IJSTR

International Journal of Scientific & Technology Research

IJSTR@Facebook IJSTR@Twitter IJSTR@Linkedin
Home About Us Scope Editorial Board Blog/Latest News Contact Us
CALL FOR PAPERS
AUTHORS
DOWNLOADS
CONTACT
QR CODE
IJSTR-QR Code

IJSTR >> Volume 7 - Issue 11, November 2018 Edition



International Journal of Scientific & Technology Research  
International Journal of Scientific & Technology Research

Website: http://www.ijstr.org

ISSN 2277-8616



Internal Control Systems & Its Relationships With The Financial Performance In Telecommunication Companies “A Case Study Of Asiacell”

[Full Text]

 

AUTHOR(S)

Amanj Mohamed Ahmed, Akram Ahmed Muhammed

 

KEYWORDS

Internal Controls, Component of Control, Financial Performance and Telecommunication Company.

 

ABSTRACT

The overall objective of this study was to establish the effects of internal controls on the financial performance of Asiacell as a telecommunication company in Kurdistan Region of Iraq. This was achieved by looking at the effect of control environment, risk assessment, information and communication, control activities and monitoring on the return on asset of the selected company. The study used both primary and secondary techniques to collect the data. In the model, the dependent variable is financial performance while the independent variables are the components of internal controls. After analyzing the audited financial statements and filling the questioners by the employees of the selected company, the findings of the study showed that there is a significant relationship between internal controls and financial performance. The dependent and the independent variables in the study indicated a relationship with control environment, risk assessment. Information and communication and control activities illustrated a positive relationship with the financial performance while monitoring showed a negative relationship with financial performance. The study also found that, Asiacell had invested on effective internal control systems, thus, it had a better financial performance as compared to the related firms that had a weak internal control system. The study further recommends that the governing body, possibly supported by the audit committee, should ensure that the internal control system is periodically monitored and evaluated by the respective managers.

 

REFERENCES

[1] Aikins. (2011), An examination of government internal audits’ role in improving financial performance, Public Finance and Management, 11 (4), 306-337. https://ssrn.com/abstract=2689405

[2] Al-Matari, E. M., Al-Swidi, A. K. and Fadzil, F. H. (2014), The Effect of the Internal Audit and Firm Performance: A Proposed Research Framework, International Review of Management and Marketing, Vol. 4, No. 1, pp.34-41. Retrieved from http://www.econjournals.com/

[3] Ary, D., Jacobs, L. C. and Sorensen, C. (2010), Introduction to Research in Education, 8th edition, Wadsworth, Cengage Learning.

[4] Asiligwa, G. R. (2017), The Effect of Internal Controls on the Financial Performance of Commercial Banks in Kenya, Journal of Economics and Finance, Vol. 8, No. 3, pp 92-105. Retrieved from http://www.iosrjournals.org/

[5] Babbie, Earl R. (2002), The basics of social research. Belmont, CA :Wadsworth, Thomson Learning.

[6] Bowrin. (2004), Internal control in Trinidad and Tobago religious organizations, Accounting, Auditing and Accountability Journal, 17(1), 121-152. https://doi.org/10.1108/09513570410525238

[7] Bett, J. C. and Memba, F. S. (2017), Effects of Internal Control on the Financial Performance of Processing Firms in Kenya: A Case of Menengai Company, International Journal of Recent Research in Commerce Economics and Management, Vol. 4, No. 1, pp. 105-115.

[8] Retrieved from www.paperpublications.org

[9] Cadeza, S. and Guilding, C. (2008), An exploratory investigation of an integrated contingency model of strategic management accounting, Accounting, Organizations and Society, Vol. 33, No. 7–8, pp. 836-863. https://doi.org/10.1016/j.aos.2008.01.003

[10] Cahill, E. (2006), Audit Committee and Internal Audit Effectiveness in a Multinational Bank: A case study, Journal of Banking Regulation, 7(1/2), 160 - 179. https://doi.org/10.1057/palgrave.jbr.2340011

[11] Channar, Z. A., Khan, M. and Shakri, I. H. (2015), Internal Control Effectiveness & its Relationship with Financial Performance, Journal of Business Studies, Vol. 11, No. 2, pp. 92-107.

[12] COSO. (2011), Internal Control- Intergrated Framework, Committee of Sponsoring Orgarnisations of the Treadway Commission, New York: PWC, Received from https://www.coso.org

[13] COSO. (1985, 1992), Committee of Sponsoring Organizations of the Treadway Commission. Internal Control over External Financial Reporting: A Compendium of Approaches and Examples, Received from https://www.coso.org

[14] Collins, O. O. (2014), Effect of internal control on financial performance of micro-finance institutions in Kisumu central constituency, Kenya. Scholarly Journal of Scientific Research and Essay, Vol. 3, No. 10, pp. 139-155. Received from www.scholarly-journals.com/SJSRE

[15] Cunningham L. A. (2004), The Appeal and Limits of Internal Controls to Fight Fraud, Terrorism, Other Ills. GW Law Faculty Publications & Other Works, 29J, Corp.L.267,Receivedfrom http://scholarship.law.gwu.edu/faculty_publications

[16] Dixon, J.R. Nanni, A.J. and Vollmann, T.E. (1991), An instrument for investigating the match between manufacturing strategy and performance measures, (Unpublished Paper), Boston University.

[17] Ejoh, N., & Ejom, P. (2014), Impact of Internal Control Activities on Financial Performance of Tertiary Institutions in Nigeria, Journal of Economics and Sustainable Development, 5(16), 133-143.

