Internal Controls

The poor economic conditions caused by the Covid-19 virus pandemic that hit all parts of the world had a significant impact on the survival of business entities. This change brings risks to the accounting profession, especially an auditor. If they are not careful in carrying out their profession, an auditor will be threatened by the continuity of his profession. This study aims to determine the shift in the application of internal control and audit in support of the realization of good corporate governance by reviewing journals related to the role of internal audit and then analyzed to obtain a paradigm related to the application of internal control and audit in creating good corporate governance. The results of this study indicate that there is a shift in the application of internal control and audit, namely by changing the approach through remote auditing.

الرقابة والمراجعة الداخلية هي مجموعة متكاملة من الأنشطة والخطط والسياسات ومجهودات تبذل من الأفــراد فــي المنظمات أو مؤسسات الاعمال أو الشركات، كل ذلك يهدف في مجموعه إلى توفير حدا معقولا من التأكيدات نحو تحقيق أهداف تلك المنظمات أو المؤسسات أو الشركات، ويأتي على رأس تنفيذ عمليات الرقابة الداخلية الإدارات العليا، وغيرهم من العاملين من الموظفين والمهنيين، وهذه العملية مصممة لتوفير تأكيد معقول، ومنطقي، وفعال فيما يتعلق بتحقيق الأهداف، هنا نستطيع القول بأن مسألة الرقابة والمراجعة الداخلية هي مسئولية كل من يعمل في المنظمة أو مؤسسة الاعمال أو الشركة.

This study aimed to develop a standard measurement tool for the effective assessment of computerized accounting systems (CAS) quality and effectiveness based on systems theory, in terms of their structural characteristics or functional components. The researcher identified five structural characteristics (components or subsystems) of CAS, namely internal controls, automated data-processing, relational database, automated reporting, and enhancing technologies components. The operationalization of these structural characteristics resulted in a 25-item index that forms the measurement tool developed. The 25-item index was constructed based on the review of prior literature to ensure content validity. The CAS measurement tool was administered to 384 active members of the Institute of Chartered Accountants of Nigeria (ICAN) through an online survey, and 234 useful responses were collected and analyzed to test the validity and reliability of the measurement tool. The researcher assessed the construct validity of the CAS measurement developed using the exploratory factor analysis, and the internal and external reliability using the Cronbach's alpha test of consistency and test-retest statistics, respectively. The results of the study suggest that the CAS measurement tool developed has strong content and construct validity as well as high internal and external reliability. It is, therefore, believed that the tool would yield valid and reliable results when employed in the assessment of computerized accounting systems. The study is significant as it introduces a new approach to assessing the quality of accounting information systems in terms of their structural characteristics instead of qualitative characteristics such as perceived advantages and ease-of-use of the systems. Further research is suggested to confirm the validity and reliability of the CAS measurement tool presented in this study.

Character traits are overlooked when assessing an IG’s success. IGs benefit when they focus on developing interpersonal skills, and building relationships with stakeholders. By understanding these traits, and the traits of successful IGs, future IGs will be positioned on how to best address the challenges they are likely to face

This research was purposively carried out to examine the role of Management in the enhancement of internal controls. The objective of the study was to identify possible areas of weaknesses in internal control system at Balaka District Hospital and how management can enhance the internal control environment in safeguarding public resources against abuse and fraud. It was conducted to appraise the existing internal control system and identify areas of internal control deficiencies and recommend for improvement.
Data was collected from twenty six (26) members of staff at the Hospital. Purposive sampling technique was used. Questionnaires were used to gather data regarding internal controls at the hospital. Data analysis and presentation were done with the aid of Microsoft Excel but carefully done to give the researcher a hand-on experience in carrying out such an exercise.
The research period covered six (6) months. It was discovered from the findings that management of Balaka District Hospital put in place strong internal controls in conformity with financial regulations such as the Public Financial Management Act (2003), Public Procurement Act (2003) and Public Audit Act (2003) and indirect application of Committee of Sponsoring Organizations of the Treadway Commission (COSO).
It was revealed that the level of compliance was high and this is very commendable and must be encouraged. However, it was discovered that there was no internal audit section at the hospital which rendered the appraisal activity of internal control performance weak. It is recommended that management of the hospital should put in place an internal audit section that should be appraising the control system at the institution. Besides, management should routinely review the operation of internal control systems at the hospital in order to find ways on how to improve on discovered weaknesses. Review of internal control system need to be done from time to time, so that new standards can be embraced for performance and improvement. It would help to change weak conventions of the system. This would help to enhance and improve the internal control to achieve effective and efficient internal control operations.

