A research in internal audit & internal control

Purpose This paper aims to examine the impact of European sustainability regulations on the degree of co-operation among audit committees, internal auditors and external auditors. Design/methodology/approach This study is based on online questionnaires completed by 112 German audit committee members, internal auditors and external auditors, adopting a research approach with qualitative components. Findings This study reveals that although the three authorities have strengths within financial and industry expertise and possess a solid base of financial, personnel and technical resources, they have deficiencies in dealing with social and, notably, environmental issues such as water and marine resources as well as biodiversity and ecosystems. However, increased sustainability-related communication and opportunities for collaboration could positively impact sustainability oversight. The parties could mutually alleviate their workloads by involving environmental experts or by conducting aligned audits of sustainability-related internal control and risk management systems performed by internal and external auditors under the strategic oversight of the audit committee. Despite potential benefits, parties tend to overestimate their own capabilities and seek assistance from one another for environmental issues, hindering effective co-operation and fostering resentment. Originality/value This research contributes by stressing the need to consider environmental capabilities in the work and profiles of all three parties. It also highlights the importance of audits of sustainability-related internal control and risk management systems co-ordinated by the audit committee and performed by internal and external auditors.

The study is dedicated to analyzing the impact of population aging on economic systems, particularly in the countries of the European Union, and to identifying innovative mechanisms for adapting business and public governance to these changes. The article examines the key consequences of population aging, such as a declining share of the working-age population, increased pressure on social and pension systems, and slower economic growth. Special attention is given to the development of the silver economy, financial technologies (Fintech), and digital healthcare (telemedicine, wearable devices) as tools to support the quality of life of the elderly. Based on a SWOT analysis, the strengths, weaknesses, opportunities, and threats of implementing digital technologies in healthcare for the older generation are identified. The article substantiates the need to transform internal control, audit, and risk management systems within enterprises in response to demographic challenges. Proposed adaptation strategies include the introduction of flexible forms of employment, knowledge transfer programs, motivational mechanisms for older employees, as well as the integration of demographic risks into corporate management systems. The role of the state is emphasized in providing incentives for continued employment among retirees, developing telemedicine infrastructure, and supporting retraining programs. The findings of the study demonstrate that population aging, in addition to posing challenges, also creates new opportunities for innovative development. An effective combination of financial technologies, adaptive management approaches, and social policy can turn these challenges into a source of stability and competitiveness amid global changes.

В статье исследуются вопросы организации систем внутреннего контроля как формы реализации рисковой функции страхования. Анализируются статистические данные по рынку страховых услуг и обосновываются направления развития системы внутреннего контроля и аудита страховых организаций, её взаимосвязь c государственным финансовым контролем финансовой устойчивости субъектов страхового дела. Рассматривается автоматизированная система внутреннего финансового контроля и аудита, построенная на принципах риск-ориентированного подхода в соответствии со стандартами Solvency II, как механизм, способствующий достижению локального компромисса в отношениях участников страховых экономических отношений. В ходе проведения исследования был сделан вывод о том, что страховым организациям необходимо внедрение эффективной системы внутреннего контроля, которая позволяла бы органам страхового надзора осуществлять превентивное выявление рисков потери финансовой устойчивости и платежеспособности субъектов страхового надзора.Цель – разработка модели системы внутреннего контроля и аудита страховых организаций в системе государственного страхового надзора в соответствии с риск-ориентированным подходом.Метод или методология проведения работы: статья подготовлена на основе проведения кабинетных исследований, информация собрана посредством качественных методов сбора данных, а именно сравнительного анализа, факторного анализа, формализованного контент-анализа.Результаты: разработана модель системы внутреннего контроля и аудита, основанная на принципах риск-ориентированного надзора в целях ранней диагностики рисков страховых организаций.Научная новизна исследования – разработка рекомендаций по совершенствованию принципов и методов внутреннего контроля и аудита страховой организации в системе государственного страхового надзора, построенной на принципах риск-ориентированного в целях превентивной диагностики рисков страховщика.Область применения результатов: полученные результаты целесообразно применять субъектами страхового надзора, в частности страховыми организациями и органами страхового надзора.

This study presents the role of internal public audit organized at the level of local public administration, the interdependence between internal audit and internal control as well as the specific ways of evaluating the management system and internal managerial control. The erroneous perception of the specific objectives of the internal public audit has often led to a reluctance on the part of the decision makers. Misunderstanding the role of internal audit is a major risk in the functioning of the decision-making system. The internal audit recommendations give assurance to the general management through the periodic evaluation of the main functional systems: the financial-accounting system, the public procurement system, the decision-making system and especially the management and internal managerial control system.

