外文翻译稿和原稿.docx
《外文翻译稿和原稿.docx》由会员分享,可在线阅读,更多相关《外文翻译稿和原稿.docx(10页珍藏版)》请在冰豆网上搜索。
外文翻译稿和原稿
外文翻译稿和原稿
[1]Hermanson,DanaR,Smith,JasonL,Stephens,NathanielM,HowEffectiveareOrganizations’InternalControls?
InsightsintoSpecificInternalControlElements[J],CurrentIssuesinAuditing,2012,Vol.6Issue1,pA31-A50.20p.
[2]Ya-FangWang.INTERNALCONTROLANDFINANCIALQUALITY:
EVIDENCEFROMPOST-SOXRESTATEMENT[J].Accounting&Taxation,2013,Vol.5Issue1,p19-28.10p.5Charts.
HowEffectiveAreOrganizations’InternalControl?
InsightsIntoSpecificInternalControlElements
DanaR.Hermanson,JasonL.Smith,andNathanielM.Stephens
SUMMARY:
Basedonsurveyresponsesfromapproximately500ChiefAuditExecutives(CAEs)andotherinternalauditors,thisarticleprovidesaninsider’sviewoftheperceivedstrengthoforganizations’internalcontrols(i.e.,internalcontroloverfinancialreporting)intheControlEnvironment,RiskAssessment,andMonitoringcomponentsoftheCommitteeofSponsoringOrganizations’(COSO1992a)InternalControl—IntegratedFramework.Althoughtherespondentslargelyratecontrolstrengthasrelativelyhigh,weidentifyseveralareasforpotentialimprovementofinternalcontrols,especiallyrelatedtoassessingthe‘‘toneatthetop,’’aswellasfollowingupondeviationsfrompolicyandmanagementoverrideofcontrols.Inanalyzingindividualcontrolelements,wefindthatpubliccompanies’controlsareconsistentlyratedasmoreeffectivethanthoseofotherorganizations.Wealsofindanumberofinterestingdifferencesacrosskeyindustries,especiallyintheMonitoringcomponent,wherebanksandotherfinancialservicesfirmsappeartohavemorerobustMonitoringcontrolsthandohealthcareandotherservicesfirms.Thecomponent-levelanalysisrevealsthatinternalcontrolcomponentstrengthispositivelyrelatedtotheCAEreportingprimarilytotheauditcommittee,publiccompanystatus,andtheaveragetenureoftheinternalauditfunctionstaff,amongotherfindings.Basedonthesurveyfindings,wedescribekeyimplicationsrelevanttointernalandexternalauditors,accountingresearchersandeducators,andmanagement.
Keywords:
internalcontrol;controlenvironment;riskassessment;monitoring.
Introduction
WerecentlydevelopedasurveythatwasadministeredbytheInstituteofInternalAuditorsResearchFoundation(IIARF)toChiefAuditExecutives(CAEs)andInternalAuditManagers.ThepurposeofthesurveywastoaskCAEsandInternalAuditManagerstoassessthestrengthsandweaknessesoftheirorganizations’internalcontrols.Suchspecificinformationaboutindividualcontrolelementstypicallyisnotpubliclyavailable,andwebelievethatauditorsandmanagementwouldbenefitfromcurrent,detailedassessmentsofinternalcontrolstrengthacrossabroadrangeoforganizations.Theseassessmentsbyinternalauditinsiderscouldbequitebeneficialforidentifyinginternalcontrolareasthatmayrequireadditionalattention.
Inthisarticle,wereportandprovideinsightsintoapproximately500internalauditors’perceptionsofthestrengthoftheirorganizations’controls,withparticularfocusoninternalcontroloverfinancialreporting.
First,weexaminecontrolelementsperceivedtoberelativelyweakorrelativelystrong.2Althoughtherespondentslargelyratecontrolstrengthasrelativelyhigh,weidentifysomecommonareasforpotentialimprovement,especiallyinassessingthe‘‘toneatthetop,’’aswellasfollowingupondeviationsfrompolicyandmanagementoverrideofcontrols.
Second,weexplorevariationsinperceivedcontrolstrengthattheindividualcontrolelementlevelbycomparingpubliccompanieswithotherorganizationsandprovidinginformationaboutfourkeyindustries.Wefindthatpubliccompanies’controlsareconsistentlyratedasmoreeffectivethanthoseofotherorganizations.Wealsofindanumberofinterestingdifferencesacrosskeyindustries,especiallyintheMonitoringcomponent,wherebanksandotherfinancialservicesfirmsappeartohavemorerobustMonitoringcontrolsthandohealthcareandotherservicesfirms(likelybecauseoftheregulatednatureoftheindustryandthesignificantcompliancerisksthesefirmsface).
Finally,weexaminevariationsincontrolstrengthatthecomponentlevel,exploringhowControlEnvironment,RiskAssessment,andMonitoringstrengthvarywithkeycharacteristicsoftheinternalauditfunctionandorganization.Thecomponent-levelanalysisrevealsthatinternalcontrolcomponentstrengthispositivelyrelatedtotheCAEreportingprimarilytotheauditcommittee,publiccompanystatus,andtheaveragetenureoftheinternalauditfunctionstaff,amongotherfindings.