Accounting is more integrated with the technology today compared to the previous years. The increase in a variety of technological developments and commercial transactions has further increased the number and type of errors as well as frauds related to the accounting profession. This causes misleading information for several stakeholders. Stakeholdes sometimes make false decisions based on the financial statements created as a result of false and fraudulent transactions. In order to minimize the errors and frauds concerning the accounting system of enterprises, effective internal controls and auditing systems should be in order. It is evident that, setting up the required internal controls and auditing systems reduce asset losses and provide great benefits in the long run for firms. Existence of strong internal controls and auditing systems in enterprises has gained great importance in Turkey. This study provides information about the audit techniques that can minimize accounting re...

Integrated computerized accounting systems (ICAS) faces the challenges of unauthorized access, alterations and destruction of data thus compromising the confidentiality, integrity and availability of financial information. The research evaluated the effectiveness of integrated computerized accounting systems (ICAS) on internal controls (IC) of supermarkets in Kisii County, Kenya. The objectives of the study were; to determine the effect of integrated financial operations on the internal controls of supermarkets in Kisii County, to determine the effect of segments information on the internal controls of supermarkets in Kisii County. The findings of the study are helpful to managers of supermarkets in acquiring the ICAS to strengthen the internal controls, developers of accounting softwares in programming software that meets the needs of the supermarkets and future researchers as it forms the basis of future researches. The study used descriptive survey designs that were conducted among 21 out of the 24 targeted branch managers, supervisors and accountants of the supermarkets in Kisii County a cosmopolitan transit county with branches of all major supermarkets in Kenya. The targets population was the eight supermarkets in Kisii County. A census method was used comprising of all the 24 branch managers, supervisors and accountants. Closed ended questionnaire were used to collect data from the supermarkets in Kisii County where only seven supermarkets responded. The reliability of the questionnaire was measured using Cronbach alpha resulting to a value of 0.866 and the fitness for model tested using analysis of variance (ANOVA) and was found to be significant at 0.003. The data was analyzed through Likert scale, descriptive and inferential statistics with the aid of Statistical Package for Social Sciences (SPSS) version 22.0 and presented using tables & figures. Descriptive methods used were mean and standard deviation.  The inferential statistics used include multivariate regression analysis to test the model fit and correlation analysis. The hypothesis was tested using t-test for a significance level of ±5 at a degree of confidence of 95%. The findings of the study showed that integrated financial operations and computerized integrated accounting are positively significant on strengthening the internal controls while segment information and consolidated financial reporting transactions are negatively significant on strengthening the internal control system

Pengendalian Internal merupakan semua elemen dari sebuah organisasi yang diambil bersama-sama dalam mencapai tujuan organisasi agar terhindar dari risiko tidak tercapainya tujuan yang ditetapkan Organisasi, laporan keuangan yang dihasilkan perusahaan dapat dipercaya dan kegiatan perusahaan sejalan dengan hukum dan peraturan yang berlaku. baca selengkapnya mengenai definisi, tujuan, hambatan, perkembangan dan konsep Sistem Pengendalian Internal (intern) yang perlu dipahami oleh auditor internal dalam melakukan audit pengendalian internal

