Business Commons^™

Obstacles And Enablers For Employing Internal Control Practices Faced By Nonprofit Leaders, Tammy L. Holloway

Walden Dissertations and Doctoral Studies

Fraud has had disturbing effects which can hurt many nonprofits. Having weak practices can increase risk and invite perpetrators. Small nonprofit organizations are especially at risk. The research problem is that many small nonprofits do not employ strong practices within their organization, which leaves them open to fraud. The purpose of this qualitative case study was to explore the obstacles and enablers that leaders of small nonprofit organizations in the eastern United States face when employing proper internal control practices to protect the organization from fraud. Agency theory framed this study when examining agency problems that leaders face when employing …

A More Efficient And Effective Objective Measure Of Financial Disclosure Quality: Omissions Of Seven Key Financial Statement Variables, Ying Zhang

Dissertations - ALL

This dissertation research includes three Chapters. Chapter One proposes a new and simple measure of financial reporting quality. Chapter Two and Chapter Three apply this new measure to examine the association between financial reporting quality and firms' internal governance issues, such as internal control quality and a possible outcome of internal control weakness (ICW), financial restatements.In Chapter One of the thesis, I propose a parsimonious, theory-based and empirically-supported measure of missing variables, REPORT. Chen et al. (2015) proposes a measure of disclosure quality, DQ, based on missing financial statement variables. DQ includes hundreds of items and is complex to program. …

Forensic Investigation Of Fraud In Village Government Agencies: An Ethnographic Study In Indonesian, Khairul Shaleh, Gugus Irianto, Ali Djamhuri, Noval Adib

The Qualitative Report

The utilization of the Village Fund budget has resulted in many improvements in facilities and infrastructure for rural areas. Still, we cannot deny there is a misuse of the funding in some village governments. In this study, we aimed to understand how fraud occurs in village government institutions because there is a patron-client relationship in a bureaucratic environment. This research is an ethnographic study using data collection methods in the form of field observations, documenting files that have relevance for research, and in-depth interviews with informants by applying the snowball technique to obtain informants. The field findings show that the …

The Value Of Assurance Over Internal Controls: Evidence From Mergers And Acquisitions, Ryan Courtlin Cating

Graduate Theses and Dissertations

In this study, I examine the value of assurance over internal controls in the mergers and acquisitions setting. Specifically, I examine the how the existence of an internal control audit mandated under Section 404(b) of SOX affects information asymmetry as proxied for by the likelihood of a company becoming the target of an acquisition. I find that companies with internal control audits are significantly more likely to receive bids than their counterparts that do not have an internal control audit. Upon further investigation, I find that the mechanism by which companies are more likely to become the target of an …

Examining The Availability Of The Required Controlling Procedures That Obstruct The Logical And Physical Access To Ais: The Case Of The Listed Companies In The Pex, Zahran Daraghma

Journal of the Arab American University مجلة الجامعة العربية الامريكية للبحوث

This paper comes to examine the availability of the required controlling procedures that obstruct the logical and physical access threats that face the accounting information system (AIS) of the listed corporations in the Palestine Exchange; PEX: (industrial, service, banking and insurance sectors). Indeed, this study goes together with a specially designed questionnaire, used to answer the study questions. 280 questionnaires were distributed to the respondents (financial managers, accountants, internal auditors, computer employees and external auditors). 211 questionnaires, which statistically constitute (75.4%) of the study sample, were taken back. To achieve the previous objectives, a number of statistical methods have been …

Internal Business Control Systems In Small Puerto Rican Retail Businesses, Belma A. Borras

Walden Dissertations and Doctoral Studies

Small businesses' vulnerability to financial losses brought about by employee theft is higher than for larger organizations. Small business owners are concerned about occupational fraud, as the annual average loss from fraud for small business owners in the United States was $150,000 per incident. Grounded in the fraud triangle theory and COSO Internal Control Integrated Framework, the purpose of this quantitative correlational study was to examine the relationship between the degree of segregation of duties, attitude toward internal controls, and the internal control system in small gas and convenience stores in Puerto Rico. Data were collected from 129 small business …

Lenders' Influence On Borrower Firms' Internal Controls, Md Mahmudul Hasan

Open Access Theses & Dissertations

I identify a covenant in commercial loan contracts that requires borrowers to provide lenders internal control-related private information. Lenders use accounting information to monitor loan contracts and reliable accounting information is dependent on effective internal controls of the firm. I argue and provide evidence that lenders are more likely to demand internal control-related private information when borrowers have weak internal controls, when lenders use more accounting information in debt contracts, and when debt contracts have terms that expose lenders to greater risk. I further show that lenders' demand for internal control-related private information is positively associated with improvement in borrower …

The Effect Of Horizontal Inequity, Capacity For Budget Slack, And Severity Of Peer Overstatement On Managerial Reporting Behavior, Yiwen Li

Doctoral Dissertations

An ongoing stream of accounting research indicates that non-pecuniary factors significantly affect employees’ reporting behavior. This study investigates the behavioral effects of three non-pecuniary factors - horizontal pay inequity, capacity for budget slack, and severity of peer overstatement. The behaviors of interest are the employees’ level of honesty and whether or not they report a peer that is overstating.

