CONTROL ACTIVITIES AND FINANCIAL ACCOUNTABILITY LESSONS FROM THE NATIONAL GOVERNMENT CONSTITUENCIES DEVELOPMENT FUND IN KENYA

The objective of NG-CDF is to promote human and infrastructural development at the community and constituency levels. The aim of the study was to examine the effect of control activities on the financial accountability of NG-CDF funds in Kenya. The study was structured on; agency theory, fraud triangle theory, and accountability theory. Positivism research philosophy guided the study. A correlation research design was adopted. The target population of the study was 1160 respondents while the sample population was 288 respondents consisting of; 72 committee members, 72 sub-county accountants, 72 fund account managers, and 72 internal auditors. It was established that there exists a strong and positive association exists between control activities and financial accountability evidenced by; r = 0.718. Control activities were further established to have a significant effect on unsupported expenditure which was confirmed by β = 2.157, P-value 0.005. It was recommended that the NG-CDF management committee should strengthen the separation of duties and ensure that the stipulated guidelines for approval are followed at all times.JEL: G10, G20, G32  Article visualizations

Examining the Antecedents of Sarbanes-Oxley Section 404 IT Control Weaknesses: An Empirical Study

The current research draws on the agency theory, the IT governance literature, and the executive compensation literature to present a theory of the antecedents of IT control weaknesses as reported under Sections 404 of Sarbanes-Oxley Act. More specifically, this paper examines the association between two categories of governance mechanisms (IT governance mechanisms and IT executive incentive alignment mechanisms) and the disclosure of IT control weaknesses. As for the IT governance mechanisms, the study findings indicate that a lower likelihood of disclosing IT-related control weaknesses is associated with having IT executives with higher levels of structural and expert power and having audit committee and corporate governance committee members with IT expertise. As for the incentive alignment mechanisms, the results indicate that the lower the pay disparity between IT executives and business executives in the top management team, the lower the likelihood of disclosing IT controls weaknesses

Audit committee attendance and earnings management in Nigeria

Purpose- The aim of this study is to examine whether frequency of audit committee meetings and attendance in audit committee are associated with accrual earnings management.Design/methodology/approach- The sample of the study is 14 companies under the Industrial Goods sub-sector listed under the Nigerian Stock Exchange (NSE) for the years 2012-2014.Modified Jones Model (1995) was used to measure earnings management proxied by discretionary accruals. Findings- The findings show that frequency of audit committee meetings and attendance during the meetings negatively and significantly associated with discretionary accruals.Theoretical implications- This study extends the previous related literature by examining the association between audit committee meetings and attendance and earnings management.Practical implications- Regulators might use the findings of the study to regulate and further control the attendance of audit committee members during audit committee meetings.Originality/value- This paper uses agency theory to provide empirical evidence on the importance of frequent audit committee meetings and higher attendance in audit committee meetings

The impact of corporate governance and Islamic Shariah on internal controls over financial reporting : evidence from Jordan

This thesis examines the impact of corporate governance and compliance with Shariah on internal controls over financial reporting. Three research questions are asked and answered: (i) How do corporate governance structures affect a company’s internal financial reporting controls and the quality of its financial reports in Jordan?; (ii) What is the effect of Shariah-compliance on the same?; and (iii) How does Shariah-compliance moderate the relationship between corporate governance structures and internal reporting controls? Two theoretical frameworks – agency theory and Islamic theory – are used to interpret the findings. Generalised Method of Moments regression model with 94 listed Jordanian companies as a sample reveal the following findings. Board size, audit committee meetings, and Shariah-compliance have a negative impact on MWIC, i.e., material weaknesses in internal controls, defined as a reasonable possibility that a deficiency, or a combination of deficiencies, in internal control over financial reporting will not be prevented or detected on a timely basis. Second, board meetings and audit committee size are both negatively correlated to account-level weaknesses. Third, Shariah-compliance strengthens the effect of board size, audit committee size, and audit committee meetings, suggesting that Shariah-compliance and good corporate governance mechanisms reinforce each other to ensure higher-quality internal financial reporting controls. Further, deeper analyses show that report quality is positively correlated to board size, audit committee size, and Shariah-compliance, and negatively related to unitary leadership, where the same individual is both the chair and CEO. The findings of this study enrich the accounting and corporate governance literature with contributions to agency theory and Islamic theory. Additionally, the analyses provide empirical evidence of the links between corporate governance, internal controls, financial reporting, and Shariah-compliance in emerging markets. The insights revealed have implications for all financial policymakers, especially those in developing economies

