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Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Should employers disclose their assessments of their employees? Popular managerial advice suggests that telling employees that they are assessed to have high potential leads to greater effort and engagement, boosting firm profits. However, some employers still choose to withhold employee assessments. What explains this paradoxical observation? We show that disclosing a positive assessment to an employee increases his incentive to appear successful. Success can be achieved by working hard or by misreporting. If the internal controls are sufficiently weak, the employee excessively substitutes misreporting for effort, thereby decreasing firm profits. Consequently, our model predicts that employers withhold assessments when internal controls are weak. Other predictions are that, all else equal, employers with an experienced human resources (HR) function will be more likely to disclose assessments, and employers who hire from "prestigious" target schools will be less likely to disclose assessments. [ABSTRACT FROM AUTHOR]

Research Question: What is the role of Information Technology on the development of effective internal controls of companies? Motivation: Companies can now support operations with IT systems to improve operating performance. As a result, companies must adapt their technique and method of internal control in accordance with computerization (AIS) to exercise effective control because the adaptation of quality internal control has an impact on operations and the achievement of operations Idea: The purpose of the study was to establish the role of Information Technology Systems (IT) on the development of effective internal controls. Data: A literature review methodology drawing on grey literature and published work elicited data for the study Tools: it can be denoted that despite the importance of information systems, challenges are imminent when adopting and implementing them. Staff should have the ability to embrace the system as well as finding the best system to use Findings: The findings indicated that information systems pose challenges when trying to adopt them. The major challenge was finding the best compatible information system and having the staff that portray familiarity and knowledge of the information systems. Contribution: Companies should support operations with IT systems to improve operating performance. As a result, companies must adapt their technique and method of internal control in accordance with computerization (AIS) to exercise effective control because the adaptation of quality internal control has an impact on operations and the achievement of operations. [ABSTRACT FROM AUTHOR]

We consider how corporate environmental, social, and governance (ESG) performance relates to the strength of the internal control environment. The transparent reporting hypothesis predicts that high ESG performance signals ethical decision making and/or strong financial performance, both of which manifest in a stronger internal control environment and, therefore, fewer material weaknesses in internal controls. We find that ESG performance is negatively related to the likelihood of general internal control weaknesses, consistent with transparent reporting. We also find that ESG performance is negatively related to company-level internal control weaknesses, which are considered relatively severe. Further, we find that ESG performance is negatively associated with specific internal control weaknesses that indicate a lack of ethical tone at the top. We find support for both ethical and performance explanations behind the transparent reporting hypothesis. Overall, our results suggest that ESG performance is positively associated with the strength of the internal control environment. [ABSTRACT FROM AUTHOR]

Firms often assemble digital infrastructures using continuously evolving software applications sourced from a multitude of vendors. Using the theoretical lens of the threat-rigidity thesis, we raise the possibility that during adverse environmental conditions, software-vendor diversification can be a source of organizational rigidity that may dampen firm performance. Empirical analysis using data on 918 large public U.S. firms operating during two severe environmental shocks, the global financial crisis and the burst of the dot-com bubble, lends strong support to our thesis. Results indicate that a variety of firm performance indicators (e.g., stock return and operating income measures) are negatively associated with software-vendor diversification during crisis periods. Mediation analysis highlights the role of IT-related material weakness in firms' internal controls in transmitting threat-rigidity effects that decrease performance. These results underscore the importance of software portfolio optimization for countering the dysfunctional effects of software-vendor diversification during adverse environmental shocks. [ABSTRACT FROM AUTHOR]

Abstract This study intends to examine the impact of internal control of non-financial reporting-related weakness on the audit fees of corporations. To pursue the research objectives, two research questions are formalized: (i) How does internal control over non-financial reporting-related weakness (ICW N-FR ) affect audit fees (ADF)?; (ii) What is the effect of external audit size on the link between ICW N-FR and ADF ?. Multiple regression models with 82 listed Jordanian companies from 2014 to 2020 used as the study sample reveal the following findings. Our findings underscore the importance of considering the characteristics of the audit firm when analyzing the relationship between ICW N-FR and audit fees. Companies audited by Big 4 firms may face greater scrutiny and potentially higher fees for ICW N-FR compared to those audited by non-Big 4 firms. While prior studies have explored various factors influencing audit fees and the impact of internal controls on audit costs, this research uniquely delves into the differential effects observed when companies are audited by different categories of audit firms. The study accentuates the significance of impeccable internal controls within non-financial reporting procedures and their far-reaching consequences on audit fees, thereby highlighting the imperative for corporations to give precedence to augmenting their internal control mechanisms.

