Internal control of enterprise

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.

On the basis of determining the basic objectives of enterprise internal accounting control, we should divide and design the specific objectives of enterprise internal accounting control according to the level of corporate governance structure and the content level of enterprise internal accounting control objectives, so as to implement the requirements of enterprise internal accounting control system concretely. As the third information technology revolution after personal computer and Internet technology, cloud computing's brand-new business model and concept have a profound impact on the production and operation activities of enterprises. To realize the internal accounting control of enterprises, it is necessary to construct the internal accounting control objectives correctly and reasonably, and carry out hierarchical design according to the relationship between powers and responsibilities in the corporate governance structure and the contents of the internal accounting control objectives. This paper analyzes the concept of cloud computing, its influence on the internal control of enterprises, and how to realize the internal control in the cloud computing environment, and puts forward the methods and strategies for the objective construction and hierarchical design of the internal accounting control of enterprises.

<p>Internal auditing is crucial for evaluating and improving internal control processes within government entities. Its primary objective is to assess the effectiveness and efficiency of internal controls, risk management, and governance processes. By identifying weaknesses and suggesting improvements, internal auditors contribute to better resource utilization and accountability. Internal audits can be conducted at various levels within the government, including central agencies, ministries, departments, or individual entities. This allows for a comprehensive examination of different aspects of government operations. Supreme Audit Institutions (SAIs) are independent governmental bodies responsible for conducting external audits of public sector entities. They assess the effectiveness and efficiency of financial management, compliance with laws and regulations, and the overall stewardship of public resources. While internal auditors focus on assessing internal controls and ensuring the reliability of financial information, SAIs provide an external perspective on the quality and impact of internal auditing within government entities. This collaboration helps promote good governance, transparency, and accountability in the use of public resources. A robust control system, which includes internal control, risk management, and audit functions, is essential for good governance. It helps safeguard public funds and maintain public trust. Adopting a risk-based approach to integrity and implementing targeted controls can enhance efficiency and effectiveness in resource utilization. Collaboration with citizens, the media, and non-governmental organizations further strengthens the functioning of the control system. This engagement enhances transparency and accountability and ensures that the government is responsive to the needs and concerns of the public. Internal and external auditing by SAIs are vital components of the public financial management system. They work together to assess and improve government operations, enhance accountability, and ensure the efficient use of public resources, ultimately contributing to good governance. In Sierra Leone, SAIs is likened to Audit Service Sierra Leone (ASSL). The concurrent triangulation approach is a specific mixed methods model used in this study. The research findings reveal that the internal audit department of the University of Sierra Leone is not adequately resourced to perform its functions effectively. However, segregation of duties and access to information is maintained but requires a functional audit committee, an increased number of competent auditors, and auditing software.</p><p><strong>JEL:</strong> H83, M42, H11, H72, H76, K42, O17</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0771/a.php" alt="Hit counter" /></p>

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

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.

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 internal audit function focuses on detecting tampering that may occur in government units and enterprises, as well as identifying weaknesses and gaps that the employees of those government units and enterprises suffer from, and then addressing them by to give a neutral technical opinion. This control function of internal audit will increase its effectiveness in the case of construction. The system of tight internal control for the purpose of improving the efficiency of the outputs of the government accounting system. One of the most important results of the research was the lack of application of local and international internal auditing standards and the weakness of the internal control systems in the centrally funded government units, which contributes to the weakness of the efficiency of the outputs of the auditing agencies and a material shortage of internal control, which in turn will be reflected in the weakness of the outputs of the government accounting system. The researcher reached a set of recommendations, the most important of which is the need to implement local and international internal auditing standards in government units funded centrally in order to raise the efficiency of internal auditing agencies, develop and improve the internal control system, and develop its human cadres, which contributes positively to raising the efficiency of control work in these government units.

