This study aims to analyze the role of the internal control system in supporting external auditors in providing reasonable assurance regarding the fair presentation of financial statements. The reliability of financial statements is highly influenced by the effectiveness of the internal control system implemented by an entity, as such a system functions to minimize the risk of errors and fraud that may affect the quality of financial information. This study adopts a descriptive qualitative approach using a library research method. The findings indicate that an internal control system designed and implemented based on the COSO framework enhances the effectiveness of internal controls, improves the reliability of financial reporting, and reduces the risk of material misstatements. Furthermore, an effective internal audit function serves as a bridge between the internal control system and the external audit process. In accordance with International Standard on Auditing (ISA) 610, external auditors may rely on the work of internal auditors to modify the nature, timing, and extent of audit procedures, thereby improving audit efficiency without compromising the quality of audit evidence obtained. The study also reveals that effective internal controls are positively associated with the quality of external audit opinions. Companies with strong internal control systems are more likely to receive unmodified audit opinions, whereas deficiencies in internal controls increase the risk of material misstatements that may lead to modified audit opinions. Therefore, the relationship among internal control systems, internal audit, and external audit is synergistic in enhancing financial reporting quality, improving audit efficiency, and fostering the continuous improvement of internal control systems.
The purpose of an internal audit in the banking system is to assess the effectiveness
of internal control and the compliance of operational directions with regulatory
standards. Here, the importance of internal control policies is emphasized, which are
used to protect bank assets, prevent fraud, and ensure accurate financial reporting.
Traditionally, internal auditors assess the adequacy and effectiveness of this control and,
if necessary, suggest improvements. However, currently, assessments of the resulting
activities of internal audit are also emphasized. In this regard, research questions arise
about how the resulting activities of internal audit in commercial banks will be
recognized, how they will become measurable in the banking system, and how they will
be managed by corporate governance. The answers to these questions were presented in
the research by formulating the results of the progress of internal audit activities,
assessing the actual achievements of key results of banking activities as a result of the
impact of internal audit, and recording deviations of actual achievements from the goals
set for key indicators of progress. As a final result of the research, the proposal of a valuecreating index by internal audit was presented, which creates an opportunity to assess the reduction of cybersecurity risks as a result of audit activities, the protection of bank
assets, the degree of consistency with ESG principles, the implementation of corporate
social responsibility by commercial banks, and the growth of the reputation of the
banking business.
Liana Grigoryan, Armen Tshughuryan, Julieta Kalashyan· Messenger of Armenian State...· 0 citations
This study investigates the significant influence of internal audit on the internal control of cash receipts, highlighting its crucial role in enhancing company development. Effective internal control over cash not only boosts the company's growth but also minimizes the chances of errors and fraud. The primary objective is to understand how internal audits function, the current state of internal cash receipt controls, and the impact of internal audits on these controls. Utilizing a descriptive quantitative approach, the research collects data through questionnaires distributed to thirty individuals. The statistical methods employed include correlation analysis, simple linear regression, and coefficient of determination analysis, following validity and reliability testing of the data. Findings indicate that both internal audit and sales internal control possess fairly good average values. The simple linear regression shows that internal audit does indeed affect internal control. It reveals that internal audit significantly contributes to the effectiveness of cash receipt control, while a portion remains influenced by factors like underutilized human resources and incomplete procedures. The novelty of this research lies in its specific focus on the food and beverage distribution sector, revealing how targeted internal audits can systematically enhance cash receipt controls unique to this industry. The implications suggest that strengthening internal audit practices could lead to substantial improvements in cash management and overall organizational efficiency.