This study intends to examine the impact of internal control of non-financial reporting-related weakness on the audit fees of corporations. To pursue the research objectives, two research questions are formalized: (i) How does internal control over non-financial reporting-related weakness (ICWN-FR) affect audit fees (ADF)?; (ii) What is the effect of external audit size on the link between ICWN-FR and ADF ?. Multiple regression models with 82 listed Jordanian companies from 2014 to 2020 used as the study sample reveal the following findings. Our findings underscore the importance of considering the characteristics of the audit firm when analyzing the relationship between ICWN-FR and audit fees. Companies audited by Big 4 firms may face greater scrutiny and potentially higher fees for ICWN-FR compared to those audited by non-Big 4 firms. While prior studies have explored various factors influencing audit fees and the impact of internal controls on audit costs, this research uniquely delves into the differential effects observed when companies are audited by different categories of audit firms. The study accentuates the significance of impeccable internal controls within non-financial reporting procedures and their far-reaching consequences on audit fees, thereby highlighting the imperative for corporations to give precedence to augmenting their internal control mechanisms. [ABSTRACT FROM AUTHOR]

Anti-bribery and corruption in sport governing bodies is a little explored area in academic literature. This paper addresses the gap in the literature through expert perceptions on the current state of anti-bribery and corruption policies in international and national sport governing bodies as seen through an ethical climate theory lens. Thus, this paper addresses the question of how and why enhancing anti-bribery and corruption in sport internal controls can mitigate financial corruption and improve ethical climates. Semi-structured interviews were undertaken with 17 forensic accountants and anticorruption experts to garner their opinion on strengths and weaknesses of current policies in sport governing bodies and ascertain the link between anticorruption, accounting controls, and ethical climates. The transcripts were analysed using thematic analysis and the results showed a consistency of opinion with regards to the policy improvements required for a robust anti-bribery and corruption programme within sport governing bodies, with multiple implications for ethical organisational climates. [ABSTRACT FROM AUTHOR]

Corporate fraud poses a significant obstacle for sustainable business development. Drawing on social network analysis, this paper used data originated from Chinese-listed companies from 2009 to 2022 and found that directors' network position significantly mitigates corporate fraud. Mechanism tests indicated that the quality of external auditors and internal control play a mediating role in this relationship. Further analysis showed that the network positions of independent directors, non-independent directors, and female directors individually inhibit the inclination of corporate fraud when considering various types of directors. Of note, the busy director hypothesis was not applicable in explaining the impact of directors' network position on corporate fraud. This study provides a new approach to improving the sustainability of enterprises in newly emerging markets via the analysis of director networks. It is also beneficial to the research on director networks and corporate fraud in companies, offering insights for corporate governance and fraud prevention in companies and regulatory agencies. [ABSTRACT FROM AUTHOR]

Corporate greenwashing has become a focal point in the academic realm. However, there has been limited research exploring the factors influencing corporate greenwashing, particularly from the perspective of pollution emissions. This study uses data from listed companies from 2011 to 2021 and employs a two‐way fixed‐effects model to unveil the correlation and mechanisms between carbon emissions and corporate greenwashing. Additionally, it examines the restraining effects of internal and external pressures on this relationship. The research reveals a significant positive correlation between corporate carbon emissions and greenwashing. Second, internal controls, audit regulations and regulatory regulations reversed this positive relationship. Third, the study finds that reducing risk tolerance and increasing employee compensation are pathways through which carbon emissions promote corporate engagement in greenwashing. Finally, this study indicates that the spillover effects of carbon emissions prompt other companies in the same city to engage in greenwashing. In conclusion, this study provides rich empirical evidence for the greenwashing literature and offers novel theoretical insights into promoting substantive green practices and carbon neutrality, particularly in developing countries such as China. [ABSTRACT FROM AUTHOR]