In the experiment, participants acted as division managers who request funding from the owner of a fictitious company to produce certain parts. In each period, participants were paired with a different fictitious peer and were required to make two decisions under …

Teaching Internal Control Using A Student-Generated Video Project, Poh Sun Seow, Gary Pan

Research Collection School Of Accountancy

Educators consider the video learning approach an effective method to deliver educational content as compared to the traditional method of books and written materials. This paper presents a project that involves student-generated videos to learn internal control in an undergraduate accounting information systems course. We believe that this video learning approach is an engaging way for students to be self-directed learners in learning internal control and complements the written materials in the textbook. The survey results show that most of the respondents viewed the learning experience of the video project positively. The results also indicate that the video project helps …

Audit Committee Oversight Of Internal Control Over Financial Reporting, Andrea B. Weickgenannt

Doctor of Business Administration Dissertations

This study investigates the processes audit committees employ to fulfill their obligation to oversee internal control over financial reporting (ICFR). Specifically, I explore audit committee processes within five fundamental internal control components: control environment, risk assessment, control activities, information and communication, and monitoring (COSO, 2013). I consider agency theory and institutional theory, investigating the degree of substantive versus ceremonial processes used by audit committees. Additionally, this study considers comfort theory as it reveals details about how audit committees get “comfortable” with ICFR.

The research questions in this study are examined through a cross-sectional survey of 167 public company audit committee …

Internal Control And Operational Efficiency, Qiang Cheng, Beng Wee Goh, Jae Bum Kim

Research Collection School Of Accountancy

We examine whether effective internal control over financial reporting has implications beyond that of financial reporting to firm operational efficiency. We predict and find that operational efficiency, derived from frontier analysis, is significantly lower among firms disclosing material weaknesses in internal control relative to firms with effective control. This result exists even in the years leading up to the disclosure of material weaknesses, but disappears after remediation of the internal control problems, suggesting that the remediation of material weaknesses improves operational efficiency. Overall, our study extends the literature on the reporting effects of strong versus weak internal control, and helps …

Effective Internal Controls For Recognizing Contracting Revenues, Antonio Ghaleb

Walden Dissertations and Doctoral Studies

Business leaders of contracting companies in Qatar struggle to develop appropriate internal controls over revenue estimates to mitigate the risk of financial statement manipulation. Grounded in the internal control framework of the Committee of Sponsoring Organizations of the Treadway Commission, the purpose of this multiple case study was to explore strategies that business leaders responsible for financial reporting use to develop and implement effective internal controls for recognizing contracting revenues. Nine participants from 3 private contracting companies in Qatar who had implemented strategies to develop and implement effective internal controls for recognizing contracting revenues participated in face-to-face semistructured interviews. Through …

Using Student-Generated Videos To Learn Internal Control In Accounting Information Systems Courses, Poh Sun Seow, Gary Pan

Research Collection School Of Accountancy

Educators consider the video learning approach an effective method to deliver educational content as compared to the traditional method of books and written materials. This paper presents a project that involves student-generated videos to learn internal control in an undergraduate accounting information systems course. We believe that this video learning approach is an engaging way for students to be self-directed learners in learning internal control and complements the written materials in the textbook. The survey results show that most of the respondents viewed the learning experience of the video project positively. The results also indicate that the video project was …

Applying The Theory Of Planned Behavior To Influence Auditors' Knowledge-Sharing Behavior, Xu Cheng

USF Tampa Graduate Theses and Dissertations

This study adopts the theory of planned behavior to understand and influence auditors’ knowledge-sharing behavior. Ajzen (1991) indicates that persuasive communications, such as belief-targeted messages, can be used as behavioral interventions to alter intentions and behaviors. Thus, this study develops and evaluates the effectiveness of behavioral interventions (belief-targeted messages) in encouraging auditors’ knowledge-sharing behavior. This study uses a 2×2 between-participants design. Arguments targeting behavioral beliefs and arguments targeting normative beliefs are manipulated. Consistent with expectations, the results of this study were that (1) auditors exposed to an intervention share more knowledge, compared to auditors not exposed to any interventions; (2) …

Audit Fee Discounting In The Post-Sox Environment, Albert Nagy, Benjamin W. Hoffman

2017 Faculty Bibliography

Purpose – This paper aims to investigate whether the expected implementation of Section 404(b) of the Sarbanes-Oxley Act (SOX 404(b)) (the integrated audit requirement) caused auditors to discount their audit fees for non-accelerated filers in anticipation of expected increased future economic rents (DeAngelo, 1981) from those clients.