The study will determine and establish the connection between internal auditing and internal control systems on financial performance in an Institution of higher learning in Uganda. Internal controls will look at from the perception of Control background, Internal Audit and Control Activities whereas financial performance will focus on Liquidity, responsibility and Reporting as the trial of financial performance and internal control. The Researcher will commence to generate the causes of continual poor financial performance from the viewpoint of internal controls.
Research will be conducted using both quantitative and qualitative approach using Survey, relationship and Case study as Research Designs. Data will be collected using Questionnaires and Interview guide as well as appraisal of available documents and records targeting essentially Deans, Heads of Departments, Management Committee members, and Finance and Accounts staff as respondents from a population of 36 Ugandans. Data will be analyzed using the Statistical Package for Social Scientists where conclusions will be drawn from tables, figures from enclose.
The study will establish that management of the institution is dedicated to the control systems, energetically participates in monitoring and supervision of the activities of the University, all the activities of the Institution’s activities are initiated by the top level management, that the internal audit department is not efficient, is understaffed, doesn’t conduct regular audit activities and doesn’t produce regular audit reports although the few reports produced by the internal audit department address weaknesses in the system. It will further be revealed that there is a clear separation of roles, weaknesses in the system are addressed, and there is a training program for capacity building in the institution. However, the study will also find out that there is lack of information sharing and inadequate security measures to safeguard the assets of the University. It will also be noted that there isn’t enough cash to meet intended University goals, that the fees charged to students are not appropriate to cover costs, that all fees meant to be remitted to the University are not collected. It will however, be revealed that all revenues and expenditures are properly classified, and that assets of the University have generally increased. The study will establish a significant relationship between internal control system and financial performance.
The investigation will recommend competence profiling in the Internal Audit department which should be based on what the University expects the internal audit to do and what appropriate number staff would be required to do this job. It will also recommend that the institution establishes and manages knowledge/information management system to enable all parties within the institution to freely access and utilize the official information. There should be a strategy improve the generation of additional finances for the University.
The Study therefore will conclude that internal control systems do function although with there is a significant relationship between internal control systems and financial performance in an Institution of higher learning.

This study was conducted to investigate the impact of internal control systems on the financial performance of banks operating in Pakistan. Various statistical tests were adopted for analysis i.e. Regression analysis, correlation analysis, and reliability test.
Data collected was of primary source through a questionnaire adopted from (MAWANDA, 2008). Convenient sampling technique was used. The data was analyzed using Statistical package for social sciences (SPSS) computer software.
R square occurs at a value of .717 thus suggesting that internal control components accounts for 42.8% variance in performance. According to regression analysis, beta occurs at .594 for control activities, .127 for internal audit and .231 for control environment suggesting a positive impact of Independent variables (Control activities, control environment, and internal audit) on the dependent variables. A positive beta value proved our hypotheses. These findings are expected to value the banks of Pakistan in increasing their financial performance by focusing on internal control systems.

The rapid growth in government expenditure in Kenya has caused concern among policy makers on the implication of such
growth. Over the three decades, government expenditure in the country grew at a faster rate than the growth rate. Given this
fiscal scenario, an explanation of this requires studying the impact of government expenditure on economic growth. The
specific objectives of the study were to examine the influence of revenue mobilization, budgeting practices, internal control
and financial planning on financial performance in Mombasa County Government, Kenya. To strengthen the conceptual
framework the researcher used theories such as the systems theory, new public management theory and allocative efficiency
theory. The study adopted a descriptive research design. The study collected primary data through use of questionnaires with
respondents in the construction industry. The target population was 210 people. The sample size was 138. On revenue
mobilization, the study findings established that Mombasa County Government collects insufficient revenue to finance its
function. The study established that Mombasa County Government is majorly financed by the central government of Kenya.
On budgeting practices, the study established that through the County Integrated Development Plan, residents are allowed to
prioritize the areas where they want development to happen within the county. On internal control, the study established that
Mombasa County Government has put in place sufficient mechanisms for detecting fraud, theft and misuse of scarce financial
resources through checks and balances. On financial planning, the study established that through budgeting process, Mombasa
County Government has a financial plan. However, the study revealed that due to lack of sufficient finances, the study
findings the county is not able to implement all the financial plans set out in the budget. The study concluded that internal
controls have a significant effect on financial performance in Mombasa County Government, Kenya. The study recommended
that; Mombasa County Government should mobilize finances from other sources such as offering municipal bonds to increase
revenue for development purposes rather than depend on the central government allocation; Mombasa County Government
should prioritize spending on projects that will have a positive impact on the residents, and this will have an effect which will
enable residents land rates; Mombasa County Government should continuously strengthen internal controls to safeguard the
little resources available from theft, misuse and misappropriation; Mombasa County Government should not offer waiver on
land rates, instead they should allow residents to make partial payments.

