The Role of Internal Control in Enhancing Corporate Governance: Evidence from Jordan

Abstract

This study aimed to examine the role of internal control elements: control environment, risk assessment, control activities, communication and information, and monitoring, in enhancing the corporate governance pillars, which are: accountability, fairness, responsibility, and transparency. The study also seeks to determine the extent to which this commitment contributes to strengthening these pillars in the context of Jordanian insurance companies.In order to achieve the objectives of this study, a questionnaire was developed and distributed to a sample of non-executive members of the board of directors, financial managers, heads of accounting departments and internal auditors of 27 Jordanian insurance companies. The total number of questionnaires distributed was 162 questionnaires, of which 123 questionnaires were returned and were valid for data analysis, with a response rate of approximately 76%.Based on the results of the statistical analysis, the study indicated that the commitment to all elements of internal control contributes to strengthening the corporate governance pillars at a high degree. The study also revealed that the commitment to each element of internal control contribute to strengthening the pillars of corporate governance at a high degree. These results show that the internal control has a significant role in enhancing the corporate governance pillars in Jordanian insurance companies, and the successes of corporate governance requires compliance with all elements of internal control.

The Effect of Quality of Internal Audit and Effectiveness of Internal Control Systems on Good Corporate Governance in Finance Companies

“…The results of this study are in line with the research conducted by Al-Zwyalif (2015) According to Mulyadi (2014), internal control system that includes the organizational structure, methods and coordinated measures are aimed at safeguarding the organization's wealth, checking the accuracy and reliability of accounting data, encouraging efficiency and encourage compliance with management policies. The definition of the internal control system emphasizes the purpose to be achieved, and not the elements that make up the system.…”

أثر نظم المعلومات الإداریة على الحد من الفساد المالی للشرکات: دراسة متعددة التخصصات (باللغة الإنجلیزیة)

“…Internal control is the process implemented by the board of directors and management to provide reasonable assurance that the following objectives are achieved: safeguarding assets, compliance with applicable laws and regulations, reliability and transparency of financial reporting, and efficiency and effectiveness of operations Internal controls are designed to protect an institution from loss or misuse of its assets, as well as to ensure that all transactions are properly authorized and thus guarantee or foster good corporate governance. (Kang 2017;Al-Zwyalif, 2015).…”

Persepsi Pengelola Terhadap Efektivitas Pengendalian Internal Pengelolaan Keuangan Negara

“…Terdapat tiga isu besar yang memengaruhi organisasi yaitu governance (tata kelola), risk management (manajemen risiko), dan compliance (kepatuhan), atau yang biasa dikenal sebagai konsep GRC (Moeller, 2011), yang pada dasarnya merupakan pengendalian internal dalam makna luas. Hal tersebut sejalan dengan pandangan terkait tata kelola (Al-zwyalif, 2015;Magnusson, 2007), terkait manajemen risiko (Hubbard, 2009;Leitch, 2008), serta terkait compliance (Steinberg, 2011). Penerapan pengendalian internal dalam makna luas dapat digambarkan dalam kerangka referensi integrated GRC sebagaimana Gambar 1 (Racz, Weippl, & Seufert, 2010).…”