Webelievethattheresultsofthisstudywillbeusefultointernalandexternalauditors,accountingresearchersandeducators,andmanagement.Weofferimplicationsofeachofthemajorfindings.Inparticular,weencourageincreasedappreciationofthetoneatthetop,managementoverride,industrydifferencesinMonitoringstrength,andthepotentialvalueoftheCAEreportingprimarilytotheauditcommittee,aswellashavingexperiencedinternalauditstaff.
Background
SincethepassageoftheSarbanes-OxleyActof2002(SOX,U.S.HouseofRepresentatives2002),theliteratureoninternalcontrolweaknessesandtheirdisclosurebypubliccompanieshasgrownrapidly.Schneideretal.(2009)reviewthisliterature,whichisprimarilybasedoninternalcontrolreportsunderSections404and302ofSOX.Suchreportsdisclosedetailsofcompanies’materialweaknesses(andsometimessignificantdeficiencies)ininternalcontrol.Thus,thefocusofresearchonadverseSection404reportsisontheminorityofcompanieswithpublicdisclosurescitingmateriallydeficientinternalcontrols.AsdescribedbySchneideretal.(2009),thisliteratureprovidesinsightsintothetypesofcompanieswithinternalcontroldeficiencies,thenatureofspecificinternalcontroldeficienciescited,theconsequencesofinternalcontroldeficiencies,andauditingissuesrelatedtointernalcontroldeficiencies.
Muchlesscommonarestudiesthatprovidemorespecificinsightsintointernalcontrolstrengthacrossabroadrangeofcompanies,includingthemajorityofpubliccompanieswithoutreportedmateriallydeficientcontrolsunderSOX.Forexample,Hansenetal.(2009)surveyinternalauditorstoexploreassessmentsofthetoneatthetop.Theyreportfindingsrelatedtocurrentpracticesandfutureplansforassessingthetoneatthetop(e.g.,howoften,whoisinvolved,whichpositionsareincludedintheassessment),aswellascurrentassessmentsofthetoneatthetop.Theyfindthat47percentofrespondentsassesstheirtoneatthetopas‘‘VeryGood,’’33percentreportthetoneas‘‘Good,’’and15percentreportthetoneatthetopas”Adequate.’’Only2.5percentofrespondentsreportthetoneaseither‘‘Poor’’or‘‘VeryPoor.’’Likewise,Huntonetal.(2011)surveyfinancialmanagersregardingthetoneatthetop,subsequentlyrelatingtheseassessmentstocompanies’earningsquality.Theyfindthatperceivedtoneatthetopispositivelyrelatedtoearningsqualityasmeasuredbytheresearchers.
Weextendthislineofresearchbyexaminingabroadrangeofcontrolelements—37elementsacrosstheControlEnvironment,RiskAssessment,andMonitoringcomponents—toprovideacurrentviewofinternalcontrolstrengthacrossarangeoforganizations.3Weincludebothpubliccompaniesandnon-publicentitiesinouranalysis.
Method
In2010,theIIARFcontactedover3,000NorthAmericanCAEsatourrequestwithaninitialemailinvitation,andlatersentafollow-upemailinvitationtoparticipateinthesurvey,whichwashostedonanonlinesurveyplatform.TosupplementtheCAEsample,theIIARFsubsequentlycontactedover3,000InternalAuditManagerswithanemailinvitationtoparticipate(nosecondrequestwassenttotheManagers).Afterthesethreesolicitations(twotoCAEsandonetotheInternalAuditManagers),wereceived501responses,foranoverallresponserateofapproximately8percent.Thisrateisconsistentwithpriorstudiestargetinginternalauditors.
Thesurveyrequestedthattherespondentsratethestrengthoftheirorganizations’controlsonascalefrom1¼‘‘Notverydescriptiveofmycompany’’to7¼‘‘Verydescriptiveofmycompany,’’whereeachinternalcontrolelementwasdescribedinpositiveterms(e.g.,‘‘Managementiscommittedtohighquality,accuratefinancialreporting.’’)usinglanguagequotedoradaptedfromCOSO’sinternalcontrolimplementationguidance(COSO1992a,1992b).Thesurveyincluded19ControlEnvironmentelements,sevenRiskAssessmentelements,and11Monitoringelements.The37individualinternalcontrolelementsincludedinthesurveyarethosethatexperiencedexternalauditors(inapriorsurveyconductedbytheauthors)hadratedasmostimportantinpromotingfinancialreportingquality.
Results
Theapproximately500respondentsareprimarilyCAEsormanagerswithsignificantexperienceininternalauditing.Organizationsizevarieswidely,withnearlyhalfoftheorganizationsreportingunder$500millioninannualrevenues,andoverone-thirdhavingrevenuesover$1billion.Theindustrydistributionofthesamplealsoisbroad.Themostrepresentedindustriesincludefinancialservices,banking,healthcare,andotherservices,whichcollectivelyaccountforapproximatelyhalfofthesample.ThevastmajorityoftheorganizationsareU.S.-based,andnearlyhalfareU.S.publiccompanies.Intermsofdeviationsfrompolicyandmanagementoverride,inadditiontoworkingwithmanagementtoensurethatsuchdeviationsarealwayspursued,weencourageinternalandexternalauditorstoworktosharpentheauditcommittee’sfocusonmanagementoverrideofcontrols.AveryhelpfulpublicationinthisregardisManagem