Design/methodology/approach – This paper predicts that auditors charged their non-accelerated filer clients lower audit fees during the years 2005-2007 (in anticipation of increased expected future economic rents from the implementation of the SOX 404(b) requirement) compared with the years 2010- 2012 (when it had been determined that non-accelerated filers were permanently exempt from …

Internal Control Opinion Shopping And Audit Market Competition, Nathan J. Newton, Julie Persellin, Dechun Wang, Michael S. Wilkins

School of Business Faculty Research

This study examines whether audit clients engage in internal control opinion shopping activities and whether audit market competition appears to facilitate those activities. Regulators have long been concerned about the impact of both audit market competition and opinion shopping on audit quality. We adopt the framework developed in Lennox (2000) to construct a proxy to measure the tendency that clients engage in internal control opinion shopping activities. Our empirical results suggest that clients are successful in shopping for clean internal control opinions. In addition, we find evidence that successful internal control opinion shopping occurs primarily in competitive audit markets. Finally, …

Ipo Firms' Voluntary Compliance With Sox 404 As Evidence On The Value Relevance Of Internal Control Quality, Qianyun Huang, Kimberly Gleason, Leonard Rosenthal, Deborah Smith

Business Faculty Publications

Newly public firms are not required to comply with SOX 404 for their initial public offerings. This provides a unique setting in which to investigate the benefits of voluntary disclosure with SOX 404 and the value of information revealed as a consequence of compliance. We investigate whether voluntary compliance with SOX 404, either fully or partially, impacts the perceived risk of firms conducting IPOs on the first day of trading (reflected in underpricing) or following the IPO. Our results indicate that neither full compliance with SOX 404 at the time of the IPO, nor a managerial discussion of internal controls …

Identifying Business Risk Factors Of Identity Theft, Robert K. Minniti

Walden Dissertations and Doctoral Studies

Businesses are under pressure to identify and control risks affecting profitability, including the risk of fraud. Identity theft, a type of fraud, costs businesses, governments, and individuals in excess of $56 billion a year. In order to develop good internal controls to help prevent and detect fraud, it is necessary to identify the risks to the business, but business owners are not always aware of what risk factors relate to identity theft. A nonexperimental research design formed the basis of this research study. The population for this study was data from all 50 U.S. states, represented via government databases maintained …

Internal Control And Operational Efficiency, Qiang Cheng, Beng Wee Goh, Jae Bum Kim

Research Collection School Of Accountancy

In this study, we examine whether and how internal control over financial reporting affects firm operational efficiency. We find that operational efficiency, derived from the frontier analysis, is significantly lower among firms with material weaknesses in internal control relative to firms without such weaknesses. We document some evidence suggesting that effective internal control leads to greater operational efficiency through reducing the likelihood of misappropriation of corporate resources and through enhancing the quality of internal reports for decision making. We also document that smaller firms benefit more from having effective internal control in terms of operational efficiency. In addition, we find …

Internal Control Opinion Shopping And Audit Market Competition, Nathan J. Newton, Julie Persellin, Dechun Wang, Michael S. Wilkins

Michael S Wilkins

This study examines whether audit clients engage in internal control opinion shopping activities and whether audit market competition appears to facilitate those activities. Regulators have long been concerned about the impact of both audit market competition and opinion shopping on audit quality. We adopt the framework developed in Lennox (2000) to construct a proxy to measure the tendency that clients engage in internal control opinion shopping activities. Our empirical results suggest that clients are successful in shopping for clean internal control opinions. In addition, we find evidence that successful internal control opinion shopping occurs primarily in competitive audit markets. Finally, …

Internal Control Opinion Shopping And Audit Market Competition, Nathan J. Newton, Julie Persellin, Dechun Wang, Michael S. Wilkins

Michael S Wilkins

This study examines whether audit clients engage in internal control opinion shopping activities and whether audit market competition appears to facilitate those activities. Regulators have long been concerned about the impact of both audit market competition and opinion shopping on audit quality. We adopt the framework developed in Lennox (2000) to construct a proxy to measure the tendency that clients engage in internal control opinion shopping activities. Our empirical results suggest that clients are successful in shopping for clean internal control opinions. In addition, we find evidence that successful internal control opinion shopping occurs primarily in competitive audit markets. Finally, …