Relevance. The role of internal audit in the entity's governance structure is constantly evolving. For a variety of reasons, internal auditors engage in an in-depth analysis of business processes to help ensure that these processes are working properly and effectively. One reason is that advanced entities expect internal auditors not only to verify compliance with laws and procedures, but also to suggest ways to make internal control more effective. However, often internal auditors in entities do not perform the function they could and should perform. They focus on tax matters, financial statements, and assess compliance with procedures. Internal auditors are sent where problems arise to play the role of auditors to detect errors and report blame. In some entities, internal auditors are separated from business or operational problems, leaving them with the traditional function of verification [Daujotaitė et.al. (2015), Tarptautiniai vidaus audito profesinės praktikos standartai (2004), Rupsys et.al. (2007), Lakis (2017)]. Scientists investigate internal audit from different angles, highlighting issues in the design and implementation stages of internal audit. Recently, the scientific literature has increasingly focused on the quality of internal audit and its evaluation. The collapse of banks also contributed to this, although in 2007 Bank SNORAS Internal Audit was awarded the title of Oldest Internal Audit Service by the Lithuanian Association of Internal Auditors. Although it is believed that poor quality audit is only due to insufficient qualification and professionalism of the auditor, this view can be negated by the list of factors determining the internal audit environment [Lakis (2007), Lietuvos Respublikos vidaus kontrolės ir vidaus audito įstatymas (2002), Pickett (2011)].Modern performance and business management tools require employees to change their well-established work habits, but internal audit is still associated with the function of verifier for many managers and internal auditors themselves. The speed of adapting to changes in the environment depends on the success of operations and business, which requires managers to have a modern approach to their internal audit function.Research aim: Identify and evaluate the determinants of the internal audit environment. Research methods: Systemic analysis of scientific literature and legislation and questionnaire survey. Research results and conclusions: Systematic analysis of the literature suggests that the following key factors exist in the internal audit environment: the legislative environment; regulatory enactments; business practices in the region. The first two factors are otherwise known as legal regulation. It should be noted that there are significant differences in the legal level of audit regulation between external, public and internal auditing. Most of the regulations are for external audit, and least for internal audit. An analysis of the legal literature and regulatory documents on internal audit suggests that only the public sector and, to some extent, commercial banks are required to comply with statutory and regulatory requirements that are binding on them. The activities of private sector internal auditors are not regulated by law, the functions of internal auditors are determined by the managers of the entity in which they work, and the standards are purely advisory.The beginning of the establishment of internal audit in Lithuania is considered to be 1995, when the Board of the Bank of Lithuania approved the Procedure of the Internal Audit of Commercial Banks and obligated commercial banks to establish internal audit services. The development of internal audit in the Lithuanian public sector was started only in 2000. In accordance with the 2000 February 7th Government of the Republic of Lithuania resolution no.127 On Internal Audit of State-owned Enterprises and Institutions, internal audit units or positions have been established within public institutions. 2002 January 1st this resolution was replaced by the Republic of Lithuania Law on Internal Control and Internal Audit.International Standards on Internal Auditing that set out the principles for conducting internal auditing are applied worldwide. The standards themselves are fairly generalized, setting only basic requirements and guidelines, as TVAI seeks to have the standards adopted by the widest possible audience. The Internship Regulations provide interpretations and more detailed explanations of the Standards of Professional Practice in Internal Auditing. Standardization and other supporting materials include methodological literature, studies and reviews, books, seminars, conferences and more.A systematic analysis of the literature indicates that sufficient legislation and regulations have been adopted, which has a positive impact on the internal audit environment.In order to assess the impact of business practices in the region on the internal audit environment, a questionnaire survey was conducted among the employees of the entities. It showed that a manager's attitude towards internal audit is strongly influenced by his education. Internal audit is acceptable to higher education managers because they are more open to change and open to change. Educated executives enable the internal auditor to be qualified and understand that internal audit requires an appropriate amount of knowledge. Respondents were also asked about their views on the internal audit process. When employees are not hostile to auditing and evaluating their work, it positively affects the internal audit environment, enabling internal auditors to play the role they would like to have in the company.

The study examines the cooperation between internal and external auditors in discharging duties and upholding organizational objectives. The aim is to know how the internal auditor relates with the external auditor once appointed and especially during the process of carrying out his/her duties. To achieve this primary data was collected through face-to-face interview from Mike Ukueje & Co. which is the case study of this research. The result showed that both the internal auditor and external auditor work in the interest of the organization through emphasis on the internal control system even though they are guided in their duties by the articles of association (internal auditor) and CAMA 2004 (external auditor). In the private sector external auditors are welcome whole heartedly by their internal counterpart, while in the public sector they are treated with suspicion and prejudice. For this reason it is advisable to enlighten the public sector more on the responsibilities of the external auditor.

