In the keen competition, public institutions face ever-tough challenges and need to improve their performances of management as their primary goal. Effective internal control system could help them reach the goal, such as increasing effectiveness and efficiency of operation, enhancing reliability of financial report, and obeying related regulations. As a result, a necessary internal control system and exactly implementing it are extremely important and imperative to any public institution or business organization. Besides, all members in an organization should realize the real meanings of internal control system and firmly implement it so as to exert its function. This research drafted up a questionnaire by referring the items in Self Control Appraisal of¡§internal control ¡X integrated frame¡¨ from COSO, and then surveyed a public institution to verify the hypothesis whether or not the awareness of the importance of internal system would help the improvement of organizational performance. The aim is to review if five elements of COSO¡¦s internal control system need to be corrected when used in public institutions, along with measuring the degree to which the awareness of the importance internal system benefits the organizational performances. This research found that not only the awareness of internal system within members in the public institution matched the frame of COSO, but also the members had a high identification with internal control system. Besides, each department with this public institution had significantly different awareness of risk appraisal; the awareness of internal system importance had a positive effect on organizational performances by means of facilitating the rational and effective internal control system operation. If an organization could integrate existed mechanism, breaking through the fence made by accountant-guided internal audit system, and combining daily operational activities with five elements of internal control so that they could effectively reach the desirable goal of internal control system.

The thesis consists of three essays on corporate finance. In the first essay, we test the hypothesis that the stock market tends to overvalue initial public offerings (IPOs), assuming that IPO issuers can value their own firms more accurately. Using the lower limit of initial file price range as issuers’ reservation price, we estimate the premiums of IPO first day closing price and first month closing price over the reservation price. We find that the price premiums are positively associated with proxies for market over-optimism and uncertainty. IPOs with higher price premiums have worse stock performance in the long run. The results are robust to various economic specifications. The findings are consistent with the argument that the stock markets get over-optimistic about IPOs from time to time. In the second essay we investigate insider selling activities for IPO firms. We find that insiders in 31.3% of IPOs sell shares prior to lock-up expiration (early sales). Consistent with the IPO over-optimism hypothesis, IPO price premium is positively correlated with early sales as well as sales following lock-up expiration (late sales), which suggests that insiders of overvalued IPOs tend to opportunistically liquidate their holdings. In addition, empirical evidences show that insiders may exploit IPO mispricing in the primary market to sell secondary shares and revise up total share offered. In the third essay, we explore why many firms disclose internal control (IC) deterioration under section 404 of Sarbanes-Oxley Act after previously reporting effective IC. We find empirical evidences suggesting that many of the reported IC deteriorations result from detection of previously undetected weaknesses. Restated or not, the reported deterioration in IC is associated with increase in audit fee, increase in management turnover and auditor turnover, decline in Altman Z score decile, and increase in loss. Consistent with an agency hypothesis that managers try to manipulate the IC process when firm performance declines, the reported deterioration in IC is also associated with poor stock returns in the year before disclosure. ICW disclosure is more likely when poor stock return is combined with higher sensitivity of executive compensation to stock price change. / May 2017

ABSTRACT As an era of progress, the business size change from small to a large scale farm, the management concept also affected. Early from the Taylor and Gilbreth´time control in scientific management to the newly developed methods of human behavior and system control, Enterprise no longer used the simple way as in the production line and sales, Global business is another indication of growing. The appraisal system applied to measure the whole system but not for individual. For the sake of protecting the investor under the rapid change in the business runing, The Ministry of Finance applied the internal control system designed by The Committee of Sponsoring Organizations of the Treadway Commission ¡]COSO,1992¡^as a blue print to stipulate the internal control and audit policy, and to force business in this country to follow it. This system will promote the operating efficiency as well as help to attain the goal required for business, Moreover It can assure the truth of financial report and the compliance in following the government regulation. Case company is a typical manufacturing firm, Their management model is traditional such as human resource, financial, quality control, and manufacturing management , Each system have its own discipline in order to achieve their target. However, Internal control will join the above management procedure as a whole, also set up some monitoring system for leading all the managemental activities to obtain the required aim and to correct the great error that might be happened in the enterprise. This paper will point out the difference in performance after introducing the internal control system, and select two critical cycles as example .

