The effect of internal control on asset misappropriation: The case of Vietnam

Abstract

Asset misappropriation is a kind of fraud that may cause severe damages to the businesses. The internal control system is expected to provide a reasonable assurance for the management of the businesses in preventing and detecting frauds, including asset misappropriation. The study is conducted to examine the effect of internal control system on asset misappropriation in Vietnamese firms. Based on questionnaires collected from internal auditors, accountants and department managers in Vietnamese firms, the study assess the impact of COSO five internal control components on the popularity of asset misappropriation in the firms. The results show that of the five components, control environment presents the strongest impact, followed by control activities, information and communication in respective order. Determinants with the mildest impact are risk assessment and monitoring of control. Based on the findings, it is important that the management of the firms improve the internal controls to effectively reduce the chance of fraud in their firms. JEL Classifications: C10, M42

Optimizing the utilization of government-owned tangible assets through managing institutional factors in Indonesia

“…The role of the internal control system greatly determines the optimal quality of regional asset management. Le and Tran (2018) find evidence that the internal control system impacts the management of assets owned by local governments. On the same note, Le and Tran (2018) detail the linkages of the high importance of internal audits in every private and public sector organization to prevent and reduce the tendency for fraud to occur.…”

“…Optimizing asset management is challenging because of misusing assets. Misappropriation of assets is a fraud (Le & Tran, 2018;Abiola & Oyewhole, 2013). Moreover, fraud often occurs in non-profit organizations and the government sector because of weak oversight, low trust, difficulties in verifying certain income, and unclear policies in the procedures for procuring public goods and services (Yusrianti et al, 2020;Majid et al, 2014).…”

“…Moreover, fraud often occurs in non-profit organizations and the government sector because of weak oversight, low trust, difficulties in verifying certain income, and unclear policies in the procedures for procuring public goods and services (Yusrianti et al, 2020;Majid et al, 2014). This shows that internal audit has benefits in adding value to the organization (Le & Tran, 2018;Coram et al, 2008). Therefore, it is necessary to have a good internal control system with sustainable performance in the optimal management of local government assets.…”

Impact of Whistleblowing System Between the Vousinas Fraud Hexagon Theory and Financial Statement Fraud

“…The board of commissioners holds a supervisory function to improve the quality and effectiveness of internal control (Khamainy et al, 2022). Effective monitoring mechanisms can minimize and control the possibility of fraudulent acts (Le & Tran, 2018;Septriani & Handayani, 2018). The balance of the number of board of commissioners also needs to be considered to prevent the monitoring system from being weakened from within (Fathmaningrum & Anggarani, 2021).…”

Internal Control Practices of Waqf Management in Yayasan Canselor, Universiti Kebangsaan Malaysia

“…Internal control, which positively affects performance (Umar & Dikko, 2018), is part of the financial accountability process (Kamaruddin & Ramli, 2018). It helps better deal with risks and new challenges (Amina, 2021), practices segregate duties (COSO, 2013), controls fraud and prevents financial fraud (Ha Le & Tran, 2018), affects the usefulness of accounting information and the success of decision-making (Phornlaphatrachakorn, 2019), and affects the timeliness of delivering financial statements (Mardi et al, 2020). Previous internal control studies by Kamaruddin and Ramli (2017) presented the current internal control practices of Islamic non-profit organizations in Malaysia.…”