Purpose: The paper examines the effectiveness of internal control systems, explores the exposure of Spanish banks to the dangers of default as a result of internal control systems and establishes a relationship between internal controls and credit risk. Design/Methodology/Approach: Quantitative research approach is used to test hypotheses on the relationship between internal controls and credit risk among listed banks in Spain. Data from Bankscope and company websites from 2004-2013 were used. Generalized Least Squares (random effect) econometric estimation technique was used for the model. Findings: We find that internal control systems are in place but their effectiveness cannot be guaranteed. This exposes Spanish listed banks to serious default situations. There is significant effect of internal controls on credit risk especially the control environment, risk management, control activities and monitoring. The non-disclosure of material internal control weakness is a contributory factor to the ineffective internal control systems. There is however a perceived board ineffectiveness which does not augur well for effective internal control systems. Board characteristics for Spanish banks confirm the agency theory. Research Limitations and Implications: Data unavailability for certain years, variables and many inactive banks did not permit a larger sample size than expected. The use of quantitative variables lacks flexibility. Practical Implications: Bank management will find the work useful to ensure strict enforcement of internal control mechanisms and see it as both credit risk and operational risk issues. Central bank should hurry to compel banks to disclose material internal control weakness as provided in the reviewed COSO framework. Social Implications: Ineffective internal controls lead to credit risks, bank closure and loss of investments. Society suffers a lot from such losses and contagion. Disclosure of material internal control weakness is a social responsibility of banks. Originality/Value: The authors are yet to come across the use of purely quantitative variables to model the effect of elements of internal controls on credit risk. This study opens and adds a new dimension of internal controls not only to be seen as operational risk issue but also credit risk.

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.

The level of development of state control points to systemic problems of state administration and affects the state of economic security in the region. The author conducted a study of the Russian practice of internal control and internal audit in the public sector. The functions of internal financial control duplicate the functions of line management for operational management. Internal financial audit means the audit of the financial and economic activities of the institution. Comparison with the provisions of conceptual documents and standards has made it possible to identify that internal financial control and internal financial audit does not fully correspond to the representations of these documents. The author substantiated the need to transform internal financial control in internal control, internal financial audit into internal audit. The author proposed to supplement with the specialization “Economic and legal support of economic security in the public sector” specialty 38.05.01 “Economic security”.

The Institute of Internal Auditors (IIA) argues that internal auditors often have a strong “employee” identity within their organization. While external auditors are concerned that this employee identity might negatively impact internal auditors' objectivity, the IIA argues this identity can actually be beneficial as employees may be more willing to share sensitive and audit-relevant information with the internal auditor than they would with the external auditor. Through an experiment relying on the social identity and organizational silence literatures, I test the prediction that non-audit employees will identify more highly with the internal than the external auditor and they will thus, be willing to share more information about internal control weaknesses with the internal than the external auditor. The results from a moderated mediation analysis support this prediction and also show the effect is stronger as the severity of the internal control weakness increases. Overall, this research informs external auditors and regulators about conditions under which the internal auditor may have an advantage over the external auditor in obtaining information that could help improve audit quality. It also informs managers about an important role played by their internal auditors that may result in increased quality of the internal control system while also potentially lowering audit fees.

This study develops and tests a moderated mediation model regarding the effectiveness of internal control structure on organizational ethical behaviors via the mediating role of internal control effectiveness and the moderating role of organizational mindfulness in the relationship between internal control structure and internal control effectiveness. The proposed model and its hypotheses were tested using partial least squares structural equation modeling (PLS-SEM) in SmartPLS3 with survey data from 540 large Vietnamese manufacturing and service firms. This study found the following: (1) The internal control structure positively affects internal control effectiveness, which in turn promotes ethical organizational behaviors; and (2) The effect of internal control structure on internal control effectiveness is amplified by strengthening organizational mindfulness. The findings demonstrate that combining internal control systems and organizational mindfulness contributes to the ethical business practices of firms in an emerging market. Our study bridges the gap in the literature on internal control and mindfulness by providing empirical evidence on how the interaction between organizational mindfulness and internal control systems can promote ethical business practices. Additionally, our study advances the current understanding of how internal control systems can interact with organizational mindfulness to influence ethical business practices in the context of an emerging market.