Copyright of Financing is the property of Financing and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Although robotic process automation (RPA) usage is growing rapidly in accounting, concerns are emerging regarding the internal controls and overall governance structure surrounding RPA. To help address these concerns, we use a design science research approach and work with a Fortune 500 company to develop an RPA governance framework. The framework consists of four governance areas and 14 control requirements, which help maximize the benefits and minimize the risks associated with the use of RPA. We validate that the framework is useful and generalizable to many organizations by presenting the framework to and subsequently interviewing and surveying 86 professionals at different organizations, including internal and external auditors, chief audit executives at several multinational corporations, academics, accounting and finance professionals, and other RPA stakeholders. Their feedback suggests the framework is successful in achieving its objectives. [ABSTRACT FROM AUTHOR]

This study investigates the effect of busy independent directors on earnings management in Chinese initial public offering (IPO) companies from 2010 to 2020. Using various measures of busy independent directors, the results indicate that directors in IPO companies play a significant role in supervision and governance, thereby significantly mitigating earnings management. Busy independent directors, serving on multiple boards, may face time constraints, but, intriguingly, companies with such directors show a lower inclination for earnings manipulation. This suggests that despite potential time pressures, the independent oversight provided by these directors serves as a deterrent to financial reporting manipulation in the context of Chinese IPOs, underscoring the importance of robust corporate governance structures for transparency and reliability. Additionally, this study identifies specific conditions that amplify the constraining effect and finds that the effect of busy independent directors on earnings management in IPO companies is more significant in companies with high compensation for independent directors, independent directors serving off-site, and companies that receive higher media attention. Mechanism testing indicated that busy independent directors mitigate IPO firms’ earnings management by engaging reputable audit firms and enhancing the effectiveness of internal controls. This nuanced analysis offers valuable insights into how busy, independent directors actively contribute to alleviating the risks associated with earnings management during the IPO process. This study enhances our understanding of the governance benefits of active independent directors in multiple roles and offers novel perspectives on how stakeholders can influence and constrain earnings management in IPO companies.

The Egyptian economy has been facing challenges due to the COVID-19 pandemic and global conflicts. This study, conducted from a macroeconomic perspective, has highlighted the importance of mandating audits for Egyptian SMEs, which primarily operate in the informal economy. This study draws on the 2013 COSO Framework, a widely accepted standard for internal control, to define IC and its features. The research utilized a comprehensive mixed methodology, combining qualitative and quantitative research methods and relevant theory to examine the impact of mandatory audits on the Internal Control Quality (ICQ) of Small and Medium-sized Enterprises (SMEs). Data was gathered through questionnaires and NILEX financial reports spanning from 2010 to 2023. Questionnaires resulted in 803 responses from auditors, owners, and managers of SMEs, as well as 217 academics/economists in Egypt. The study employed various analyses, such as ANOVA, Scheffe’s post hoc test, Wilcoxon signed rank test, and Cohen’s d, to assess the effect of mandatory audits on SMEs’ ICQ and identify any discrepancies, ensuring the thoroughness and reliability of the conclusions. The research indicates statistically significant differences in perceptions among SME management, auditors, and academics/economists. This study plays a crucial role in supporting the Egyptian national economy by creating a standardized and concise scale for measuring ICQ among SMEs, which aligns with their unique attributes and features. This customized scale facilitates comparisons among SMEs and opens doors for further scholarly investigations, instilling a sense of optimism for the future of the Egyptian SME sector. The findings of this study are significant. They reveal an apparent enhancement in internal control quality following the implementation of mandatory audits for Egyptian SMEs. This evidence was derived from an analysis of ICQ before and after the mandatory audit requirement among a substantial sample of 56 SMEs in Egypt, covering the period from 2010 to 2023.

We exploit a regulatory change to examine whether bank regulator strictness is affected when regulators no longer rely on external assurance. In the absence of external assurance, we find that banks report higher nonaccrual loans, higher troubled debt restructurings, and both a timelier loan loss provision and higher quality allowance for loan loss reserve. Further, regulators spend more days performing targeted bank examinations for banks affected by the regulatory change. We do not find evidence of operational deterioration, but rather the findings are consistent with increased regulator strictness over the reporting of problem assets, particularly during targeted examinations. Overall, our results suggest that regulators become stricter when they can no longer rely on the work of external auditors and that third-party assurance is an imperfect substitute for direct regulatory monitoring. Data Availability: Bank regulatory rating and examination dates are confidential and were obtained from the Federal Reserve Bank of St. Louis. All other data are available from the public sources cited in the text. JEL Classifications: G21; G28; M42. [ABSTRACT FROM AUTHOR]