The Alignment of Internal and External Control Mechanisms: The Differential Market Valuation and Performance Effects in High-Growth Versus Low-Growth Industries

The basis of the successful activity of a business entity is an effective internal control system, the effectiveness of which directly depends on the assessment of the risks of the enterprise's activities. Therefore, an important issue of scientific research is the determination of methodological approaches to the optimal interaction of participants in the process of risk management and internal control in order to increase the efficiency of domestic enterprises. In the process of research, general scientific theoretical and empirical methods were used, based on systemic, historical and complex approaches: analogy, comparison – when revealing the issues of the synthesized functioning of risk management and internal control systems; modeling, generalization – when studying the constituent elements of the methodological tools in the enterprise management system. The work proves that in order to increase the efficiency of the enterprise's activities, it is worth introducing an integrated approach to the internal control system, which should be based on the interaction, unification, functional coordination of participants in internal control and risk management, taking into account the industry specifics, scale of activity, regulatory and legal environment, corporate culture. For optimal interaction of all participants in the risk management and internal control process of the company, it is proposed, based on the provisions of the “Three Lines of Defense” model, to introduce into the current practice of the enterprise a mechanism for coordination and partnership interaction of all participants in such a process, with consolidation in the relevant internal regulations. In this regard, a format of the model of the internal standard of risk management of the company has been developed for implementation, which takes into account the specifics of the enterprise's activities, creates a basis for increasing the value of the company, and ensures business efficiency. It is substantiated that the interaction of participants depends on the organizational and functional components of the internal control system. Therefore, in the logic of the integrated approach, an organizational and functional model of internal control has been built at the appropriate levels and taking into account the synthesizing components, which should ensure optimal interaction of participants in the risk management process in the control sphere.

В статье рассматриваются вопросы организации системы внутреннего финансового контроля и внутреннего финансового аудита в учреждениях уголовно-исполнительной системы (УИС). В государственном секторе экономики в условиях риск-ориентированного подхода системе внутреннего финансового контроля уделяется повышенное внимание. Внутренний финансовый контроль занимает серьезную нишу в системе финансового управления, позволяет выявить слабые стороны управленческих процессов и гарантирует оптимальное использование бюджетных средств. Внутренний финансовый контроль оказывает влияние на организацию всей системы управления. Данные вопросы являются актуальными и для учреждений УИС. Описывается новая схема бюджетных полномочий по внутреннему финансовому аудиту, которая предполагает упрощение процедуры проверки качества осуществления внутреннего финансового контроля и больше увязана на оценке бюджетного риска, а также мониторинга качества финансового менеджмента. Авторами проведен анализ и систематизированы положительные и отрицательные качества привлеченных экспертов для проведения аудиторских мероприятий, основные принципы проведения аудиторских проверок экспертами и требования к привлечению экспертов в рамках внутреннего финансового аудита. Кроме того, разработан алгоритм проверки вопросов по достижению целей внутреннего финансового аудита при осуществлении аудиторских мероприятий. На основе анализа принятых федеральных стандартов разработан чек-лист по достижению целей внутреннего финансового аудита при осуществлении аудиторских процедур, что позволит снизить трудоемкость процесса внутреннего финансового аудита. Даются предложения по совершенствованию системы внутреннего контроля и аудита в учреждениях УИС и внесению изменений в ведомственные и локальные акты по этому вопросу. The article deals with the organization of the system of internal financial control and internal financial audit in institutions of the penitentiary system. In the public sector of the economy, in the context of a risk-based approach, the system of internal financial control is given increased attention. Internal financial control occupies a serious niche in the financial management system, allowing to identify weaknesses in management processes and guaranteeing optimal use of budget funds. Internal financial control affects the organization of the entire management system. These issues are also relevant for the institutions of the penitentiary system. A new scheme of budget powers for internal financial audit is described, which involves simplifying the procedure for checking the quality of internal financial control and is more linked to the assessment of budget risk, as well as monitoring the quality of financial management. The authors have analyzed and systematized the positive and negative qualities of the experts involved in conducting audit activities, the basic principles of conducting audits by experts, and the requirements for attracting experts in the framework of internal financial audit. In addition, an algorithm has been developed for checking issues related to achieving the goals of internal financial audit when performing audit activities. Based on the analysis of the adopted Federal standards, a checklist has been developed for achieving the goals of internal financial audit in the implementation of audit procedures, which will reduce the complexity of the internal financial audit process. Proposals have been made to improve the system of internal control and audit in the institutions of the penitentiary system and to make changes to departmental and local acts on this issue.

