ABSTRACT:
This research investigated factors as Control Environment; Risk Assessment; Control Activities; Information and Communication; Monitoring affecting on the effectiveness of regularity expenditure internal control system in Gia Lai State Treasury Department. Conducting by quantitative and qualitative method on the INTOSAI foundation, the results indicated that only four factors influenced on the effectiveness of regularity expenditure internal control system (exception of Control Activities factor), whereas the strongest and least impacted factors was Control Environment and Risk Assessment. Hence, this research will be a foundation for managers making suitable strategies and policies to enhace the effectiveness of operation.
Keywords: Internal control, INTOSAI, Effectiveness of internal control system
1. Introduction
The regularity expenditure control at local treasury departments in Vietnam are still ineffective and inefficient due to the weak of internal control system. It has create overspending comparing to budget from 1.00% to 2.00% every year and accelerate ceaselessly Vietnams public debt from 45.80% to 62.40% GDP over a six-year period, from 2011 to 2016. Hence, measuring factors affecting the effectiveness of regularity expenditure internal control system in local treasury departments, especially the Gia Lai State Treasury Department, is significantly critical, devoting to secure governmental agents the effectiveness and efficiency in expenditure control.
2. Literature review
2.1. Definition of internal control system and regularity expenditure
Internal control system is defined in INTOSAI 2004 as “a dynamic integral process that is continuously adapting to the changes an organisation is facing. Management and personnel at all levels have to be involved in this process to address risks and to provide reasonable assurance of the achievement of the entitys mission” (INTOSAI, Guidelines for internal control standards for the public sector, 2004).
Regularity expenditure (as known as stated budget regularity expenditure), according to The Law on State Budget of Viet Nam in 2015, are expenditures to maintain constant activities of Nation comprising essential items like wage; merchandise; office stationery and supplies; services; transference and other expenditures. In essence, regularity expenditure is a process redistribution of the capital from national monetary fund to ensure the normal operation of stated system corresponding for its functions and missions.
2.2. Components of internal control system
Depending on INTOSAI 2004, there are five components of internal control system including: Control Environment; Risk Assessment; Control Activities; Information and Communication and Monitoring. In which:
Control Environment: Set as the tone of entire internal control system in an organisation and influencing on the consciousness about control of its staff.
Risk Assessment: Support organisation achieve its objectives based on identifying and analysing relevant risks and determining the appropriate responses.
Control Activities: The policies and procedures established to address risks that affecting to the achievement of entitys objectives. Control activities comprise a range of detective and preventive control.
Information and Communication: Are crucial to realizing all internal control objectives.
Monitoring: Assess the quality of the internal control systems performance over time, is accomplished through routine activities, separate valuations or a combination of both.
2.3. The effectiveness of internal control system
According to the Internal Control Framework of INTOSAI 2004, the effectiveness of internal control system in an entity is obtained if the entitys mission, the following general objectives are being achieved:
- Executing orderly, ethical, economical, efficient and effective operations.
- Fulfilling accountability obligations.
- Complying with applicable laws and regulations.
- Safeguarding resources against loss, misuse and damage due to waste, extravagant, weak management, error, fraud and misconduct.
From above theory framework, we appraised the effectiveness of regularity expenditure internal control system in the Gia Lai State Treasury Department follow four observations:
- Completing targets of regularity expenditure control;
- Proclaiming financial and non-financial reports for both internal and external parties;
- Complying with state budget regularity expenditure regulations;
Securing assets, documents and sensitive information.
3. Research method
3.1. Research model
By adopting the research model from papers of researchers as Turnbull (1999); AMF (2005); Annukka Joipii (2010); Philip Ayagre et al. (2014) and Moni Muskanan (2014), we proposed research model (with five independent variables comprise Control Environment; Risk Assessment; Control Activities; Information and Communication; Monitoring) to investigate factors affecting the effectiveness of regularity expenditure internal control system (the depend variable) in the Gia Lai StateTreasury Department as follows:
3.2. Research hypotheses
From above proposed model of authors, hypotheses would be tested as follows:
- Hypothesis 1: The effective Control Environment induces the regularity expenditure internal control system more effectiveness.