We investigate whether improvements in banks' organizational capital and control systems facilitate increased loan origination to minority borrowers. We focus on bank supervisors' enforcement decisions and orders (EDOs) against banks and hypothesize that EDO‐imposed improvements in loan policies, internal governance, and employee training mitigate deficiencies in credit assessments and lending decisions that previously disadvantaged minority borrowers. We find that mortgage origination to minority borrowers increases following the resolution of EDOs, and more so for banks with stricter supervisors or more severe EDOs. Using a semisupervised machine learning method to analyze the text of EDOs, we find that such increases are higher for EDOs specifying revisions of loan policies, implementation of formal internal governance procedures, or more employee training. Overall, we find that EDO‐driven improvements in organizational capital generate unintended, positive social externalities that enhance access to credit for minority borrowers. [ABSTRACT FROM AUTHOR]

In order to promote the construction of internal control in public institutions and improve work efficiency, the author proposes an optimization of internal control in public institution budget business based on random forest algorithm. We have constructed a big data audit framework for internal control of A Maritime Bureau based on the financial cloud platform and sorted out its audit process. By using the random forest algorithm to identify suspicious points in the internal control audit of administrative institutions at the data level, an example analysis is conducted using some data from A Maritime Bureau's assets, budget, revenue and expenditure, infrastructure, and contract business. The results indicate that the design of the internal control big data audit plan for administrative institutions will promote the innovation of audit information technology and application in A Maritime Bureau, provide theoretical guidance for the internal control big data audit carried out by administrative institutions, and effectively solve the problems of high workload and low work efficiency when A Maritime Bureau conducts internal control big data audits, thereby improving audit efficiency. [ABSTRACT FROM AUTHOR]

This study uses material weakness (MW) disclosures to explore whether auditors systematically assign greater risk to specific financial statements and account types. Auditing Standard 2201 mandates auditors adjust their levels of material weakness detection in response to the risk associated with each control being tested. Using a sample of firm years with financial misstatements, I show that auditors are most likely to detect material weaknesses in advance of misstatement discovery when they relate to the income statement, followed by the balance sheet, and to revenues and assets, relative to other income statement and balance sheet accounts. These results suggest that auditors, on average, assign the greatest level of associated control risk to the income statement, then the balance sheet, and that revenues and assets are the drivers of that assignment. [ABSTRACT FROM AUTHOR]

Auditors are expected to identify and resolve material misstatements (MMs) in management's financial statements. However, beyond the audit opinion, the audit process is opaque. To address this, we independently survey 462 audit partners and interview 24 audit partners, CFOs, and audit committee members on how partners assess and address MM risk, resolve MMs, and the consequences of MMs. Partners identify MMs in approximately 9% (15%) of public (private) engagements and use qualitative factors to waive apparent MMs. Loan covenant and going‐concern issues increase MM risk more than earnings benchmark issues. Partners point to a variety of both auditor and client factors as threats to audit effectiveness. Partners often rely on rapport with management and involve the national office and audit committee in resolving MMs. Partner incentives around restatements are context specific. Our results provide new insights into the auditor's role in financial reporting that are relevant to academics, practitioners, and regulators. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

AbstractThe article argues that government organizations and the discipline of public administration should embrace a New Public Integrity Management (NPIM) to bridge the gap between advocates of external and internal public integrity controls on the behavior of public employees and contract government employees. The article argues that external and internal controls are important in maintaining public trust in government. This includes the management of the acceptance of gifts and private hospitality by government and contract government employees. The article traces the evolution of federal executive branch public integrity management and argues that the discipline of public administration has demonstrated a long-standing hostility towards external ethics controls due to early 20th-century divorce between law and administration. Of particular importance, the NPIM requires the adoption of a much broader definition of public corruption, which includes the conduct of private sector partners of government agencies responsible for the delivery of public goods and services paid for with public funds. Finally, the article argues that government ethics programs need to integrate moral reasoning education into their public integrity training programs and discuss criminal and administrative rules of conduct directed at protecting public confidence in the impartiality of bureaucratic decision-making. [ABSTRACT FROM AUTHOR]