This paper investigates whether changes in internal control weakness (ICW) disclosure regulation affect the reliability of a firm’s disclosed ICW in a unique Canadian setting. In Canada, public firms have been required to provide internal control weakness disclosures since 2006. However, the credibility enhancement mechanisms (i.e., the implementation of effectiveness evaluation and CEO/CFO certification) were not adopted until 2008. Taking advantage of such an evolutionary process of regulations and inferring the reliability of the disclosed ICW from the magnitude of the negative association between disclosed ICW and investment efficiency, I first document that in the pre-adoption period, the association between Canadian firms’ disclosed ICW and their investment efficiency is insignificant; however, in the post-adoption period, the disclosed ICW negatively affects firms’ investment efficiency. This finding suggests that the credibility enhancement mechanisms improve the reliability of disclosed ICW in Canada. In addition, using the U.S. sample as a benchmark, I find that in the post-adoption period, the association is weaker between Canadian firms’ disclosed ICW and their investment efficiency, which is consistent with my prediction that the external audit requirement increases the reliability of the disclosed ICW. Overall, the study implies that changes in disclosure regulation lead to efficient resource allocation by improving the reliability of the information disclosed.

This paper investigates whether changes in internal control weakness (ICW) disclosure regulation affect the reliability of a firm’s disclosed ICW in a unique Canadian setting. In Canada, public firms have been required to provide internal control weakness disclosures since 2006. However, the credibility enhancement mechanisms (i.e., the implementation of effectiveness evaluation and CEO/CFO certification) were not adopted until 2008. Taking advantage of such an evolutionary process of regulations and inferring the reliability of the disclosed ICW from the magnitude of the negative association between disclosed ICW and investment efficiency, I first document that in the pre-adoption period, the association between Canadian firms’ disclosed ICW and their investment efficiency is insignificant; however, in the post-adoption period, the disclosed ICW negatively affects firms’ investment efficiency. This finding suggests that the credibility enhancement mechanisms improve the reliability of disclosed ICW in Canada. In addition, using the U.S. sample as a benchmark, I find that in the post-adoption period, the association is weaker between Canadian firms’ disclosed ICW and their investment efficiency, which is consistent with my prediction that the external audit requirement increases the reliability of the disclosed ICW. Overall, the study implies that changes in disclosure regulation lead to efficient resource allocation by improving the reliability of the information disclosed.

We all know that the constitution is acted as a fundamental law for all the national people to follow. Moreover, the rights and obligations are also required by this critical foundation. In the same way, to enterprises, Internal Control plays a basic role of the future perspectives and strategic planning. We also find that even the most detail procedures should be designed based on the Internal Control. Therefore, a powerful Internal Control is considered a critical factor for a successful enterprise. Taking several examples regulated by the Ministry of Finance, we find out that government really emphasizes a lot on a corporate¡¦s Internal Control. However, the recent Procomp Informatics Ltd. and Infodisc Technology Corp. scandals, which brought great losses for both investors and creditors, thus have proven to be a failure for decades of promoting corporate¡¦s Internal Control. Obviously, the major failure cause comes from the corporate¡¦s Internal Control. In this study, we redesign the model of Internal Control according to the viewpoint of the ¡§architecture¡¨ in order to solve the serious situation nowadays. Furthermore, with the new viewpoint of the ¡§architecture¡¨ this study is able to reveal current shortcomings of an enterprise. After analyzing the whole situation, we present an ¡§architecture model¡¨ of Internal Control. By adopting this ¡§architecture model,¡¨ we can improve the process of traditional Internal Control and create a stable system helping future development of an enterprise. We hope that this study can open another aspect of thinking serving as a reference on designing and executing corporate Internal Control as well as enhancing corporate governance.