Presented by Martin Otundo Richard at academia.edu digital library to add knowledge to the world scholars and future researchers. Martin is a senior lecturer, researcher and data analyst in Kenya. He can be reached via +254721246744; martinotundo@gmail.com for all research assignments, data collection, analysis and any other consultancy work.

ABSTRACT
The study sought to establish the effect of Internal Controls and Organizational Characteristics on the
relationship between the budgeting process and the performance of Churches in Kenya to address
identified gaps in the literature review. There has been increased calls for church accountability due to
reported fraudulent activities in churches and lack of consensus regarding the existence of robust
budgeting and internal controls in religious organizations. Furthermore, reported fraud cover-up and
unconcluded debate on whether there exists a conflict between the sacred and secular nature of
accounting informed the focus of the study. Also, due to limited studies on churches focusing on
budgeting, internal control, organizational characteristics, and the performance, this study addresses
the knowledge gap within the Kenyan context. The objectives of the study were namely; to investigate
the effect of the budgeting process on the performance, to determine the intervening effects of Internal
Controls on the relationship between budgetary process and performance, to establish the moderating
effect of Organizational Characteristics on the performance and to establish the joint effect of
budgeting, Internal Controls and Organizational Characteristics on the performance of churches in
Kenya. It was hypothesized that; there is no effect of budgeting processes on the performance of
churches, there is no intervening effect of Internal Controls on the relationship between the budgeting
process and the performance of churches, there is no moderating effect of Organizational
Characteristics on the relationship between budgeting process and performance churches and there is
no joint effect of the budgeting process, Internal Controls and Organizational Characteristics on the
performance of churches in Kenya. Data from 96 churches were analyzed out of the 97 targeted
reporting a response rate of 99%. The study used a positivistic research design and descriptive design.
The study further used statistical tests that include Cronbach alpha, descriptive statistics such as the
mean, standard deviation, skewness, kurtosis. Other analysis included correlational analysis while
regression analysis was used to test the hypothesis. The study findings were that there was a
statistically significant effect of budgeting process on the performance of churches of churches,
Internal Controls have an intervening effects on the relationship between the budgeting process and
the performance of churches in Kenya, there is a moderating effect of Organizational Characteristics
on the relationship between budgeting process and performance churches in Kenya and there is a joint
relationship of Budgeting Process, Internal Controls and Organizational Characteristics on the
performance of churches in Kenya. The study found that the budgeting process and internal controls
are adequately practiced in Churches in Kenya and that the two variables have a significant positive
effect on performance. The study further found that organizational characteristics have a significant
role in ensuring organizations improve their performance. The results of the study add to the existing
knowledge regarding the debate on whether the budgeting process and Internal Controls exist in
churches by showing that indeed they are practiced. By the study results indicating a significant
relationship between the variables, the sacred versus secular debate reduces. The study demonstrated
the relevance of positivism philosophy thus contributing to the debate on its relevance to modern
research. Furthermore, the study reinforces the relevance of agency, budgeting, contingency and
stewardship theories to churches. Since the study shows that Internal Controls and Organizational
Characteristics have an intervening and moderating effect on the relationship between budgeting and
performance, the study recommends development of church policies and enhanced training of church
leaders around these variables. The study further recommends that future research consider inclusion
of external factors and attempt to establish whether membership growth translates to revenue growth
of churches in Kenya.