There is a growing public debate on the role of boards in government-owned entities due to poor performance, corporate scandals, and increased corruption. Good board practices and internal controls, including enterprise risk management, are crucial for enhancing performance. Research findings on their impact have been contradictory. However, improving transparency, accountability, and adherence to governance frameworks can positively influence performance. Addressing governance issues is crucial to mitigate resource mismanagement and corruption, leading to better overall performance. The objective was to determine relationships among board practices, internal controls, and government-owned entities' performance. Data was collected from 153 properly completed questionnaires out of the 157 returned, representing 65.38% of the entire population of 234 government-owned entities. The findings established that internal controls positively and significantly intervened in the relationship between board practices and performance. Implementing good board practices and internal controls promotes accountability and transparency, leading to enhanced organizational performance. Government-owned entities should prioritize implementing effective board practices and internal controls to enhance their overall performance. [ABSTRACT FROM AUTHOR]

As publicly funded institutions, public universities are expected to follow a competitive and systematic tendering process when procuring goods or services. Despite legislation and regulations aimed at ensuring adherence to international best practices and promoting integrity and accountability, there have been instances of inefficiencies in the tendering process, particularly within public universities. The purpose of this study was to assess the moderating effect of internal controls on the relationship between supplier pre-qualification and procurement performance in public universities in Kenya. The study was anchored on stakeholder theory. A positivist research philosophy and a correlational research design was adopted. Target population of the study was 1,016 employees from the selected public universities. The study adopted stratified and simple random sampling to select a sample of 287 respondents. Primary data was obtained using a structured questionnaire, which was self-administered using a drop-and-pick later technique. The validity of the research instrument was ensured through an extensive literature review and consultation with subject experts and supervisors from the procurement department. The reliability of the instrument was examined through a pilot study involving 29 respondents from the University of Kabianga where a Cronbach alpha coefficient of 0.834 was obtained. The obtained quantitative data was analysed descriptively using means, frequencies, and standard deviation, and inferentially, correlation and regression analysis were used. The study established that internal controls had a positive moderating effect on the relationship between pre-qualification (R2, change of 0.075; p<0.05), and procurement performance. The study concluded that pre-qualification of suppliers, was an important factor in determining the procurement performance in public universities because it significantly explained the change in procurement performance. Therefore, the study recommends that public universities improve internal controls to ensure efficiency in the supplier pre-qualification process as well as the procurement performance in public universities in Kenya. The study findings could be significant to the management of public institutions and policymakers in public procurement, enhancing knowledge in academia and theory development in procurement activities. [ABSTRACT FROM AUTHOR]

Purpose: The Auditor-General South Africa (AGSA) identified metropolitan municipalities as the highest contributors to unauthorised, irregular, fruitless and wasteful (UIFW) expenditure in South Africa, prompting the National Treasury (NT) to call for the management there-of, as a top priority. This study aimed to assess the drivers behind UIFW expenditure's ongoing presence in the City of Tshwane Metropolitan Municipality (CoT), despite the AGSA's findings and recommendations, with an extensive oversight role by municipal public account committees (MPAC). Methodology/Approach: Through qualitative research techniques, the researchers thematically analysed the collected data, using the Committee of Sponsoring Organisations of the Treadway Commission (COSO) framework. The analysis of UIFW expenditure trends in metropolitan municipalities over five years, revealed significant problems in the Tshwane metropolitan municipality, leading to the study of the CoT. By employing Atlas.ti software, the coding process identified the primary factors responsible for the prevalence of UIFW expenditure in the CoT. Findings/Results: Using eight codes, the study illustrated the primary themes that contribute to irregular spending and the challenges that obstruct internal controls. The research findings attributed the weaknesses of the internal control environment to cultural and behavioural factors as the main driving forces towards incurring the UIFW expenditure, whilst identifying management practices as significant contributors to the lack of oversight. According to the study, the lack of awareness and failure to adhere to established procedures detrimentally impacted the effectiveness of control measures, resulting in the occurrence of UIFW expenditure. Owing to the absence of effective measures to manage and discourage misconduct, the metropolitan municipality had inadvertently provided individuals with opportunities to embezzle funds, leading to a surge in unethical practices. To effectively address these challenges, the study outcomes recommended a range of measures, including enhancing the control environment, increasing accountability, and establishing a consequence management system. The aim of this initiative was to address loopholes that facilitate unwarranted activities and to encourage responsible financial management by the metropolitan municipality, ultimately reducing UIFW expenditure. Heuristic inferences: The study highlighted that a lack of effective management oversight at an operational level had led to a failure to understand and follow internal controls. Although the AGSA managed to achieve some progress in suggesting measures to address the problem, the underlying causes of the issue remained unknown. Discovering these causes would be instrumental in mitigating UIFW expenditure in the metropolitan municipality. The root causes of these issues can be traced back to the way management operates, the CoT's capacity constraints, and the prevailing culture. In order to tackle this issue, the metropolitan municipality culture should prioritise adherence to and promote awareness of internal controls. Originality/Value: This study identified the factors behind the persistent incurrence of UIFW expenditure in the CoT, suggesting the need for more research in other municipalities. [ABSTRACT FROM AUTHOR]

