internal Control Weaknesses

ABSTRACT: Management and auditors face increased responsibilities to evaluate internal control and assess the risk of fraud. This case provides the opportunity to evaluate internal controls and the possibility of fraud in a very small not-for-profit child care center, a setting that is easy to understand. The first goal of the case is to identify internal control weaknesses by applying the COSO internal control framework in an environment that lacks many aspects of internal control. Interactions among the five components of the COSO framework provide the basis for analyzing internal control. The case requires students to consider possible misappropriation of funds using the fraud triangle. A secondary goal of the case is to introduce financial reporting for a not-for-profit organization as a means of accountability.

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Internal Controls and Credit Risk in European Banking: The Basel Committee on Banking Supervision Framework Approach

Banking and Finance ◽

10.5772/intechopen.92889 ◽

2020 ◽

Author(s):

Ellis Kofi Akwaa-Sekyi

Keyword(s):

Financial Crisis ◽

Credit Risk ◽

Internal Control ◽

Internal Controls ◽

Banking Supervision ◽

Basel Committee ◽

Operational Risks ◽

Control Framework ◽

Governance Practices ◽

European Banking

Poor corporate governance practices have been cited as contributory to the 2007 global financial crisis. The chapter explores a qualitative self-regulation approach to address a major risk facing banks using the Basel Committee on Banking Supervision (BCBS) framework of internal controls. The study examines the effect of the qualitative principles of the BCBS internal control framework on credit risk. Corporate institutions use internal control frameworks to address the most operational risks, but the current study hypothesizes a possible relation with the credit risk. This research covers banks from selected EU countries covering some period before and after the 2007 financial crisis using a fixed-effect model. We report a significant relationship between board functions and activities, board structure and board monitoring, and credit risk. The results indicate that investment in high-risk assets, bank profitability and board chair being ex-CEO increases credit risk in European banking. The chapter extends the scope of a previous work that used the elements of the COSO internal control framework on a single country. This quantitative measure of qualitative constructs of the framework complements existing research that uses algorithms and simulations to study credit risk.

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PERAN PENGAWAS DALAM MENERAPKAN PENGENDALIAN INTERN PEMBERIAN KREDIT PADA GABUNGAN KOPERASI PEGAWAI REPUBLIK INDONESIA JAWA TIMUR

Jurnal Ekonomi dan Bisnis Airlangga ◽

10.20473/jeba.v29i22019.132-141 ◽

2020 ◽

Vol 29 (2) ◽

pp. 132

Author(s):

Revi Arfamaini

Keyword(s):

Organizational Structure ◽

Internal Control ◽

Human Error ◽

Credit Unions ◽

Internal Controls ◽

Risk Mapping ◽

Internal Auditor ◽

Integrated Framework ◽

Control Framework

Introduction: Implementation of internal control is one of theorganization's efforts must be made to improve the effectiveness of its operations. How to implement internal control is to implement an integrated framework published by COSO in 1992. Internal control not only on the organization, credit unions must implement internal control. This is because credit unions have an activity in the form of lending on credit to members. Lending on credit can lead to an unsuccessfuluncollectible receivables that have threats that can cause harm. Threatsinclude non-performing loans, human error and fraud. Internal controls will be run in accordance with the plan, if the controller cooperativesperform functions as an internal auditor to evaluate and provide recommendations on the implementation of internal controlimprovements that have been running on credit unions. Thus, the purpose of this study was to determine the role of the controller as afunction of the internal auditor in the application of internal control ofcredit on GKPRI JATIM.Methods: The method used is the method of participation observationto determine the application of internal control GKPRI JATIM. Furthermore, assessment of internal control so as to know GKPRI JATIMcontroller role as internal auditor function components based control framework published by COSO in 1992.Results: As a result, controllers should consider several things that madecooperative organizational structure, procedures and policies areimplemented cooperative lending, risk mapping and assessment of allcredit control activities undertaken management to be able to detectproblems that emerge early on.Conclusion and suggestion: Thus, internal control can be run effectively.