Risk management committee, ownership structure and financial performance

The role of risk management committee (RMC) under the corporate governance consist of monitoring the risk strategies, policies and risk tolerance level as well as reviewing the sufficiency of risk management policies and framework. Risk management committee performs a very important function in the monitoring of the risk and internal control. Thus, the main objective of the study is to examine the effect of the existence of risk management committee on firm performance of companies listed in the Main Market of Bursa Malaysia. In addition, the study also examines the effect of ownership structure of director and family ownership on firm performance. ROA and ROE are used as proxy to measure the firm performance. Sample of the study is based on 20% companies in each industry excluding finance companies. Data were collected from 154companies in the financial year 2015.The study uses agency theory to predict the relationship. Descriptive analysis shows that only 18% of the sample companies have stand-alone risk management committee and 28% of the sample companies have joining risk management committee with other committees such as audit committee. The mean of family ownership is 21.93% and the mean of director ownership is 36.81%. The regression analysis revealed that there is no significant relationship between the existence of risk management committee, family ownership and director ownership with firm performance. In addition, the result indicates that only board composition, the control variable has significant negative relationship with firm performance

IMPLIKASI TEORI AKUNTANSI POSITIF DAN TEORI KEAGENAN DALAM PRAKTIK MANAJEMEN LABA

The purpose of this study is to test positive accounting theory by analyzing the effect of audit committees, independent commissioners on earnings management through debt hyphothesis testing, bonus motivation on earnings management, by adding the firm size variable as a control variable on earnings management in banking companies listed on the Indonesia Stock Exchange 2015-2020. The results of the study confirm that the independent commissioners partially have a significant influence on earnings management. The audit committee has a significant effect on earnings management and bonus motivation has no effect on earnings management and debt motivation has no effect on earnings management. While the firm size variable has no effect on earnings management. Simultaneously independent commissioners, audit committee, bonus motivation, and firm size have a significant effect on earnings management. This findings indicates that the motivation developed in positive accounting theory in earnings management

Pengendalian Internal Pada Perusahaan Start Up

Internal Control System is one of the tools for management to control all operational activities in line to achieve ultimate goals. As a start-up company, internal control is a must. This research conduct to analyzes internal control systems in handling inventory of vegetables and fruit-based on COSO (Committee of Sponsoring Organization) theory. This type of research is a qualitative descriptive approach. Data is obtained through interviews with informants.  The results showed that the company has largely implemented internal controls on vegetable and fruit inventory that according to internal control standards according to COSO. But, it is not fully implemented for environmental control and supervision activities

The Relationship Between the Risk Disclosure and Risk Management Committee on Banks Value: Empirical Evidence From Jordan

Purpose: Government levels may better fulfill the expanding expectations for public service governance, performance management, and accountability with the use of risk management backed by an integrated management accounting and control system. To explain how the risk management committee and risk disclosure affect bank value, this paper draws on agency theory and signaling theory, by using the market to book ratio (MTBR) to measure bank value.   Theoretical Framework: This article explains how the characteristics of risk management committees (RMCC) (size, independence, qualifications, meetings, executive membership, expertise, and dual membership) and voluntary risk disclosure influence each other on the value of Jordanian banks from 2014-2021.   Design/methodology/approach: The descriptive statistics of risk disclosure practices were calculated by the study sample using data from 18 banks collected between 2014 and 2021. The study variables' observations have an unbalanced distribution as well. 120 observations across all study variables are included in this paper. To calculate the bank value in this study, we use the Market to Book Ratio (MTBR). The regression analysis employed the multiple regression model.   Findings: The results indicate that risk management committee qualifications in accounting or finance significantly negatively affect bank value, while other variables  have a significant impact on the value of Jordanian banks, such as risk management committee expertise, risk management committee dual membership with the compensation committee, risk management committee independence, and executive membership in the composition of the risk management committee.   Originality/value:  This paper provides new empirical evidence in financial and accounting literature regarding the effect of the RMCC characteristics on Jordanian banks' value. Also, The main contribution of the paper is the discovery that the influence of an RMCC tends to encourage more disclosure of risk management to minimize risks

