(Study on the Evaluation of Applications for the COSO Internal Control Model and Accounting Information System in Businesses)

Abstract

Purpose: The aim of this study is to determine, from the perspective of an enterprise’s authorities (managers and officials), the level of compliance of the internal control system applications in the enterprise with the components of the COSO internal control framework. The second aim of this study is to evaluate the applications regarding the Accounting Information System. Method: Questionnaire method was used to accomplish the aims of the study. The questionnaire, prepared following the 5-Likert type (where 5 is I fully agree, and 1 is I fully disagree), was applied to 197 officials working at various levels of enterprises with 10 or more employees operating in Van, Muş and Bitlis provinces as of May 2018. Relying on the frequency, percentage, arithmetic mean and standard deviation values of the answers, the obtained data were analyzed using the SPSS 22.0 for Windows statistical package program. The Cronbach's Alpha reliability coefficients of the scale items prepared for the two purposes of the study were found to be 0.825 and 0.694, respectively. Findings: The results of the analysis show general consensus at the level of "I strongly agree" in all the 5 components of the COSO internal control model: Control environment, Risk assessment, Control activities, Information-communication and Monitoring. Statements at the levels of “Fully Agree, Strongly Agree, and Moderately Agree” were observed in each of the component. The statements created to evaluate the applications regarding the Accounting Information System showed a general consensus at the level of "I strongly agree", similar to the findings in the first aim. Agreements at the levels of “Fully Agree, Strongly Agree, and Moderately Agree” were observed in each component. Discussion: Internal control system establishes a framework to improve, activate and evaluate business assets and financial/non-financial transactions. Accounting Information System, on the other hand, is concerned especially with financial transactions, laws, regulations, principles, rules and the likes. This study found that the participants did not show a negative approach to any of the statements regarding both the COSO internal control model and the effectiveness of the Accounting Information System. This finding is significant and consequential. The findings indicate that, within the scope of the research, the expected benefits from both systems have been achieved in the enterprises.