Purpose: This study aimed to explore how auditors' applications of the International Standard on Auditing (ISA) 701 (communicating key audit matters) in independent auditor's report-principles link with corporate governance practices in state-owned enterprises, in South Africa. This was expected to provide insights regarding public sector auditors' views regarding ISA 701-links to the influencing of governance practices in state-owned enterprises. Methodology: The study followed a qualitative approach, relying on interviews with senior external auditors and senior technical managers, who have a working knowledge of auditing state-owned enterprises in South Africa. Findings: The study found that public sector auditors communicate certain matters to encourage effective oversight by those charged with promoting good governance. These matters include communication and emphasising matters that significantly impact financing decisions, as well as significant weaknesses in key financial controls. Implications: The benefits of drawing management's attention to issues that could improve corporate governance, are significant. Regulatory authorities might consider extending the reporting of key audit matters to all state-owned enterprises, not just those that are publicly listed. Additionally, the insights provided by auditors can be leveraged by regulatory authorities to strengthen corporate governance within state-owned enterprises. Originality/Value: The study contributes to understanding the value of adopting international auditing standards to the broader corporate governance ecosystem, using evidence from the public sector within an emerging economy. [ABSTRACT FROM AUTHOR]

The research investigates the influence of the System Understanding Aid (SUA), on students' learning of accounting cycles and controls. The SUA requires students to enter 15 transactions and perform related accounting activities. The theoretical model uses Bloom's Taxonomy and Scaffold method. The study's objectives are to identify if SUA completion method (i.e. manual or digital) influences students' SUA scores and if these scores influence performance on an end of the semester assessment regarding accounting cycles and controls. The data were collected from 274 students in a required accounting information systems course at an AACSB accredited accounting department across seven consecutive semesters. The data were analyzed using systems of linear equations and three-stage least squares estimation. The results provide evidence that SUA scores have a positive relationship to student learning of accounting cycles and controls. Supplemental analysis also indicates that digital completion of the SUA influences student scores. [ABSTRACT FROM AUTHOR]

SYNOPSIS: We examine how internal control effectiveness influences the audit completeness of earnings announcements and the consequences on earnings reliability. One of the intentions of the Sarbanes-Oxley Act of 2002 (SOX) was for internal controls to improve financial reporting. Although we show that effective internal controls directly reduce earnings announcement revisions as SOX would intend, we also find evidence that it provides management with the confidence to release their earnings disclosure earlier (with a less complete audit), indirectly increasing the likelihood of earnings announcement revisions. As a result, the beneficial impact of internal control effectiveness on earnings reliability is significantly undermined in a regulatory environment where companies are permitted to disclose preliminary earnings to the public. Our study provides important insights for regulatory policymaking and for accounting practitioners who are responsible for producing reliable financial disclosure. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M41; M42; M48. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This study analyses the influence of internal controls on risk reduction and compliance of accounting information. Qualitative research combined with a quantitative analysis of contents was used applied to a case study. Data were collected through interviews with managers and employees of a public transport institution. The relevance of the study lies in the need to mitigate risks that affect the compliance of accounting information within organizations, given the need for quick and secure information for decision making. The results show in a practical way the compliance of the information through internal controls established at the level of the operational processes of the organization, even if some controls are developed in an informal way. In addition, the results identify technology as the most relevant risk to the organization and legislation as one of the risks inherent to compliance. In addition, the need to integrate strategic and operational risk management to improve information compliance has been identified. The case studied can be transferred to other contexts where it can become a contributory reference for the improvement of internal controls and compliance of accounting information. [ABSTRACT FROM AUTHOR]