The concept of Public Internal Financial Control (PIFC) has been developed by the European Commission in order to provide a structured and operational model to assist national governments in reengineering their internal control environment and in particular to upgrade their public sector control systems in line with international standards and EU best practice. The democratic changes affecting all areas of life in the last years, have led to reforms in the management of public finances of the public sector in the Republic of Albania. On the road of the accession to the European Union, Albania is in the process of important conceptual, legislative and structural reform of the Public Internal Financial Control framework with the aim of strengthening the managerial accountability of the managers of public sector organizations and further develop independent internal audit. The paper aims to give some key issues regarding PIFC development in Albania such as: the level of transparency regarding the status of the financial management and control and internal audit in the public sector; the awareness of the Heads of public organizations about the importance of sound financial management and control and to enhance their managerial accountability; information about the self assessment of the heads of public sector organizations on the adequacy and the effectiveness of internal control and about the progress made. It also outlines the weaknesses, solutions and development opportunities based on the assessment of the status of the financial management and control systems as well as of the internal audit. Through conclusions it summarizes the main directions in which the Albanian institutions must be focused in the future for further development and improvement of management of public resources. The development of the new model of public internal financial control in Albania demands from all the participants in the process, leading to effective action in accordance with their roles and responsibilities. Only proper implementation of new legislation and efforts by all stakeholders can lead to achieving the goal - to create a modern system, reliable and functioning of public internal financial control. In this regard the CHU/FMC will outline specific measures related to strengthening managerial accountability and updating of legislation and methodology in the field of internal control in accordance with EU legislation and best practices. As one of the three pillars of the Public Internal Financial Control System, Internal Audit has developed and continuously improved in order to take its modern role as advisor for the assessment and systems and contributing to the achievement of strategic and operational objectives of the organization, always in accordance with international standards and best practices. DOI: 10.5901/ajis.2014.v3n4p301

The relevance. Optimization of the state’s regulatory and legal policy in the field of internal control and internal audit undoubtedly involves large-scale work in a risk-oriented environment, which is impossible without a chronological analysis of the development of the systems under consideration. What makes it difficult largely in the circumstances of an inter-sphere imbalance turns out to be the necessity to search for alternative ways of further development not only at the micro level, but also on the scale of the national economy as a whole. This makes financial market regulators, government structures, practitioners to study comprehensively the evolutionary transformations of both domestic internal control and audit, as well as foreign experience. The objective of the research is to analyse in the context of the historical development of such responsibility centers as internal control and internal audit. It is the chronological aspect, that becomes one of the most powerful resources for the development of qualitatively new tools to improve business efficiency, in the context of the ongoing ideological fatigue of the existing paradigm. The methodology is based on historical and chronological research, the method of modeling and systematisation. It is proved that a close correlation of the functions performed by the internal control system with the elements of corporate governance provides an enhanced impact due to the interchange between the methods, procedures, and technologies used in the implementation of managerial functions. The authors suggested the concept, that global triggers will lead to the subsequent prospects for the transformation of internal control, evident in transformations in regulation, unification of control systems. They will partly depend, first of all, on the further epidemiological situation (which has caused a severe disturbance in every sphere of public life), rapid development of IT technologies together with the escalation of information security threats, risks, as well as global geopolitical instability in general. Research results provided scales for the development of internal control for global and domestic control systems, which clearly correlate with the ongoing changes in economic systems.

The current business environment changes rapidly. The company must have a reliable internal control system in order to survive and highly competitiveness. This paper discusses about the important role of internal control in Accounting Information Systems. The study of literature is used in this paper. The author presents five old papers as an object of it.The author finds six important role of Internal Control System. The first is giving a great influenced on Accounting Information Systems which is computer-based, Internal Control Systems can prevent excessive resources within the company, Creating accountability of the financial reports, increasing the credibility and quality to the company, the management becomes easy to make the decision, and preventing the fraud. Accounting Information Systems which is computer based can’t do well without controlling from the management Keywords:Accounting Information System, Internal Control, The Important Role

The educational changes in the Romanian pre-university education system over the last ten years have required the creation of internal mechanisms, articulated through an internal managerial control system in order to improve and maintain performance in all the basic compartments of the school organization. The success and the performance of a educational organization is based on many factors that take into account the scholars progress, the professional training of professors, the curriculum, but also the manager’s style and strategies that he applies at an institutional level. Despite controversy and doubt, internal management control is seen as an indispensable tool in performance management of modern organizations. The reason for this consists in management control treating the present problem for all the typologies: that there is certainty in the fact that managers, alongside with professors achieve performances in the behalf of the organization. In order for the relationship between the manager of the institution and his personnel to remain favorable, it is normal that the management to measure and control the performance of his employees. The present paper aims to create an internal radiograph within a preschool education institution in order to hierarchize performance indicators and / or identify influential factors to be achieved in order to obtain a performing school environment (for children, teachers and the entity manager). The paper/research begins with a presentation of the theoretical concepts, followed by an empirical research that is based on qualitative methods, and uses as an instrument the interview (applied to teachers, heads of departments, managers). The paper ends with a series of proposals, conclusions that can be implemented in various educational organizations.

