Research proposal paper on internal control

Research problem

Management responsibility for establishing adequate systems of internal control is emphasized, but it is acknowledged that the auditor must plan the audit to provide a 'reasonable expectation' of detecting material mis-statements.  Internal control systems are emerging as public objects of regulatory attention in a way that they were not before. Concepts of internal control have been debated and defined. So the changes in the financial services sector are more complex than merely requiring auditors to be explicit about what they have always done anyway (Ijiri 1993). The external auditor is located in a new space of programmatic expectations with the risks and rewards that this entails. The audit explosion is to do with the need to install a publicly auditable self-inspecting capacity which attempts to link ideals of accountability to those of self-learning. The rise of internal control as the auditable object has also made the role of internal auditors more visible and has re-opened debates about optimal balances between internal and external arrangements for assurance which may trade off competence and proximity against independence. The development of sampling procedures for auditing seems on the surface to be unproblematic. To recap the official story, as businesses grew in size so did the number of transactions they conducted. Auditors quickly realized that they could not audit, except in the most superficial manner, every transaction. The audit would simply be too expensive. Furthermore, there was no need to look at all transactions if the company itself was engaged in a process of self-checking through its own internal control system (Power 1997). This paper is a proposal on the study of how a company reaches a good performance through a good internal control.

 

Importance of the research

The proposed research will help in understating how internal control helps a firm achieve a good financial performance. The proposed research will help in understanding the importance of systems such as internal control. Moreover the proposed research will help in describing how a firm achieves a good financial performance.

 

Literature Review

Taking a longer-term perspective of the financial performance as suggested, under the profit-conscious style, may institutionalize a level of tolerance by the superior. For example, smoothing the accounting record over successive time periods may be acceptable under this style as long as they are not systematic and recurring. Apparent reliance on financial performance measures encourages subordinates to indulge in dysfunctional behavior to attain targets. Superiors tolerate the subordinate actions as they are dependent on their own need to avoid embarrassment and threat (Neely 2002). Perception by subordinates of the level of tolerance shown by superiors provides guidelines of future acceptable actions and thereby weakens the superior's ability to question or investigate. Hence, the circularity of implicit tolerance enables perennial dysfunctional behavior to occur. The acceptability of manipulations may only be broken by specific corporate policies, for example to prevent fraud or by the replacement of a superior with different values and tolerance levels. The non-neutrality long established with an over-reliance on financial performance measures may therefore extend to superior tolerance which implicitly reinforces subordinate dysfunctional behavior. The levels of tolerance and range of judgments superiors are just one way in which the charade of accountability by means of financial performance attainment is allowed to perpetuate. However, the approach is unlikely to lead to learning organizations or adventurous target setting or innovative management (Krausz & Pava 1995). Financial performance based on internal control systems rely on a rigorous analysis of financial records and analysis of circumstances within a firm.

 

Methodology

Sample collection

To determine the number of respondents that will be asked to participate and give information regarding the study convenience sampling will be used. Convenience sampling means to collect or interview individuals who actually experience the phenomenon. Convenience sampling will focus on individuals that experienced diabetes mellitus or has someone in the family that experienced such disease.

 

Methodology/Data Collection

Primary and secondary sources of data would be used for the study. Surveys will the primary method of data collection.  Internet surveys would be the primary source of data. Internet surveys have been both hyped for their capabilities and criticized for the security issues it brings. Internet surveys would also require less time for the researchers and the respondents.  Secondary source of data would involve the use of books and journals.

Data Analysis

            In analyzing the collected data, the paper will be divided into the demographic profiles of the respondents and the ideas of respondents. The data that will be acquired will be put into graphs and tables.

 

References

Ijiri, Y 1993, Creative and innovative approaches to the science

of management, Quorum Books, Westport, CT.

 

Krausz, J & Pava, ML 1995, Corporate responsibility and

financial performance: The paradox of social cost, Quorum

Books, Westport, CT.

 

Neely, A (ed.) 2002, Business performance measurement: Theory

and practice, Cambridge University Press, Cambridge, England.

 

Power, M 1997, The audit society: Rituals of verification,

Oxford University Press, Oxford.