Moha Computer Services Limited: A Fraud Case, Srinivasan Ragothaman

Faculty Publications

This article describes the implementation of a “Fraud case study” in an undergraduate auditing class. The author developed an instructional case based on the financial statement fraud that occurred at Satyam Computer Services Limited (Satyam) in India. Satyam is the largest corporate fraud ($1.5 billion) in India that came to light in 2009. Ironically, Satyam in Sanskrit means “truth”. This teaching case exposes students to several auditing-related concepts: 1) corporate governance issues; 2) financial statement fraud; 3) fraud auditing (SAS No. 99); 4) ethical reasoning and utilitarian principles; 5) internal control evaluation (AS 5); and 6) regulation. This case is …

Presentation Of Dissertation: Material Weaknesses In Internal Control Over Compliance For Federal Grants To U.S. Counties, Julie Hyde

Faculty Works

No abstract provided.

San Diego Center For Children Audit Committee Handbook, San Diego Center For Children

Finance

2012 edition of the San Diego Center for Children's Audit Committee handbook.

San Diego Center For Children Finance Manual, San Diego Center For Children

Finance

2012 edition of the San Diego Center for Children's Finance Committee handbook.

An Investigation Of Internal Control Related Frauds And Auditor Litigation: Pre- And Post- Sarbanes-Oxley, Section 404, Ifeoma Udeh

Theses and Dissertations

Using 629 observations of U.S. publicly listed firms with internal control related frauds from 2000 to 2006; this study investigates the change in auditor litigations in the Post- Sarbanes Oxley, Section 404 period. To the extent the conditions of the internal control in place are inadequate or non-existent, the possibility of the occurrence of internal control related fraud heightens. Thus, the inability of auditors to detect a financial statement misstatement due to internal control fraud in a timely manner exposes auditors to litigation (Barra, 2010; Heninger, 2001; Caplan, 1999). This situation was prevalent in the recent notable corporate failures that …

The Effects Of Decision Aid Structural Restrictiveness On Decision-Making Outcomes, Poh Sun Seow

Research Collection School Of Accountancy

Decision aids are often designed to direct decision-makers' attention to potential problems or solutions prompted by the decision aid; but in most instances, it is impossible to prompt all possible issues that should be considered in making a decision. Decision aids can induce decision-making biases whereby users focus only on the issues identified by the decision aid and fail to adequately consider other issues that are not identified by the decision aid. The purpose of this study is to investigate whether restricting how users interact with computerized decision aids affects their performance by limiting their ability to consider other possible …

The Effect Of Internal Control Weakness Under Section 404 Of The Sarbanes-Oxley Act On Audit Fees, Jong-Hag Choi, Jeong-Bon Kim, Soo Young Kwon, Yoonseok Zang

Research Collection School Of Accountancy

In this paper, we investigate the effect of the enactment of the SarbanesOxleyAct (SOX) in 2002 on audit pricing, using a sample of 252 firms that received an “Ineffective” audit opinion and other firms that received cleanaudit opinion on the effectiveness of the internal control over financial reportingunder Section 404 of SOX. Our analyses show the following. First,we find that auditors charge significantly higher audit fees for all firms inthe post-SOX period than in the pre-SOX period. Second, we find that auditors’opinions on the weakness in internal control (WIC) are positively associatedwith audit fees, and that the positive association between …

Direct And Indirect Effects Of Internal Control Weakness And External Audit Effort On Accruals Quality: Evidence From A Unique Canadian Regulatory Setting, Hai Lu, Gordon D Richardson, Steven Salterio

Research Collection School Of Accountancy

Public disclosure about effectiveness of internal control systems is subject to much controversy in Canada, resulting in Canadian disclosures being made in Management Discussion and Analysis (MD&A). These disclosures are provided to investors without a definition of the weaknesses to be reported, without implementation effectiveness testing, no direct management certification and no external audit of such disclosures. Though the cost of such SOX North disclosures are lower than in the U.S setting, the credibility of these disclosures is far from assured, posing an important empirical issue for regulators interested in the cost versus benefit trade-off of various disclosure regimes. We …

Financial Management For Nonprofit Organizations: Father Joe's Village, Anna Plaster, Karen Pretzer, Simi Rush, Jim Stone

Finance

What started as a modest shelter for homeless families in downtown San Diego, has grown into Father Joe’s Villages (FJV), a multi-program, multi-dimensional approach to break the cycle of homelessness.

Since 1982, Fr. Joe’s Villages’ vision and mission reflect the aim the organization is determined to achieve within the communities it serves: to ensure that all neighbors in need will have access to food, housing, career development, healthcare, and education that will promote independence, self-sufficiency and fulfillment of one’s potential. To address these needs, FJV provides short and long term transitional housing for homeless men, women and families, and offers …