- Hypothesis 2: The effective Risk Assessment induces the regularity expenditure internal control system more effectiveness.
- Hypothesis 3: The effective Control Activities induce the regularity expenditure internal control system more effectiveness.
- Hypothesis 4: The effective Information and Communication induces the regularity expenditure internal control system more effectiveness.
- Hypothesis 5: The effecitve Monitoring induces the regularity expenditure internal control system more effectiveness.
Finally, authors would conduct multiple regression analysis to identify the equation assessing factors effect on the effectiveness of regularity expenditure internal control system in the Gia Lai State Treasury Department. The specific equation is:
Effectiveness (EFF) = β0 + β1CE + β2RA + β3CA + β4IC + β5MO
For:
EFF - The effectiveness of regularity expenditure internal control system
CE - The effectiveness of Control Environment
RA - The effectiveness of Risk Assessment
CA - The effectiveness of Control Activities
IC - The effectiveness of Information and Communication
MO - The effectiveness of Monitoring
3.3. Data collection
A survey was carried out in Gia Lai State Treasury Departments system to study the effectiveness of five factors and regularity expenditure internal control system. The designed and edited survey was sent to respondents who belong to the leader board and staffs of 1 province-level office and 16 district-level offices, as well as staffs participate directly in state budget regularity expenditure activities of units using the state budget.
And, the survey must be conducted by respondents who participated directly in internal control activities as well as have knowledge enough to understand and answers questions. Moreover, to fulfill the validity and reliability of the research result, the sample in Multiple Regression Analysis (Green, 1979; Tabachnick and Fidell, 2007) is at least as:
N = 50 + (8 x m) (1)
Where: N - The select sample; 50 - The constant; m - independent variables
To conduct the research, authors send the survey to all 210 respondents including leaders and staffs who take part in regularity expenditure activities of Gia Lai Sate Treasury Department system and divisions using the state budget. And, the questionnaire was designed with 45 questions divided into 3 section concluding: section one with 7 question related to respondents information, section two with 34 question toward to 5 factors as independent variables and section three with 4 questions for the effectiveness of regularity expenditure internal control system according to the INTOSAI foundation. Furthermore, the question in section two and three was based on a five (5) point Likert scale, ranging from strongly disagree to strongly agree, where 1 represented for strongly disagree and 5 represented for strongly agree.
In addition, the software Statistical Package for Social Sciences (SPSS) was used to analyze and present data in the form of mean and standard deviation for each question and factor. Cronbanch's alpha was also used to test dependent variable and independent variables. Moreover, a Cronbach's alpha is generally accepted at 0.7, but other researchers consider that 0.6 and above are reliability and validity enough to recognize (Field, 2000). Furthermore, without new factor in research model adopting form former studies, authors did not conduct Exploratory Factor Analysis (EFA) before Multiple Regression Analysis (MRA). Moreover, authors also performed One-way Anova Test to evaluate above hypotheses.
4. Results and discussions
210 questionnaires was sent to directors, deputy director, managers, deputy manager and chief accountant and the return rate accounted for 100%. After testing the appropriate answers, all collected 210 surveys were validity and liable to conduct analysis.
At first, the figures showed that the mean of factors CE accounted for 4.19; 3.95 for RA; 4.17 for CA, 4.12 IC for and 3.93 for MO. Thus, the result reflected a good internal control system in regularity expenditure control at Gia Lai Sate Treasury Department system. Then, authors tested Cronbach's Alpha.
The reliability of observation with Cronbach's Alpha form 0.684 to 0.895, whereas five factors CE; CA; IC; MO and the effectiveness was 0.895; 0.812; 0.886; 0.754 and 0.758, respectively. In contrast, the Cronbach's Alpha of RA was 0.684 < 0.7. However, this figure could be accepted (Field, 2000).