The article is of interest to internal control specialists who carry out their activities, both within the system of the Ministry of Defense of Ukraine and the Armed Forces of Ukraine, as well as in other bodies of state power, institutions and organizations of any form of ownership. Also, the results of the study will be useful to the audit team as a service that is directly involved in the process of assessing the effectiveness of the functioning of the internal control system. In the article, through review of normative legal documents, an analysis of the formation and functioning of the internal control system, both in the Ministry of Defense of Ukraine and the Armed Forces of Ukraine, as well as in the state as a whole, was conducted. The place and role of internal control in the general system of state internal financial control, in addition to the internal audit and the harmonization unit within the Ministry of Finance of Ukraine, have been established. The role of the main international standards of state internal control in the development of state internal financial control in Ukraine is determined. It is formulated that the system of internal control in the process of its functioning, like any other system, is exposed both by external and internal factors. The list of existing factors influencing the functioning of the internal control system through analysis in three directions is determined: analysis of the guidelines and the main international standards governing the functioning of the internal control system, the analysis of scientific articles, scientific works in the relevant field, interviewing with specialists of internal control of the Ministry of Defense of Ukraine. The above made it possible to distinguish external and internal factors in the context of the problems of this article. Internal and external factors have been investigated in the context of managed and unmanaged factors. The results of this research are the starting point for solving the scientific task of substantiating the scientific and methodical apparatus for assessing the effectiveness of the functioning of the internal control system in the system of the Ministry of Defense of Ukraine and the Armed Forces of Ukraine.

In condition of global financial crisis companies and investors pay greater and greater attention to the reliability of financial records.An efficient system of internal control (ICS) contributes significantly to this effect. The aim of the research is to consolidate theinternational experience in the sphere of the development and regulation of the system of internal control, to assess the feasibilityof its application to various Latvian enterprises, and to propose a conception and a model of realisation of ICS in medium and smallcompanies. According to the author, there are two main obstacles to the application of the studied theories relevant to the field ofinternal control in Latvia. The first one is the insufficiency of legislative framework, intended only for listed companies, and thesecond one is a start-up phase of business development, when the owner and top management are often combined in one and thesame person and, therefore, they may believe that all is under their control and there is no need to create a special system of control.The theoretical and methodological foundation of the research was derived from the study of a wide range of activities in the field ofcorporate management and internal control as well as provisions of regulatory and legislative acts defining the scope of requirementsto ICS. In order to achieve the set aim, several objectives were realised: the regulation of ICS in the area of corporate legislation ofthe USA and the EU was analysed; the conceptual principles and existing models of internal control were summarised; the conceptof development of the ICS for medium and small enterprises was formulated, and the necessity to introduce recommendations to thecurrently effective legislation of Latvia was substantiated.KEYWORDS: Internal control system (ICS), model COSO, regulation of EU corporate legislation, operation of ICS in small andmedium companies, non-public sector companies.

This study aimed to determine if internal audit control and integrity system were predictors of good governance. 325 teaching personnel of the Department of Education, Division of Tagum City were the respondents of this research. The statistical tools used were Mean, Pearson-r, and Regression Analysis. Quantitative non-experimental research utilizing correlational technique with regression analysis was the research design of this paper. Results revealed that the level of internal auditing in terms of risk management, internal control, and compliance and consulting was very high. The level of integrity system obtained a descriptive equivalent of very high in terms of strategic alliance, strategic planning, and fraud control. For the level of good governance, it obtained a very high level of results in terms of rule of law, responsiveness, transparency, and vision and mission. There was a positive significant relationship between internal audit control and integrity system to good governance. Overall, the two independent variables are predictors of good governance.

Outside the enterprise, internal control systems do not provide sufficient protection to investment decision makers from the possibility of great management fraud. However, the system of internal control is there to provide assurance for management of an enterprise that accounting information of an enterprise is reliable. Internal control systems, internal and external audit, never really had an exclusive task to protect an enterprise form fraud, or to protect the owner and wider public from management fraud. These days, especially, institutes for internal control and audit, are becoming modern management's instrument for running and managing business operations, and for permanent evaluation reliability of an enterprise. Internal control is a form of supervision of accounting and administrative controls, and something even more, it is a special value adding philosophy in an organization through its activities. Operational audit has exceeded internal audit. Operational audit is a widespread activity that is established to analyze organizational structure, internal control systems, and flow of a working process, wider evaluation reliability and management performance results. Operational audit is and instrument of business operations of an enterprise, management tool and its corrector. It measures the realization of an organization compared to its purpose and goals set. Operational audit deals with entire achievement of goals effectiveness of business procedures and internal control, performance of some managers and other non-financial aspects of business operations. Operational audit uses exceptional, special senses through logical auditing technique to realize the purpose of organizational goals, operations controlling processes, communication and information system.