The Internal Control Effort in Improving Company Performance
Keywords:
Control, Supervision, Communication, Risk Assessment
Abstract
The implementation of effective internal control contributes broadly to improving the implementation of corporate governance and performance. This study aims to confirm and describe how implementing effective internal control can improve company performance. Data were collected based on the respondents' perceptions, namely the internal control units of nine selected companies listed on the Indonesia Stock Exchange. A multiple regression approach processed the data. The test results proposed that the dimensions of internal control, namely monitoring activities, communication and information, control activities, risk assessment, and control environment, have a positive and significant influence on efforts to improve company performance. The board of commissioners must continue to direct and motivate management to implement effective internal control to improve company performance.
References
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Vallabhaneni, S. Rao, (2014), Wiley CIAexcel Exam Review 2014, Part 1, Internal Audit Basics. John Wiley & Sons, Inc.
Wang, P., Bu, H., & Liu, F. (2022). Internal Control and Enterprise Green Innovation. Energies, 15(6), 1–21. https://doi.org/10.3390/en15062193
Wang, J., & Xia, W. (2022). Relationship between capital allocation efficiency and diversification strategy from the perspective of internal control. Discrete Dynamics in Nature and Society, 2022 doi:https://doi.org/10.1155/2022/5081126
Wardhani, N. S. (2021). the Influence of the Role of Internal Auditors , Internal Control , Good Government Governance , Fraud Prevention on the Performance of Provincial Governments North Sumatera With As Ethics. Accounting and Business Journal, 7, 21–29.
Almagtomea, A., Shaker, A., Al-Fatlawi, Q., & Bekheet, H. (2019). The integration between financial sustainability and accountability in higher education institutions: An exploratory case study. International Journal of Innovation, Creativity and Change, 8(2), 202–221.
Benardin, J., & Russell, J. (2010). Human Resource Management. New York: McGraw-Hill.
Connie Atristain Suárez. (2017). Internal Control Systems Leading to Family Business Performance in Mexico: A Framework Analysis. Journal of International Business Research, 16(1), 1–17.
Din, N. U., Cheng, X., Bashir, A., Muhammad, F. S., Olawoyin, G. A., Zhao, Y., & Nazneen, S. (2021). Gender diversity in the audit committee and the efficiency of internal control and financial reporting quality: Znanstveno-strucni casopis. Ekonomska Istrazivanja, 34(1), 1170-1189. doi:https://doi.org/10.1080/1331677X.2020.1820357
Eniola, A. A. (2020). Internal control procedures and firm’s performance. International Journal of Scientific and Technology Research, 9(2), 6407–6415.
Gde, I. W., Darma, Y., Bagus, I., Astika, P., Rm, M., & Bambang, H. (2018). The Effect of Internal Control System , Tri Hita Karana Culture and Good Governance on Government Performance. Ijsbar, 42(3), 26–37.
Hanoon, R. N., Khalid, A. A., Hanani, N. O. R., Rapani, A., Aljajawy, T. M., & Al-, A. J. (2021). The Impact of Internal Control Components on the Financial Performance, in the Iraqi Banking Sector. Journal of Contemporary Issues in Business and Government, 27(3). https://doi.org/10.47750/cibg.2021.27.03.303
Huang, P., Jiao, Y., & Li, S. (2022). Impact of internal control quality on the information content of social responsibility reports: A study based on text similarity—Evidence from China. International Journal of Accounting Information Systems, 45(March), 100558. https://doi.org/10.1016/j.accinf.2022.100558
Khlif, H., Samaha, K., & Amara, I. (2021). Internal control quality and voluntary disclosure: Does CEO duality matter? Journal of Applied Accounting Research, 22(2), 286-306. doi:https://doi.org/10.1108/JAAR-06-2020-0114
King, Alfred M. (2011), Internal Control of Fixed Assets, John Wiley & Sons, Inc.
Larmou, S., & Vafeas, N. (2010). The relation between board size and firm performance in firms with a history of poor operating performance. Journal of Management & Governance, 14(1), 61-85. doi:https://doi.org/10.1007/s10997-009-9091-z
Lerno, D. L. (2016). Relationship Between Internal Controls and Performance of County Government in Kenya a Research Project Submitted in Partial Fulfilment of the Requirement for the Award of the Degree of Master.
Mendy, J. (2021). Performance management problem of four small and medium-sized enterprises (SMEs): Towards a performance resolution. Journal of Small Business and Enterprise Development, 28(5), 690-710. doi:https://doi.org/10.1108/JSBED-06-2019-0201
Saeidi, P., Sayyedeh, P. S., Gutierrez, L., Streimikiene, D., Alrasheedi, M., Sayedeh, P. S., & Mardani, A. (2021). The influence of enterprise risk management on firm performance with the moderating effect of intellectual capital dimensions: Znanstveno-strucni casopis. Ekonomska Istrazivanja, 34(1), 122-151. doi:https://doi.org/10.1080/1331677X.2020.1776140
Scoleze Ferrer, P. S., Galvão, G. D. A., & de Carvalho, M. M. (2020). Tensions between compliance, internal controls and ethics in the domain of project governance. International Journal of Managing Projects in Business, 13(4), 845–865. https://doi.org/10.1108/IJMPB-07-2019-0171
Sihombing, J., & Pangaribuan, H. (2016). The influence of corporate governance on financial performance: study on two governance banks based in bandung. Proceedings International Scholars Conference, 4(1), 32. https://doi.org/10.35974/isc.v4i1.1735
Standards, I. C. (2001). Internal Control Management and Evaluation Tool. Evaluation, August.
Sunarsi, D., Rohaeni, . N., Wulansari, . R., Andriani, . J., Muslimat, . A., Rialmi, . Z., Kustini, . E., Kristianti, . L. S., Rostikawati, . D., Effendy, . A. A., Purwanto, . A. & Fahlevi, . M. (2020) Effect of e-Leadership Style, Organizational Commitment and Service Quality towards Indonesian School Performance. Systematic Reviews in Pharmacy, 11 (10), 472-481. doi:10.31838/srp.2020.10.71
Ud Din, N., Cheng, X., Ahmad, B., Sheikh, M. F., Adedigba, O. G., Zhao, Y., & Nazneen, S. (2021). Gender diversity in the audit committee and the efficiency of internal control and financial reporting quality. Economic Research-Ekonomska Istrazivanja , 34(1), 1170–1189. https://doi.org/10.1080/1331677X.2020.1820357
Vallabhaneni, S. Rao, (2014), Wiley CIAexcel Exam Review 2014, Part 1, Internal Audit Basics. John Wiley & Sons, Inc.
Wang, P., Bu, H., & Liu, F. (2022). Internal Control and Enterprise Green Innovation. Energies, 15(6), 1–21. https://doi.org/10.3390/en15062193
Wang, J., & Xia, W. (2022). Relationship between capital allocation efficiency and diversification strategy from the perspective of internal control. Discrete Dynamics in Nature and Society, 2022 doi:https://doi.org/10.1155/2022/5081126
Wardhani, N. S. (2021). the Influence of the Role of Internal Auditors , Internal Control , Good Government Governance , Fraud Prevention on the Performance of Provincial Governments North Sumatera With As Ethics. Accounting and Business Journal, 7, 21–29.
Published
2022-06-27
How to Cite
Pangaribuan, H., Sihombing, J., Sunarsi, D., & Manurung, D. T. (2022). The Internal Control Effort in Improving Company Performance. Kontigensi : Jurnal Ilmiah Manajemen, 10(1), 161-167. https://doi.org/10.56457/jimk.v10i1.267
Section
Articles
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