A Study on Effectiveness of Internal Control System in Selected Banks in Saudi Arabia

Abstract

The study is to attempt to examine effectiveness of internal control system in selected Saudi Banks in Saudi Arabia. The effectiveness of internal control depends and interrelated to five components viz., Control Environment, Risk Assessment, Accounting Information System and Communication System, Control Activities, and Self-Monitoring. These components derived from management and integrated with the management process. Although the components are applicable to all banks, small and medium, sized banks can apply them separately on a large scale. Its control can be less formal and less structured, yet a small bank can control effective internal controls. The study concluded that the Banks in Saudi Arabia have satisfactory internal control system. The Al Rajhi bank has top most internal control system in selected banks. It recommended that there still need to improve in control environment, risk assessment and communication system in banks. The study statistically proved that there is significant difference in effectiveness of Internal Controls in the Selected Saudi Banks.

The financial performance of private hospitals in Saudi Arabia: An investigation into the role of internal control and financial accountability

“…The principal contribution of this study to the literature lies in its specific application to the private healthcare sector and its focus on financial accountability and financial performance. These represent points of departure from the research in the field to date, given the previous emphasis on internal control relative to quality-of-service delivery in public and private settings [ 24 , 29 , 30 ]. This study contributes to the related literature on the healthcare sector in the KSA, where there is an increasing interest in involving the private sector in healthcare delivery.…”

“…However, Al-Matari et al [ 74 ] failed to establish a relationship between financial accountability (defined as action taken by the board of directors and audit committees) and the performance of firms in the KSA. Sharma and Senan [ 29 ] stressed the existence of significant differences in the effectiveness of selected Saudi banks depending on their internal control and financial accountability levels. Organizations that operate at a high level of accountability ensure the efficient and effective use of resources in line with given objectives and targets [ 4 ].…”

“…Numerous studies have examined internal control, financial accountability, and financial performance, but most of them have focused on public organizations [ 23 – 26 ], non-governmental organizations [ 11 , 27 ], and commercial organizations [ 1 , 2 , 5 , 28 , 29 ]. This study, therefore, contributes to the literature by taking a multidimensional perspective on internal control and addressing the following questions: Does internal control influence financial performance?…”

“…Furthermore, does financial accountability mediate the influence of internal control on financial performance? Besides, the current literature primarily focuses on internal control in the context of quality-of-service delivery, with limited attention given to financial accountability and performance [ 24 , 29 , 30 ]. Consequently, this study aims to fill this gap by examining the interplay between internal control, financial accountability, and financial performance in the private healthcare sector in the KSA.…”

The impact of IFRS adoption on Saudi Arabia

“…Such capitalisation is added to the underlying asset account, and a corresponding liability is created in the appropriate liability section depending on the individual site’s expected restoration. However, there is no such guidance under Saudi GAAP (Sharma and Senan, 2020; Iqbal, 2012).…”