Application of Hidden Markov Model to locate soccer robots

© 2015 Technical Committee on Control Theory, Chinese Association of Automation. This paper adopts a Hidden Markov Model as a basis for predicting the probabilities in location of soccer robot's trajectories, develops the corresponding algorithms, and then demonstrates the simplicity of the procedure with simulations. The purpose of the initial presentation is to establish a proper platform for the future comprehensive studies of using Hidden Markov Models to assemble critical observations with uncertainties or random measurement errors in stochastic system modelling and control

Investigating the Relationship between Governance Mechanisms and the Disclosure of IT Control Weaknesses

The current research is concerned with exploring the quality of information technology (IT) control over financial reporting systems as reported under Section 404 of the Sarbanes-Oxley Act of 2002. More specifically, this dissertation examines the association between organizational governance mechanisms and the occurrence and subsequent disclosure of IT control weaknesses. Despite the adverse impact of IT control weaknesses on internal control quality and financial reporting reliability, research on IT controls in general and IT control weaknesses in particular remains largely anecdotal with limited reliance on theory. The current work proposes and tests an integrated theoretical model of the antecedents of IT control weaknesses. The proposed model draws upon agency theory to provide a theoretical perspective of the occurrence of IT control weaknesses and upon corporate governance literature to solicit potential factors that influence the achievement of effective IT control over financial reporting. Drawing upon agency theory, this research views the existence of IT control weaknesses as a manifestation of an agency problem caused by information asymmetry and lack of alignment between the overall organization represented by its board of directors as a principal and its information systems (IS) organization represented by the top IS team as an agent. Drawing on corporate governance literature, this dissertation proposes two categories of governance and contracting mechanisms that the board of directors can employ to reduce information asymmetry and align the interests of the top IS team with those of the firm thereby reducing the agency problem. These categories are: IT governance mechanisms and IT executive incentive alignment mechanisms. The IT governance mechanisms involve two elements: first, the IT background element which includes (a) the IT background of the board of directors as reflected by two of its main committees, namely the corporate governance committee and the audit committee and (b) the IT background of the top management team; second, the IT executive element as reflected in terms of the structural and the expert power of the Chief Information Officer (CIO). The IT executive incentive alignment mechanisms include two elements: (a) the CIO’s absolute compensation level and (b) the pay disparity between the CIO and other members of the top management team. A research model integrating these elements is developed and tested with empirical data. For testing the proposed model, this dissertation uses a sample of firms with IT control weaknesses and a control group of similar firms with no IT control weaknesses for the years 2005-2009. Empirical results provide support for five of the seven hypotheses put forth in this research. Regarding the IT governance mechanisms, study findings indicate that a lower likelihood of disclosing IT-related control weaknesses is associated with having audit committee and corporate governance committee members with IT expertise. Furthermore, the study findings provide support for the contention that the goal congruence is contingent on the CIO’s power. To this end, the study finds that a lower likelihood of disclosing IT-related control weaknesses is associated with having CIOs with higher levels of structural and expert power. As for the incentive alignment mechanisms, empirical results provide support for the assertion that goal congruence is contingent on perceived pay equality between the CIO and other members of the top management team. The results indicate that the lower the pay disparity between IT executives and business executives in the top management team, the lower the likelihood of disclosing IT control weaknesses. The present study contributes to the current body of knowledge of literature in several ways. It is the first study to propose and test an integrated model of the antecedents of IT control weaknesses. The proposed model adds to the current literature by introducing agency theory as a theoretical basis of the antecedents of IT control weaknesses. Furthermore, this study adds to the current literature by introducing and providing empirical evidence linking the IT background of the corporate governance committee, the structural power and expert power of the CIO, and the CIO relative pay to the disclosure of IT control weaknesses over financial reporting. Lastly, this research contributes to practice by offering a much needed understanding for managers, directors, auditors, and regulators in their effort to improve the quality of IT control and the reliability of financial reporting