Enur Halimah, R. Kumalasari· Acman: Accounting and Manage...· 0 citations
This study aims to examine the effects of audit risk, operational complexity, and internal control systems on audit quality. High audit risk and increasingly complex business operations present significant challenges for auditors in obtaining sufficient and appropriate audit evidence, while effective internal control systems are expected to improve the reliability of financial reporting and support higher-quality audit outcomes. A quantitative research approach with an explanatory design was employed. Secondary data were collected from annual reports and audited financial statements of companies listed on the Indonesia Stock Exchange during the 2020–2024 period. The sample was selected using purposive sampling based on predetermined criteria. Data analysis was conducted using descriptive statistics, classical assumption tests, multiple linear regression analysis, t-tests, F-tests, and the coefficient of determination. The findings indicate that audit risk has a significant negative effect on audit quality, suggesting that higher audit risk increases the likelihood of material misstatements and reduces audit effectiveness. Operational complexity also has a significant negative effect on audit quality because diversified business activities require broader audit procedures and greater professional judgment. Conversely, internal control systems have a significant positive effect on audit quality by improving the reliability of financial information and reducing control risk. Furthermore, audit risk, operational complexity, and internal control systems simultaneously have a significant influence on audit quality. These findings highlight the importance of comprehensive risk assessment, effective internal control implementation, and appropriate audit planning in enhancing audit quality. The study contributes to the auditing literature by providing empirical evidence regarding the combined effects of organizational and audit-related factors on audit quality in publicly listed companies.
S. Sukmono· International journal of man...· 0 citations
This study aims to demonstrate the impact of implementing continuous auditing on the key qualitative characteristics of financial information, and the resulting increase in confidence regarding business reporting information, achieved by shifting from traditional financial statement auditing to continuous auditing.
A number of findings were reached, most notably that continuous auditing plays a role in supporting and achieving the quality of "relevance" in electronically published financial reports. It does so by facilitating timely access to information and providing users with significant predictive value at the appropriate time. Furthermore, continuous auditing contributes to enhancing the reliability and credibility of these reports by fostering confidence in the real-time corporate disclosures made via the Internet, and ensuring the production of accurate, reliable, and trustworthy financial information. Accordingly, the study concluded with a set of recommendations, most notably: the need for public and private entities that publish their financial statements electronically to adopt a continuous auditing approach as the basis for auditing those statements; the necessity of mandating that audit firms and offices conduct continuous audits; and the need to qualify auditors for these tasks by organizing—and requiring attendance at—training courses to keep pace with significant technological developments in the modern business environment.
Rafiq Abdul-Razzaq Muhammad Al-Quraishi· International Journal of Adv...· 0 citations
Digital transformation has increased the complexity of fraud risks within organizations, necessitating a more adaptive and integrated internal control system. This study aims to analyze the integration of internal audit, electronic audit, and audit governance in improving the effectiveness of internal control and mitigating fraud risks. This study uses a Systematic Literature Review (SLR) approach by analyzing various scientific literature relevant to the research topic. The results show that independent internal audit, the use of electronic audit technologies such as Big Data Analytics and Blockchain, and audit governance through Whistleblowing Systems and AI Governance have a synergistic relationship in strengthening organizational oversight systems. The integration of these three aspects can improve the effectiveness of fraud detection, maintain the integrity of audit data, and strengthen organizational transparency and accountability. This study provides a conceptual contribution in the form of a digital-based integrated oversight model as a strategy for strengthening internal control in the era of digital transformation.
In the context of digital transformation, sanctions pressure and increased requirements for business transparency, audit organization issues are of strategic importance. Any audit today is not just an element of control, but an essential management tool that allows you to timely identify risks and weaknesses, increase the efficiency of processes, and ensure compliance with legislation.
The article provides a comparative analysis of two main models - the creation of its own internal audit service (full-time employees) and the involvement of an external audit company (outsourcing).
Key criteria were identified for choosing the optimal form depending on the size of the enterprise, the specifics of the activity, financial capabilities and strategic goals. Particular attention is paid to a comparative analysis of the economic efficiency, objectivity and independence of audit assessments, confidentiality of information and response to incidents. Recommendations are proposed on the choice of the form of organization of internal audit aimed at increasing the stability and competitiveness of the business entity.
O. Ermishina, Arkadiy Boyko, Egor Smirnov· Journal of Monetary Economic...· 0 citations
