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Measuring the effectiveness of internal control systems of Ghanaian listed banks considering control environment, risk assessment and monitoring activities components of COSO’s framework
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CitationMohammed, A. ve Aksoy, T. (2020). Measuring the effectiveness of internal control systems of Ghanaian listed banks considering control environment, risk assessment and monitoring activities components of COSO’s framework. 32nd EBES Conference Program and Abstract Book içinde (80. ss.). Istanbul: EBES Publications.
Every organization operates within a business sector and the ability of the organization to break through the thick walls of rival competitiveness depicts its success. The ability of the organization to achieve its aims within the sector depends hugely on the policies and strategies as well as the effectiveness of procedures established to safeguard their operations. Organizations face internal and external forces that call for a strategy to help them continue to be relevant and competitive in the business environment. For instance, the Enron and WorldCom scandals in the US inculcated the importance of Internal Control Systems (ICS) as well as reliable financial reporting, strengthening corporate governance, increasing corporate responsibility, re-ensuring auditor independence, establishing and providing efficiencies of internal audit, internal control and risk management systems, strengthening management and public oversight functions. With the effect of scandals and subsequent Sarbanes-Oxley (SOX) Law, the establishment and effectiveness of the internal control system became one of the crucial factors and safety valves of sustainability, corporate management and business success. Banks were equally affected by all these developments. As a result, ensuring the existence and effectiveness of internal control system within banks became more important following the global accounting and auditing scandals. The main purpose of this paper is to evaluate the effectiveness of Internal Control Systems (ICS) of the banks listed on the Ghana stock exchange considering the Control Environment (CE), Risk Assessment (RA) and Monitoring Activities (MA) components of Committee of Sponsoring Organizations of the Treadway Commission (COSO)’s internal control framework. Methodologically, a comprehensive survey questionnaire designed and used to collect data. Out of the 60 questionnaires distributed to the banks, 37 copies were received representing 61.6% response rate. Statistical Package for Social Sciences (SPSS) version 25 used to analyze data by running among others reliability test, test of normality and descriptive statistics (means and standard deviations). The results of means (m) and standard deviations (SD) indicated that, strong controls exist in the CE (M= 4.14, SD =.755), RA (M= 4.27, SD =.731) and MA (M= 4.24, SD =.722) of internal control of the Ghanaian listed banks. Banks operate under higher risk than any other financial institution so, the study recommends that Ghanaian listed banks should invest more into risk management to curb or prevent any possible fraudulent activities.