This case introduces students to engagement planning, risk management, independence, and execution in the setting of attestation engagements by examining the auditor's role in the Academy Awards (also "the Oscars"). Specifically, this case focuses on an error made by PwC during the 89th Academy Awards ceremony in 2017, which resulted in the announcement of the wrong "Best Picture" winner ("the error"). Students are required to research attestation engagements and the AICPA Code of Professional Conduct, analyze the benefits and risks associated with the Oscars engagement, evaluate the controls that were in place, and think critically about what additional control considerations may have prevented the error. Finally, students are asked to assess the potential consequences of this error for the engagement partners, the firm, and its clients. The visibility of this error is a unique opportunity to evaluate the roles and responsibilities of accountants in practice. [ABSTRACT FROM AUTHOR]

During excessive inflation, business owners may raise selling prices or reduce operating costs to maintain profit margins. For businesses that raise selling prices, customers may move their business; thus, profits may decline. Businesses that reduce the number of employees or decrease wage rates, benefits, or work hours may lose employees, enabling motivated employees to commit occupational fraud. The motivation for these occupational frauds can occur when the remaining employees believe management wrongfully denied requests for pay raises or added more work hours without additional pay. Thus, employees may also commit occupational fraud to obtain retribution. Alternatively, desperate employees may misappropriate and convert employer assets to cash to purchase desperately needed food, clothing, or other items. In addition, reducing controls or having too much trust in employees may motivate some employees to commit fraud. Finally, executives may recognize a need to falsify records to maintain their access to capital. Therefore, business owners, executives, and managers must understand that occupational fraud can flourish for many reasons. As a result, management should develop, implement, and maintain fraud prevention and deterrence controls to reduce potential losses. [ABSTRACT FROM AUTHOR]

In a time where financial fraud is rapidly increasing and technological advances open the backdoor and even the front door for more occurrences, advanced internal control mechanisms need to be implemented and monitored. Local governments attempt to reduce fraud risk by performing annual risk assessments, reviews, and audits. These evaluations and protocols help determine the likelihood of a loss occurring. Studies have determined that local governments often have one of the following four risk assessment violations: absence of risk analysis, non-effective risk analysis, risk management that is not linked to the risks, and failure to record asset obligations in the bylaws. Research has not been able to conclude which activities specifically link to each of these violations directly, but it has been determined that when risk assessments are not effectively employed and evaluated, significant deficiencies in the control environment of the workplace exist. The Association of Certified Fraud Examiners suggested that governmental agencies have the highest median loss as a result of fraud in the United States. This narrative literature review examines the research surrounding local government internal control weaknesses that derive from mismanagement, lack of oversight, and unethical behaviors. [ABSTRACT FROM AUTHOR]

SUMMARY: We summarize a recent study that examines whether and how the signals provided by the internal control over financial reporting (ICFR) opinion and auditor use of advanced data analytic tools (ADAs) influence juror negligence perceptions. When auditors issue an unqualified ICFR opinion and rely on traditional statistical sampling, jurors assess the auditors as more negligent than when the auditors use ADAs. Conversely, when auditors issue an adverse ICFR opinion, jurors ascribe less blame to auditors and more to investor plaintiffs, regardless of whether the auditors use ADAs. Further, jurors perceive auditors as less negligent when they use ADAs for full population testing because they perceive ADAs to be an indicator of higher audit quality. Interestingly, jurors perceive no difference in the level of assurance provided by the audit opinion alone when auditors use ADAs relative to traditional sampling testing methods. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Internal control systems are an essential component of every organisation, as they are known for their impact on prevention and risk mitigation. However, limited studies examine the nexus between internal control systems and small and medium enterprises (SMEs). Although SMEs play a crucial role in enabling the country’s financial stability, SME owners and managers in developing countries are perceived to lack knowledge of internal control systems. This conceptual paper aims to bring a broader understanding of SME leaders and managers on knowledge of implementation of quality internal controls systems towards SMEs’ survival and impact on the country’s economy. This paper analyses the relevant literature on internal controls’ implementation, the knowledge of SME leaders and owners on quality implementation of internal control systems, SMEs’ survival and impact on the economy of the country. An existing and persisting perception that internal control systems can only be implemented by large organisations is a major concern. Based on the literature, this study discovered that SMEs could also implement effective and efficient internal control systems and improve their performance. Adequate knowledge by SME leaders and management could improve SMEs’ implementation of internal control systems. The literature from the study revealed that improved implementation of internal control systems would subsequently enhance the country’s economy.

