Evaluating the Internal Controls System in Non-profit Institutions Based on COSO Framework (A Case Study: Shiraz Public Hospitals)

Document Type : Original Article

Authors

1 Ph. D. Student in Accounting, Department of Accounting, Shiraz University.

2 Ph. D. of Accounting, Department of Accounting, Shiraz University.

3 The Faculty Member of Accounting Department, University of Sistan & Baluchestan.

4 Instructor, Department of Accounting, Payame Noor University.

Abstract

Introduction: Designing and establishing the system of internal audit and internal controls in the governmental executive agencies like hospitals is one of the basic necessities. In this regard, the present research evaluates the effectiveness of internal controls in Shiraz public hospitals and clinics based on COSO framework.
Method: The method of the research is a descriptive correlational survey. The statistical population of the research include all employees of the financial department of Shiraz public hospitals and clinics (17 hospitals and clinics) in 2015 which contain 339 individuals. Sampling was not used in this study. In relation to the evaluation of internal controls system, the designed questionnaire by COSO and an adjustable one has been used with regard to the nature of the public hospitals. In order to test the hypotheses of the research, SPSS Software Version 19, and according to the normality or abnormality of data distribution, One Sample T-test and Median test have been used respectively.
Results: The results of the research state that in the internal controls system of Shiraz public hospitals and clinics, the components of internal controls including control environment, risk assessment, control activities, information, communication, evaluation and monitoring do not operate effectively.
Conclusion: In Shiraz public hospitals, some policies must be imposed for protecting the internal audit unit, and some effective internal controls should be designed and used.
 
Keywords:

Keywords

References

1        Kivelä, T. (2013). “Compulsory as Part of the Strategy”, Balanssi, Vol. 6, pp. 32-34. [In Finnish]
2        Arwinge, O. (2013). Internal Control: A Study of Concepts and Themes, 1th Edition, New York: Springer.
3        Heikkala, J. (2011). “Efficiency of Requirements for Internal Control, Risk Management and Internal Audit”, Auditing, Vol. 3, pp. 60-63. [In Finnish]
4        Musau, S. and T. Vian (2008). “Fraud in Hospitals”, Working Paper, Available at: http://www. cmi.no/publ ications/publication/?3028=fraud-in-hospitals. [Online] [26 October 2016]
5        Pourzamani, Z. and D. Moinian (2015). “The Conformity of Qualitative Characteristics of Financial Reporting of the Universities of Medical Sciences with Public Sector Accounting Standards”, Journal of Health Accounting, Vol. 4, No. 3, pp. 20-44. [In Persian]
6        Dickins, D.; O’Hara, M.; and J. Reisch (2010). “Frameworks for Establishing and Evaluating Internal Controls: A Primer and Case Study”, Journal of Case Research in Business and Economics, Vol. 3, pp. 1-16.
7        COSO (2016). “About us”, Available at: http://www.coso.org /aboutus.htm. [Online] [26 October 2016]
8        Securities and Exchange Commission (SEC) (2005). “Statements of SEC Chief Accountant Donald Nicolaisen and Corporation Finance Division Director Alan Beller Regarding New COSO Guidance on Section 404 Compliance (October 26)”, Available at: http://www.sec.gov /news/press /2005-153.htm. [Online] [26 October 2016]
9        Transparency International (2016). “Corruption Perceptions Index”, Available at: https://www.transpar ency.org/country/#IRN. [Online] [10 December 2016]
10    Rahmani, A. and F. Ghashghaie (2014). “The Necessities for Establishing an Internal Auditing Unit in the State Universities of Iran”, Journal of Health Accounting, Vol. 3, No. 2, pp. 41-62. [In Persian]
11    Pouria Nasab, A. (2013). “Internal Control: The Disengaged Ignorance”, Hesabdar, Vol. 21, pp. 47-58. [In Persian]
12    D’Aquila, J. M. and R. Houmes (2014). “COSO’s Updated Internal Control and Enterprise Risk Management Frameworks”, CPA Journal, Vol. 84, pp. 54-59.
13    Imani Barandagh, M. (2014). “The Challenges beyond the Obligation of Performance Audit in the Government Agencies of Iran”, Journal of Health Accounting, Vol. 3, No. 4, pp. 1-19. [In Persian]
14    Mohammadpour, F.; Tavakolnia, E.; and M. Akbarpour (2013). “Assessment of Internal Control and the Effects of Information Disclosure”, Exchange, Vol. 107, pp. 62-66. [In Persian]
15    Basel Committee on Banking Supervision (1998). “Framework for Internal Control Systems in Banking Organizations”, Available at: http: //www.bis.org/press/p980922a.htm. [Online] [26 October 2016]
16    Rahimian, N. and N. Zamani Fard (2014). “Applying Internal Controls Framework and Risk Management in Governmental Agencies and Non-governmental Organization”, Journal of Internal Auditors, Vol. 1, No. 3, pp. 8-20. [In Persian]
17    Gronli, M. J. and C. Xystros (1999). “Elevating Internal Audit”, Traffic World, Vol. 259, No. 5, pp. 40-63.
18    Lorenzo, M. J. P. (2001). “The Internal Auditor Oriented Processes”, Partida Doble (Spanish), July/August, pp. 78-85.
19    Campbell, M.; Adams, G. W.; Campbell, D. R.; and M. P. Rose (2006). “Internal Audit Can Deliver More Value”, Financial Executive, Vol. 22, No. 1, pp. 44-47.
20    Rivenbark, W. C. (2000). “Embracing Risk-Based Auditing in local Government”, Government Finance Review, Vol. 16, No. 3, pp. 17-20.
21    Griffiths, D. (2006). “Risk Based Internal Auditing: An Introduction”, Available at: www.internalaudit.biz. [Online] [26 October 2016]
22    Maynard, G. R. (1999). “Embracing Risk”, The Internal Auditor, Vol. 56, No. 1, pp. 24-8.
23    Marks, N. (2001). “The New Age of Internal Auditing”, The Internal Auditor, Vol. 58, No. 6, pp. 44-49.
24    O’Regan, D. (2002). “The CPA’s Transition to the World of Internal Auditing”, The CPA Journal, Vol. 72, No. 8, pp. 11-13.
25    D’Aquila, J. M. and R. Houmes (2014). “COSO’s Updated Internal Control and Enterprise Risk Management Frameworks”, CPA Journal, Vol. 84, pp. 54-59.
26    Hammed Rababa’h, M. S. (2014). “The Factors Effected in the Internal Control Systems at the Private Hospitals in Jordan: A Field Study”, Research Journal of Finance and Accounting, Vol. 5, No. 10, pp. 65-73.
27    Allegrini, M. and G. D’Onza (2003). “Internal Auditing and Risk Assessment in Large Italian Companies: An Empirical Survey”, International Journal of Auditing, Vol. 7, No. 3, pp. 191-208.
28    Al-Hijjawi, H. A. A. (1999). The Assets in the Scientific and Practical Governmental Accounting and itsApplications in Jordan, 1th Edition, Jordan: Library Audit Bureau in Jordan.
Journal of Health Accounting
Volume 4, Issue 4 - Serial Number 14
December 2016
Pages 26-41

Files

Share

How to cite

Statistics