[18] http://iiste.org/Journals/index.php/JEDS/article/view/15344/15561

[19] Eniola, O. J. and Akinselure O. P. (2016), Effect of Internal Control on Financial Performance of Firms in Nigeria (A Study of Selected Manufacturing Firms), Journal of Business and Management, Vol. 18, No. 10, pp. 80-85. Retrieved from http://www.iosrjournals.org/

[20] Mafiana, A. Z. (2013), Examining the Relationships between Internal Control Effectiveness and Financial Performance in the Nigerian Banking Industry, Walden University, ProQuest Dissertations Publishing, 1-123, Received from https://search.proquest.com

[21] Gamage, C.T., Lock, K.L. & Fernando, A.A.J. (2012), A Proposed Research Framework: Effectiveness of Internal Control System in State Commercial Banks In Sri Lanka, International Journal of Scientific Research and Innovative Technology, 1(5), 25-44.

[22] Hamed, A.(2009), A clear Look at Internal Control: Theory and Concept. Unpublished MBA Research Paper, University of Nairobi.

[23] Hayes, R., Dassen, R., Schilder, A. and Wallage, P. (2005), Principles of Auditing, An Introduction of International Standards on Auditing, second edition. Pearson Education Limited. Harlow. England.

[24] Inusah, A. M. & Abdulai, S. (2015), Assessing Internal Financial Controls of the Lands Commission of Ghana, European Journal Of Business, Economics and Accountancy, 3(3), 51-65. Received from http://www.idpublications.org/

[25] Jensen, M. C. and Meckling, W. H. (1976), Theory of The Firm: Managerial Behavior, Agency Costs, and Ownership Structure, Journal of Financial Economics, 341-356. https://doi.org/10.1016/0304-405X(76)90026-X

[26] Jussi, N and Petri, S. (2004), Does Agency Theory Provide a General Framework for Audit Pricing?, International Journal of Auditing, 8 (2), 253-262. https://doi.org/10.1111/j.1099-1123.2004.00094.x

[27] Kaplan. (2008), ACCA Study Text- Audit and Assurance London: Ftc Kaplan ltd.

[28] http://kaplan-publishing.kaplan.co.uk/acca-books/f8/Pages/complete-text.aspx

[29] Kumar, R. & Sharma, V. (2005), Auditing Principles and Practice, Prentice-Hall of India Private Limited.

[30] Lannoye, M. A. (1999), Evaluation of internal Controls. Retrieved from http://www.michighan.gov/documents/gf_master1_26775_7.pdf

[31] Mawanda, S. P., (2008), Effects of internal control systems on financial performance in an institution of higher learning in Uganda: A case of Uganda Martyrs University, Unpublished thesis, Uganda Matyrs University.

[32] Ngari, G. M. (2017), The effect of Internal Controls on Financial Performance of Microfinance Institutions in Kenya, International Academic Journal of Economics and Finance, Vol. 2, No. 3, pp. 112-140. Received from http://www.iajournals.org/articles/iajef_v2_i3_112_140.pdf

[33] Ngwenya. (2013), Application of Internal Controls in NGOs: Evidence from Zimbabwe, Journal of Finance and Accounting, 1, 39-47. DOI: 10.12691/jfa-1-2-1

[34] Nyakundi, D. O. (2014), Effect of internal control systems on financial performance of small and medium scale business enterprises in Kisumu City, International Journal of Social Sciences and Entrepreneurship, vol. 4, No.1 , pp. 719-734. Received from https://www.ijsse.org

[35] Olumbe, C. O. (2012), The relationship between internal controls and corporate Governance in commercial banks in Kenya, Unpublished thesis, University of Nairobi.

[36] Rahmany, Halime (2013), evaluating and improving internal control in organizations, the journal of auditing, No.64, pp. 78-86.

[37] Received from https://www.ifac.org/publications

[38] Shokoohi, M, Saeidi, P. and Malekmahmoudi, S. K. (2015), Investigating the Relation Between Internal Control System and Financial Performance of Telecommunication Company of Golestan Province, Multidisciplinary International Peer Reviewed Journal, Vol. 3(2), pp. 206-211. Received from http://saussurea.org/

[39] Simmons, M.R. (1995), The Framework for Internal Control: A Strategic Approach to Internal Audits.

[40] http://www.facilitatedcotrols.com/internal- audit/cosobsic.htm. pp. 12-22.

[41] Treba. L. M. (2003), Evaluating internal controls: control self-assessment in Government, Journal of Finance and Accounting, 4(3); 55-67. Received from https://www.gfoa.org/sites/default/files/EICLGMG.pdf

[42] Tuan, N. (2015), A Theoretical Model Studying the Impact of Internal Control on Performance and Risks of Vietnam Commercial Banks, International Conference on Accounting. Danang, Vietnam, 22 May 2015, Yokohama National University.

[43] Uket., & Joseph. (2012), The Impact of Internal Control Design on Bank's ability to investigate Staff Fraud, and Lifestyle and Fraud Detection in Nigeria, International Journal of Research in Economics and Social Sciences, 2, 32-43.

[44] Vadiei, M. H. and Kuchaky, S. M. (2008), evaluating effectiveness of internal control system from the perspective of independent auditors and its effect on auditing process, the journal of development and investment, No.2, pp. 127-148.

[45] Wainaina, S. W. (2011), An Evaluation of the Internal Control Function: The Case of Kenya Polytechnic University College, Unpublished MBA Thesis, University of Nairobi. Kenya Wee,

[46] Whittington, O. R. and Pany, K. (2001), Principles of auditing and other assurance services, Irwin/McGraw- Hill. New York.

[47] Woods M (2009), A contingency theory perspective on the risk management control system within Birmingham City Council. Manage, Account. Res., 20(1): 69-81.