Objective To explore the significance of blending internal controls by automatic sample processing instruments in the enzyme linked immunosorbent assay (ELISA). Methods The internal controls were vortexed and mixed before the test, and then were added to the same ELISA plate by the STAR automatic sample processing instruments under the same detection conditions. The difference of S/CO value of internal controls with and without sufficient blending via the sampling needle and their frequency distribution were compared. Internal controls that were greatly affected by mixing parameters were submitted to the same test with different batches of reagents from the same manufacturer, and the results were analyzed for consistency. Results The S/CO value of anti-HCV internal controls without blending using adding sample needle was significantly lower than that of quality control samples with sufficient blending (P

We investigate the association between material weakness in internal controls (MW) disclosed under Section 302 of the Sarbanes–Oxley Act of 2002 (SOX) and future stock price crash risk. We argue that relative to firms with effective internal controls, firms with MW have lower financial reporting precision. The lower reporting precision (a) increases divergence of investor opinion with regard to firm valuation and (b) facilitates managers' withholding of negative information, which increases the information asymmetry between managers and outside investors. We hypothesize that both these effects increase the probability of a future stock price crash. We find empirical evidence consistent with our prediction. In additional analyses, we document that the positive association between MW and crash risk is primarily driven by company level rather than by account-specific weaknesses, increases with the number of material weaknesses, and intensifies during the financial crisis. In addition, we find that both the existence and the disclosure of MW incrementally affect crash risk, and that MW facilitates managers' withholding of bad news. Finally, we fail to find consistent evidence of a significant relation between MW disclosed under Section 404 of SOX and crash risk. [ABSTRACT FROM AUTHOR]

This study analyses the influence of internal controls on risk reduction and compliance of accounting information. Qualitative research combined with a quantitative analysis of contents was used applied to a case study. Data were collected through interviews with managers and employees of a public transport institution. The relevance of the study lies in the need to mitigate risks that affect the compliance of accounting information within organizations, given the need for quick and secure information for decision making. The results show in a practical way the compliance of the information through internal controls established at the level of the operational processes of the organization, even if some controls are developed in an informal way. In addition, the results identify technology as the most relevant risk to the organization and legislation as one of the risks inherent to compliance. In addition, the need to integrate strategic and operational risk management to improve information compliance has been identified. The case studied can be transferred to other contexts where it can become a contributory reference for the improvement of internal controls and compliance of accounting information.

We survey 137 charter school administrators and 129 board members and find that U.S. charter school internal controls are perceived to be relatively strong overall. However, board independence, board communication of internal control responsibilities to school personnel, lines of communication between the board and school personnel, and reporting lines that allow the board to assess the school's activities are perceived to be weakest in comparison to other internal controls. We also find that board members have more positive views than administrators regarding the strength of several of the internal controls examined. We discuss implications and several avenues for future research. [ABSTRACT FROM AUTHOR]

Using manually constructed enterprise digital data from 2012 to 2020, this paper innovatively constructs an enterprise digitalization index to explore its impact on enterprise performance and discusses the potential channels of digitalization on enterprise performance. The findings show that (1) digitalization has a significant positive effect on firm performance, and this finding holds after a series of robustness tests. (2) Digitalization improves firm performance by reducing external management costs and strengthening internal controls. The mediating effects model tests the potential impact mechanism of digitalization on firm performance. (3) The effect of digitalization on the performance of state-owned enterprises is greater than for non-state-owned enterprises. The results of the heterogeneity analysis provide policy recommendations for the development of digital transformation of enterprises. Overall, this study provides new insights into the relationship between digitalization and firm performance. [ABSTRACT FROM AUTHOR]

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