After that, five mentioned hypothesizes was tested by using One-way Anova Test. The Sig. value of fives tests ≈ 0.000 < 0.05. Hence, all of five hypothesizes was accepted. Then, authors conducted correlation analysis and MRA. With figures of correlation analysis table, the correlation between dependent variable EFF and independent variables CE; RA; CA; IC and MO is significant at the 0.01 level (the validity at 99%). Furthermore, independent variables represented a significant correlation each other at the 0.01 level.
With Model Summaryb in table 4.1, we had Adjusted R Square = 0.690. It mean that five factors CE; RA; CA; IC and MO explained 69.00% the EFF of Gia Lai State Treasury Department. Moreover, 31.00% remaining of the EFF was affected by other factors. Furthermore, the value of Sig. ≈ 0.000b < 0.05 in table ANOVAa, regression model was absolutely appropriate and acceptable.
In addition, with table Coefficientsa, the Sig. value of CA ≈ 0.272 > 0.05. Thus, the CA factor could not expound the change of the EFF. The reason for this issue might due to errors affecting the obtaining regularity expenditure control targets. Further, the Sig. value of four remained factors was suitable with CE ≈ 0.000 < 0.05; RA ≈ 0.039 < 0.05; IC ≈ 0.000 < 0.05 and MO ≈ 0.030 < 0.05. Hence, four factors CE; RA; IC and MO expound the change of the effectiveness value and the standardized regression model:
EFF = 0.350CE + 0.097RA + 0.326IC + 0.123MO
In generall, according to Model Summaryb table, we have the value of Durbin-Watson = 1.683 ≈ 2. It means that there was no auto-correlation phenomenon. Then, we could affirm that the collected data is trustworthy and validity to reflect the research result. Futhermore, with the ANOVAa table, we had the value of F = 93.822 which is significant and the value of Sig. ≈ 0,000b< 0.05. Thus, the research model conducted by authors was appropriate with meaning level of 5,00%. On the other hand, with the value of VIFcolumn in Coefficientsb table, we also had the figures of five factors less than 4. So, we could conclude that there was no multi-collinearity phenomenon. As the same as according to the figure 4.1, there was no infringe in linear relationship assumption of research model.
Furthermore, we also conducted testing the standard distribution of residual. The result was interpreted by figure 4.2 as follows.
It could be seen that in figure 4.2, the standard distribution curve superimposed the histogram. And the value of Mean = 0 as well as standard deviation value (Std. Dev.) = 0.98797, we could infer that the residual distribution was almost standard.
5. Inclusion
This study was conducted to find out the effect of factors as components of internal control system comprising Control Environment; Risk Assessment; Control Activities; Information and communication; Monitoring on the effectiveness of Gia Lai State Treasury Department regularity expenditure internal control system, Viet Nam. The result expatiated that the effectiveness of above factors is incorporated with the effectiveness of regularity expenditure internal control system.
Nevertheless, according to the regression model, there were only four factors comprising Control Environment; Risk Assessment; Information and communication; Monitoring what could elucidate the alteration of the effectiveness of regularity expenditure internal control system. The Control Activities factor could not explicate the change of the effectiveness due to the formality of control activities in Gia Lai state treasury departments and the performed method was manipulated by the leaders. Simultaneously, the Control Environment factor (with β = 0.350) had the strongest effect and the Risk Assessment factor (with β = 0.097) had the least effect on the effectiveness of Gia Lai State Treasury Department regularity expenditure internal control system, Vietnam.
Thenceforward, we advocate some suggestions to Gia Lai State Treasury Department form the result of research as follow:
- Proceeding enhancing the effectiveness of four factors comprising Control Environment; Risk Assessment; Control Activities; Information and communication; Monitoring sponsoring to the effectiveness of regularity expenditure internal control system. And, the main factor what necessitate to focus on is Control Environment;
- Revising the Control Activities factor to ensure these activities take the real effective function in the internal control system contributing to impact on the effectiveness of regularity expenditure internal control system.
