Determinants of the internal control effectiveness of the IOUC’S selected entities in Madagascar

Abstract

Internal control must be the everyday life of each entity as it is the process established by the entity’s management to prevent and detect frauds, errors and thefts in order for the entity to achieve its established missions and objectives. Having effective internal control is the prime priority of today’s entity as it leads to good corporate governance, elimination or diminution of risks and fraudulent acts, growth and development of the entity and achievement of objectives. Unfortunately, some of the Indian Ocean Union Conference of Seventh-day Adventists (IOUC)’s entities can’t achieve these goals and objectives because of ineffective internal control in the workplace. Thus, the purpose of this study is to explore the determinants of the internal control effectiveness of four IOUC’s selected entities in Madagascar. For the present research, questionnaire and structured interviews were used to collect data. The target population was 310, and 202 out of 310 shared questionnaires were collected. Male gender was the most represented and the majority of respondents were from the age group 30-39 years. The 5-9 years category of service was more represented compared to others and many of IOUC’s selected entities employees had a bachelor’s degree and above. A pilot study was conducted before the actual one in order to correct possible flaws in the instrument. One month was given to the respondents to complete the questionnaire and to give it back. For the interviews, different methods were used according to the prevailing situation. With the level of significance at 0.01, the first, third, fourth, fifth and sixth null hypotheses of the present study were rejected while the second null hypothesis was accepted. Thus, just four components of internal control of the four IOUC’s selected entities in Madagascar contribute to their internal control effectiveness which was the dependent variable of the study. Accordingly, the determinants of the internal control effectiveness of the four IOUC’s selected entities by order of impact are the information and communication system, risk assessment, control activities and monitoring of control. As the internal control of the four IOUC’s selected entities is not effective enough due to the deficiencies in the area of risk assessment and monitoring of control, the major recommendation and implication of the researcher is that internal audit unit should exist within those entities and both management and employees should be totally committed and engaged in the improvement of the deficiencies area of internal control.