Many county governments are not able to collect sufficient funds to cover their budget expectations and thereby causing huge
local revenue collection gaps. This study therefore seeks to establish the effects of internal control systems on revenue
collection performance in Uasin Gishu County. The study targeted all the 111 staff of Uasin Gishu County attached to the
finance/accounts and revenue collections departments. The sample size formula for this study was based on Yamane’s
formula where a sample size of 85 respondents was selected by use of stratified random sampling techniques; however the
study added a loading population of 10% in the sample to cater for possible non response. Therefore, samples of 94
respondents were included in the study Questionnaires were used to collect data. To determine the reliability of research
instruments a pilot study was conducted before the actual data collection and further split half method was carried out to
calculate Cronbach alpha. A value of above 0.79was obtained and confirmed the reliability of the research instruments. The
data was analyzed using both inferential (multiple regression and correlation) and descriptive statistics (frequencies,
percentages, mean and standard deviation) and was presented by use of tables and charts. The study findings indicated that
control environment (β = 0.147; p< 0.05), was positive and had significant relationship with revenue collection in Uasin
Gishu County. It was therefore recommended that Uasin Gishu County government should ensure compliance with laws,
regulations and operational controls in their internal control systems, needs to avail competent internal and external
professionals who have responsibilities of making an effective and efficient control environment, ensure effective control
activities in their institution. Further it is recommended that, counties should ensure efficiency of monitoring The study will be
beneficial to various stakeholders; these include Uasin Gishu County government, Government of Kenya, other organizations
policy makers and scholars.

Abstract
From history we learn that when a company needs to expand and the local market is saturated it is time to venture into the international market. This can be observed from the ancient days when caravans moved from town to town selling their wares. Even on matters that are spiritual missionaries have moved out to expand their religion. The extent of ‘abroad’ depended on the time it was used, political boundaries set and the available technology. In the present, the world has become a global village given the technology advancement in the communication industry which has made the world borderless and the faster modes of transport.
In this paper we will conduct a qualitative research to examine the expansion of Kenya Airways and explore the different approaches it adopted to counter the risks and uncertainties as it entered the international market. We will identify, categorize and prioritize the risks and uncertainties it faces in the host country and find out how it currently hedges itself against the risks and propose sustainability strategies for risk management by the company.
Keywords: saturated, international market, risk, uncertainties, hedges, risk management

An analysis of the organization and ethics of the Sparks Police Department which is located in Washoe County, Nevada and is east of adjoining Reno, Nevada. The study covers the demographics, crime stats, employment hiring, organizational structure, internal investigations and discipline.

The World Bank&#39;s Integrity Vice-Presidency (INT) investigates misconduct in Bank-funded projects and advises World Bank staff and borrowing country personnel on corruption prevention measures. When INT finds misconduct in a World Bank-funded project, the Bank can bar the firms or individuals involved from bidding on future World Bank-financed contracts. It can also provide information to national law enforcement authorities in the country or countries where the misconduct occurred or where the companies or individuals reside for possible criminal prosecution. Its preventive unit distills investigative findings into thematic reports like this and other documents that it shares with World Bank staff and borrowing country personnel to help them reduce misconduct in future projects. One of the challenges in preventing fraud, corruption, and collusion in the roads sector is that there are so many ways they can seep into the process of designing, tendering, and managing construction c...

This research aimed to identify the computerized accounting systems employed by Nigerian SMEs, examine the extent to which Nigerian SMEs utilize the built-in internal control features in their computerized accounting systems, as well as explore the perceived reasons for the underutilization of any of the computerized accounting systems internal control features. The researcher employed the survey methodology in the conduct of the study, and data was collected using questionnaire administered to the an accounting officer in each of the 370 firms randomly selected from the population of SMEs in the south-south region of Nigeria. The research data was analyzed using frequencies, mean, standard deviation, and the one-sample T-test statistics. The results of the study indicate that Nigerian SMEs employ various accounting software in the performance of their accounting function, with QuickBooks, Peachtree (Sage 50), and MS-Navision being the most used. The study also indicate that Nigerian SMEs optimally utilize the built-in internal control features in their computerized accounting systems. The reasons for the underutilization of a few of the internal control features by firms are indicated in the study to include lack of awareness of the availability of the internal control features in their accounting systems, limited number of accounting staff, and lack of formal internal control policies. This study extends the body of knowledge in accounting, and its results would be useful to those in the academia, management and accounting personnel of SMEs, and other practitioners. Areas for further research have been suggested to confirm and extend the outcome of this study.