To sum up, this papers consequence enrich the knowledge in research of internal control system in Vietnam's public sector, especially in Gia Lai State Treasury Department, by adopting INTOSAI theory. Notwithstanding, to encounter new characteristic factors affecting to the effectiveness of regularity expenditure internal control system, we will carry on research on this field in future to figure out the result.
REFERENCE:
1. Autoritè des Marches Financieres: The Internal Control System Reference Framework, AMF, 2005.
2. Ayagre, P., Appiah-Gyamerah, I., & Nartey, J. (2014). The effectiveness of Internal Control Systems of banks. The case of Ghanaian banks. International Journal of Accounting and Financial Reporting, 4(2), 377.
3. Briciu, S., Dănescu, A. C., Dănescu, T., & Prozan, M. (2014). A comparative study of well-established internal control models. Procedia Economics and Finance, 15, 1015-1020.
4. Drucker, F. P., (1988). Tasks, Responsibilities, Practices, Chapter 31, Controls, Control and Management, Abridged Edition, Butterworth Heineman.
5. Field, A. (2000), Discovering Statistics Using SPSS for Windows, SAGE Publications, London.
6. INTOSAI. (2004). Guidelines for internal control standards for the public sector. Retrieved August 9, 2014, from International.
7. Jokipii, A. (2010). Determinants and consequences of internal control in firms: a contingency theory based analysis. Journal of Management & Governance, 14(2), 115 - 144.
8. Muskanan, M. (2014). The Effectiveness of The Internal Controlling System Implementation in Fiscal Decentralization Application. Procedia-Social and Behavioral Sciences, 164, 180 - 193.
9. Tabachnick, B.G. and Fidell, L.S. (2007), Using Multivariate Statistics (5th ed.). New York: Allyn and Bacon.
ĐO LƯỜNG NHỮNG NHÂN TỐ TÁC ĐỘNG ĐẾN SỰ HIỆU QUẢ
CỦA HỆ THỐNG KIỂM SOÁT NỘI BỘ CHI THƯỜNG XUYÊN
TẠI KHO BẠC NHÀ NƯỚC GIA LAI
● TĂNG TRÍ HÙNG
Khoa Kế toán, Trường Đại học Tôn Đức Thắng
● NGUYỄN HIẾU TRUNG
Cục Thuế tỉnh Tiền Giang
● NGUYỄN THỊ TUYẾT MAI, NGUYỄN TRẦN TRỌNG NHƯ
Sinh viên lớp MSA05, Trường Đại học Tôn Đức Thắng
TÓM TẮT:
Nghiên cứu được tiến hành nhằm xác định và đo lường các nhân tố như Môi trường kiểm soát; Đánh giá rủi ro; Hoạt động kiểm soát; Thông tin và truyền thông; Giám sát tác động đến sự hiệu quả của hệ thống kiểm soát nội bộ công tác chi thường xuyên tại hệ thống Kho bạc Nhà nước tỉnh Gia Lai. Kết hợp phương pháp nghiên cứu định tính và định lượng trên nền tảng lý thuyết INTOSAI, kết quả cho thấy sự hiệu quả của KSNB Chi thường xuyên chịu sự tác động của 4 trong số 5 nhân tố (ngoại trừ nhân tố Hoạt động kiểm soát), trong đó nhân tố Môi trường kiểm soát có tác động mạnh nhất và nhân tố Giám sát có tác động yếu nhất. Vì vậy, kết quả nghiên cứu là căn cứ để các nhà quản lý có các chiến lược và chính sách phù hợp nhằm tăng cường hiệu quả điều hành.
Từ khóa: Kiểm soát nội bộ, INTOSAI, sự hiệu quả của kiểm soát nội bộ.
Xem tất cả ấn phẩm Các kết quả nghiên cứu khoa học và ứng dụng công nghệ số 10 tháng 09/2017 tại đây