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Financial statement fraud control has attracted considerable attention and associated response in recent years due to the incalculable collateral damage that could drain the long term success of companies. This research aims to present recommendations to improve financial statement fraud control in commercial companies. The research also evaluates the current strategies for the prevention and detection of financial statement fraud and the reaction thereto. Accordingly, the research attempts to highlight the best practices and weaknesses from the present practices. Based on the experience of two Malaysian commercial companies, the research provides ameliorations to improve the current weaknesses, in particular, to financial statement fraud control. The research takes a normative point of view in making recommendations for financial statement fraud control. A qualitative research methodology is adopted in conducting the investigation to understand the actual conduct of practices. Hence, the primary data are acquired from the case study companies and interviews with the relevant group of respondents, and secondary data from the law, regulations, legislation and professional guidelines. The research investigates the financial statement fraud regulations to understand the legal framework as well as the legal practice. Furthermore, the professional guidelines are examined to understand what the professional bodies have suggested to manage the risk of fraud, thereby enabling the researcher to understand the consequences of the actual practices and provide improvements for financial statement fraud control. In addition, interviews with regulators, forensic accountants, external auditors and independent bodies are conducted to develop an understanding of the protocols of financial statement fraud in Malaysia. Therefore, the findings of the research are a mix of the present practices, respective roles, and perceptions concerning the issues of financial statement fraud control. The case study findings demonstrate that neither case study company is highly concerned about the issue of financial statement fraud control. This provides an indication that no evidence was gained concerning specific controls embedded in the present internal control system and typifies the actual practice, in particular, the prevention, detection and response strategies to mitigate financial statement fraud. The lack of evidence presents a research limitation to identify any best practices for the mitigation of financial statement fraud in the context of commercial companies in Malaysia. The research results indicate that the case study companies are highly reliant on their respective internal controls for the prevention of financial statement fraud and detection strategies. In addition, they demonstrate that the present internal audit functions focus on operational audit and concern pertaining to corporate risk. This provides an indication that the scope of the internal auditing work is not primarily concerned with the accuracy of the financial statement information, but rather with the risk of losses to the respective companies. This certainly leaves scope for an expectation gap to arise in the present internal audit functions and the association of internal audit and risk towards financial statement fraud. The particular aspects concerning the detection of fraud in financial statements and financial statement fraud control have been perceived differently between the company’s internal and external auditors. The combined results of the perceived control by company management, the present audit functions, and the detection and control responsibilities of the internal and external auditors provide and support the existence of an internal audit expectation gap. The overall case study findings indicate evidence of an internal audit expectation gap, which constitutes a serious flaw in the internal control systems adopted by the companies. Therefore, the contribution of this research might improve the present internal control system and provide a more holistic solution for financial statement fraud control. A review of the findings also indicates that Malaysia implements the lowest penalties and exercises the most lenient enforcement in relation to financial statement fraud cases compared to the UK and the US. The research has made contributions to research methodology; contributions to knowledge about the present practices in the form of practical recommendations to improve practice; contributions to academic theory in relation to the theoretical concept of financial statement fraud control and internal auditing of financial statement and, finally, contributions to the regulators and standard setters. The research also offers anti-fraud programmes, particularly in respect of the prevention, detection and response strategies as part of a company’s efforts to mitigate financial statement fraud. Overall, the research contributes to the study of financial statement fraud control and provides practical recommendations for financial statement auditing theory. The focus on financial statement fraud in commercial companies would enhance the reliability of the issued financial statement.

How does National Culture impact the Financial Risk of a company? To begin answering this question, it is important to look at culture and risk. By understanding the opponents of both, through analysis of cultural aspects as well as cultural theory, it is shown that the National Culture effects the financial representation of a company. This has a very strong effect on Multinational Companies that must balance the culture of their headquarters with that of their regional locations.

The purpose of this study was to investigate the relation between generalized expectancies of internal versus external control and sociometric status.