Wajinga Nyinyi is a Swahili Song by King Kaka. It's a lamentation by Kenyan youths and the fellow citizens on the state on the nation in Kenya. King Kaka in his song speaks about the unfulfilled promises by Kenyan politicians. High unemployment rates, unending corruption scandals and loss of funds leading to poor living standards in the country are just but the main concerns on the mind of the average Kenyan who is known as Wanjiku in slang.

The types of whistleblowing claims made against institutions of higher education are not well understood nor are the various mechanisms used to solicit, investigate, and learn from such claims at the institutional and state levels. This research obtained and analyzed whistleblower claims made against institutions of higher education and explores and facilitates a discussion around the value of learning opportunities that come from whistleblowing claims. Aggregate claims data and detail workpapers for claims made against the 45 publicly funded colleges and universities in the state of Ohio, in the midwestern United States was analyzed to identify patterns and areas of focus which could improve institutional processes and internal controls. Four areas resulted from the analysis: hiring and pay practices, prevention of the theft of institutional assets, prevention of the theft of student funds, and an institutional accreditation issue. All claims that were reported reflected real concerns on topics of strategic importance to institutions and their management practices, although not all were substantiated or corroborated. One quarter of the claims resulted in proven cases for recovery and prosecution. At the state level, completeness of investigation and administrative learning were sometimes not pursued due to the code enforcement nature of the governing bodies whose mandate was limited to the identification and prosecution of crimes, although improvement opportunities clearly existed. The case of Ohio demonstrates that open government and public information request processes can provide sufficient information to allow insight into the nature of the claims and to identify improvement opportunities for both the institution and state level administration.

This paper presents a first attempt at understanding some of the many issues involved in the granting of an amnesty to illegal immigrants. We consider government behavior with respect to allocations on limiting infiltration (border control) and apprehending infiltrators (internal control) and with respect to the granting of amnesties, the timing of amnesties, and limitations on eligibility for those amnesties. We demonstrate the effects of government actions on allocations and the flow of immigrants, and how the interactions between these factors combine to yield an optimal amnesty policy. We also consider various extensions such as intertemporal transfers of policing funds, risk-aversion, and &quot;fuzziness&quot; in declarations regarding eligibility for an amnesty aimed at apprehending and deporting undesirables.

Kurumlar, ölçeklerinin büyümesi ve teknolojik gelişmelere bağlı olarak kurumsal yapılarında değişim yapmak zorunda kalmaktadırlar. Kurumsal ölçek büyümesi yönetimsel açıdan profesyonelleşme ve kontrol sorununu ortaya çıkarırken, teknolojik gelişmeler kontrol sorunuyla kontrollerin nasıl yapılacağı sorununu ortaya çıkarmaktadır. Bundan dolayı “neye- neden oluyor?” sorularına yönelik analizlerden önce; “neler var ve nasıl analiz edilecektir?” sorularının cevaplarıyla ilk soruların cevaplarına ulaşacağımız bir çağdayız. Bunun için kurumsal yapı içinde etkin bir kontrol ortamının gerekliliği ortaya çıkmaktadır.
Kurumların en temel amacı varlıklarını sürdürmek veya onlara yüklenen temel işlevleri yerine getirmektir. Bu iki amaç özel sektör için geçerliyken, kamu kurumları için ise temel amaç verilen görevler yoluyla kamu yararı ve toplumsal faydayı ortaya çıkarmaktır. Bu nedenle kamu kurumları için temel işlevlerini yerine getirmek stratejik amaç olmaktadır. Ancak kurumların stratejik amaçları ister kurumların varlığını sürdürmek, isterse işlevlerini yerine getirmek olsun; bu amaçlara ulaşmak için karşılaşacakları risklerin yönetilmesi zorunludur. Bundan dolayı günümüzdeki tüm kurumsal yapıların en temel özelliği risklerin yönetilmesine yönelik bir yapılanmaya yönelmeleridir.