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The Adoption and Consequences of COSO 2013

Accounting Horizons ◽

10.2308/horizons-18-123 ◽

2021 ◽

Author(s):

Amanuel F Tadesse ◽

Gina Cavalier Rosa ◽

Robert J. Parker

Keyword(s):

Information Technology ◽

Internal Control ◽

Internal Controls ◽

Lower Probability ◽

Control Problems ◽

Timely Manner ◽

Sarbanes Oxley ◽

Enterprise Risk ◽

Control Framework ◽

Internal Control Weaknesses

COSO has developed frameworks for firms to improve their internal controls with the objective of reducing fraud and managing enterprise risk. The frameworks are widely used by firms and their auditors to comply with the internal control requirements of the Sarbanes-Oxley Act (SOX). We investigate two issues involving the most recent COSO internal control framework (COSO 2013): the determinants of a firm's decision to adopt it in a timely manner; and the consequences of adoption on internal controls. In our sample, firms that report internal control problems under SOX 404, especially firms with information technology (IT) problems, are likely to be late adopters. Regarding the consequences of adoption, for late adopters, we find that firms using the revised COSO framework have a lower probability of reporting weaknesses in IT-related controls. We also find evidence that COSO 2013 adoption is helpful in remediating internal control weaknesses.

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The Importance Of The Control Environment: Expense Account Fraud At Blue Grass Airport

Journal of Business & Economics Research (JBER) ◽

10.19030/jber.v11i2.7622 ◽

2013 ◽

Vol 11 (2) ◽

pp. 97 ◽

Cited By ~ 2

Author(s):

Thomas G. Noland ◽

Eddie Metrejean

Keyword(s):

Internal Control ◽

Internal Controls ◽

The State ◽

Control Environment ◽

Red Flags ◽

External Auditors ◽

Control Framework

COSOs Internal Control Framework discusses the components of internal control and how the control environment is the most important component. This paper analyzes how a non-existent control environment led to a massive expense account fraud at a regional airport. This fraud eventually led to the resignation and prosecution of the airports top four executives. The paper discusses the findings of the State Auditors investigation and outlines the red flags that should have been obvious to the external auditors. The paper concludes by discussing the changes made to the airports internal controls in the aftermath of the fraud.

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Content Analysis Of Board Reports On Corporate Governance, Internal Controls And Risk Management: Evidence From France

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v32i3.9668 ◽

2016 ◽

Vol 32 (3) ◽

pp. 637-648 ◽

Cited By ~ 4

Author(s):

Eustache Ebondo Wa Mandzila ◽

Daniel Zeghal

Keyword(s):

Risk Management ◽

Internal Control ◽

Management Practices ◽

Internal Controls ◽

Financial Control ◽

Management Approach ◽

Firm Characteristics ◽

Regulatory Standard ◽

Control Framework ◽

Internal Accounting

The French legislature has mandated in 2008 that the board chairperson reports on governance, internal controls, and risk management approach with the objective to enhance corporate disclosures to investors. This study examines the content of board chair reports to assess their relevance and compliance with mandated disclosure requirements. Based on a sample of 109 french publicly listed comapnies in 2009, Our results show that, with the exception of banks subject to a more stringent regulatory standard, the mandatory nature of the legislation did not translate in extended disclosures about internal controls and risk management practices. We further observe significant variations among the different indices of disclosure particularly with regards internal accounting and financial control. The multivaraite results validate the influence of the chosen internal control framework as well as firm characteristics on the content of the information disclosed about governance, internal control, and risk management practices.

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The Severity of Internal Controls over Financial Reporting Deficiencies: Differences among Types and Industries

FINANCIAL REPORTING ◽

10.3280/fr2014-001003 ◽

2014 ◽

pp. 55-77

Author(s):

Tatiana Mazza ◽

Stefano Azzali

Keyword(s):

Information Technology ◽

Financial Reporting ◽

Internal Control ◽

Service Industry ◽

Listed Companies ◽

Internal Controls ◽

Service Companies ◽

Finance Industry ◽

Material Weaknesses ◽

Fixed Assets

This study analyzes the severity of Internal Control over Financial Reporting deficiencies (Deficiencies, Significant Deficiencies and Material Weaknesses) in a sample of Italian listed companies, in the period 2007- 2012. Using proprietary data the severity of the deficiencies is tested for account-specific, entity level and information technology controls and for industries (manufacturing and services vs finance industries). The results on ICD severity is compared with one of the most frequent ICD (Acc_Period End/Accounting Policies): for account-specific, ICD in revenues, purchase, fixed assets and intangible, loans and insurance are more severe while ICD in Inventory are less severe. Differences in ICD severity have been found in the characteristic account: ICD in loan and insurance for finance industry and ICD in revenue, purchase for manufacturing and service industry are more severe. Finally, we found that ICD in entity level and information technology controls are less severe than account specific ICD in all industries. However, the results on entity level and information technology deficiencies could also mean that the importance of these types of control are under-evaluated by the manufacturing and service companies.

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