The objective of this research was to establish effects of internal controls on performance of public institutions with focus on the Ministry of Foreign Affairs Kenya in particular, the effects of control environment, control activities, risk assessment, communication systems and monitoring on performance at the Ministry of Foreign Affairs Kenya. The study was anchored on Agency theory, positive accounting theory and reliability theory and adopted descriptive research design. The study adopted a census approach to achieve its objectives since all seventy staff in accounts, finance and administration departments participated. Primary data was collected using semi-structured questionnaires. Descriptive statistics was used in data analysis and presentation while inferential statistics of multiple regression analysis was used to establish the relationship between dependent and independent variables. An assessment of the model’s underlying statistical assumptions was conducted through tests for Homoscedasticity, Multicollinearity and Normality. All decisions about the hypotheses and the corresponding conclusions were made using the p-values. The null hypotheses were rejected for p-value < 0.05. That is, a significant effect of any independent variable on the dependent variable existed if the p-value for the corresponding coefficient is less than 0.05. The study concluded that all identified aspects of internal controls had positive influence on performance and are efficient at the Ministry of Foreign Affairs with control activities and monitoring controls having highest efficiency levels followed by control environment, communication systems and risk assessment had lowest efficiency level. The study recommends the Ministry to develop strong whistle blowing policy to protect whistle blowers, train staff on possible risks and how to assess them, review communication policy to allow free communication, ensure asset register is regularly update and review risk assessment tools to ensure that they are effective.

Purpose: The study purport to investigate the effectiveness of internal control mechanisms, investigate whether evidence of agency problem is found among banks in Europe and determine how internal controls affect credit risk. Design/methodology: Panel data from 91 banks from 23 European Union countries were studied from 2008-2014. Hausman's specification test suggest the use of fixed effects estimation technique of GLS. Quantitatively modelled data on 15 variables covering elements of internal controls, objectives of internal controls, agency problem, bank and country specific variables were used. Findings: There is still high credit risk in spite of measures being implemented by the European Central Bank. Banks have individual entity factors that increase or decrease credit risk. The study finds effective internal control systems because objectives of internal controls are achieved and significantly determine credit risk. Agency problem is confirmed due to significant positive relation with credit risk. There is significant effect of internal controls on credit risk with specific variables as risk assessment, return on average risk weighted assets, institutional ownership, bank size, inflation, interest rate and GDP.-25-Intangible Capital – http://dx.doi.org/10.3926/ic.911 Research limitations/implications: Missing data prevented the use of strongly balanced panel. The lack of flexibility with using quantitative approach did not allow further scrutiny of the nature of variables. However, statistical tests were acceptable for the model used. The study has implications for management and owners of banks to be warry of agency problem because that provides incentive for reckless high risk transactions that may benefit the agent than the principal. Management must engage in actions that profile the company better and enhances value maximization. Rising default risk has tendency to impair corporate image leading to loss of reputational capital. Originality/value: The study provides the use of quantitative approach to measuring certain phenomena within the discipline of internal controls. The study adds to a previous study by same authors and confirming the agency problem in a different approach.

The problem of the present research is indicated as the desire to want to know what are the  predominant factors that limit the internal control in the Municipality of Punta-Callao,  and whose objectives have been to determine such predominant factors to be able to diagnose, evaluate recommend And propose a contribution for the continuous improvement of this institution.

          The methodology used is based on a positivist paradigm, with a quantitative approach, of a substantive type, non - experimental design, cross - section and subtype of explanatory descriptive design, with hypothetical deductive research method. From the obtained results, it is necessary that the instrument used presents a good reliability and internal coherence. It concludes in the following:
         
          The predominant factor that limits internal control in the Municipality of Punta- Callao is the technological factor.
The predominant indicator within the personal factor that limits internal control in the Municipality of La Punta is inefficiency in strategic operational actions.
The predominant indicator within the institutional factor that limits internal control in the Municipality of La Punta is the lack of a good organizational structure.
The predominant indicator within the functional factor that limits internal control in the Municipality of La Punta is the gap between the necessary skills profile and the actual profile of the official who holds the position.
The predominant indicator within the technological factor that limits internal control in the Municipality of La Punta is the non-implementation of controls on backup files.
Key words: Personal factor, Institutional factor, Functional factor, Technological factor.