The Role of Internal Control Components on Financing Activities in Jordan Islamic Bank (North Region) (original) (raw)
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Institute of Advanced Scientific Research, 2020
This paper primarily examines how internal control affects the financial performance of the six banking sectors in Iraq. The inductive approach used in this paper entails the surveying, studying, comparing and summarizing of all papers published in prominent journals in the past seven years. This paper found that internal control is weak in Iraq compared to developing countries in the analyzed studies. It also found that internal control is more positively correlated to financial performance 94.28 % than negatively linked to it 5.72 %. After defining the studies through a systematic review, the researchers concluded that most studies on the two variables i.e. internal control and financial performance had indicated a significant and positive relationship between both. In addition, the researchers also found that none of the previous studies had addressed the abovementioned correlation in the context of the Iraqi banking sector.
The Impact of Internal Control Components on the Financial Performance, in the Iraqi Banking Sector
Journal of Contemporary Issues in Business and Government , 2021
The aim of this study was to investigate the impact between Internal Control Components (ICC) and the Financial Performance (FP) of the Iraqi banking sector. The selected components were control environment, control activity, risk assessment, information & communication, and monitoring. The theoretical framework in this study was based on the Agency theory. A quantitative approach using Structural Equation Modelling (SEM) was utilised as the main study design. The data was collected from a group of respondents comprising CFO, CEO, Accountants, Internal Auditors, and Audit Committee selected through non-random purposive sampling. The actual survey questionnaire was distributed to 365 respondents, and the data were analysed using SEM to determine the impact between Internal Control Components and Financial Performance. The study results indicated that the Internal Control Components have a significant impact on Financial Performance. The positive significant relation were control activity (β =0.311, p<0.05), followed by risk assessment (β =0.203, p< 0.05), monitoring (β=0.176, p<0.05), control environment (β=0.164, p<0.05) and information & communication (β=0.157, p<0.05). In conclusion, the control activity is the most dominant ICC factor that affects financial performance. The main implication of the study is that Iraqi banks should focus on the improvement of Internal Control Components to enhance financial performance.
A Study on Effectiveness of Internal Control System in Selected Banks in Saudi Arabia
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.
International Review of Management and Business Research, 2017
The study aimed to identify the level of satisfaction of employees in Islamic banks in Jordan on the methods of preventive and corrective control and their impact on the performance of employees. The study population consisted of 280 employees in financial and accounting units distributed over 3 banks. The questionnaires of the study were distributed on a random sample consisting of (75) employees, by 27% of the total sample size. The researchers used many tests in the study including T-TEST, The one-way analysis of variance (ANOVA) and the simple regression test. The most important results of the study showed that there is a high level of satisfaction of the employees in Jordanian Islamic banks regarding the internal control methods, whether preventive or corrective, and that there is a positive effect of preventive and corrective methods on the performance of employees in Jordanian Islamic banks.
A Study on Effectiveness of the Internal Control System in the Private Banks of Trincomalee
This study is about the Effectiveness of Internal Control System in the Private Banks of Trincomalee. There was found through observation and discussion that there are some deviations in the internal control system in the daily banking activities. Based on this problem the researcher was intended to do this research on the objectives of evaluate the bank's control environment and internal control system in the bank, to identify the bank's risk assessment process and the internal control in the bank, to evaluate bank's accounting, information and communication system relevant to financial reporting and the internal control in the bank, to find out bank's control activities affect the internal control in the bank and to find out bank's self assessment affect the internal control in the bank. This study is based on the dependent variable; effective internal control and five independent variables; control environment, risk assessment,accounting,information and communication, control activities and self assessment. In this study, data were collected through primary as well as secondary to measure the relationship between two variables. The main tool of primary data is questionnaires. The questionnaires distributed among permanent staff of ten banks. And in the case of data analysis and evaluation, univariate as well as bivariate analysis methods were used. Under the univariate analyses mean, standard deviation, percentages were used to evaluate the data According to the data evaluation, all the independent variables are moderately supportive in the effectiveness of internal control system. And in the consideration of all independent variables as overall they were moderately supportive in the effectiveness of internal control system. In the discussion part, presented data discussed in qualitatively. And under the conclusion and recommendations researcher have been given summary on the data analysis and recommended some suggestions to implement in the bank to enhance the internal control system in the bank.
IMPORTANCE OF INTERNAL CONTROL SYSTEM IN BANKING SECTOR : EVIDENCE FROM TURKEY
The globalization process, complexity of banking transactions and the increase in fraudulent activities have recently sharpened the ever-increasing attention on internal control systems in banking sector. Banks are the main player in economies, especially in bank-based economies such as Turkey. To sustain a healthy economic environment authorities care internal control system and develop strategies for bank managements through regulations. Establishment of internal control system has become a legal obligation since the new banking law and the BRSA's regulations in Turkey. In this paper, the importance of internal control system is expressed and also its impacts to the banking system are analyzed. Moreover, the current structure of the internal control system in Turkish Banking sector is explained and evaluated through the annual reports. The method used in this research is evaluating and comparing of selected 15 Turkish banks and 3 main international banks. The data is collected from the 2012 year-end annual report of each bank and analyzed with qualitative research methods. The research shows that the internal control activities of the banks are adapted to the international standards in Turkey and effective control procedures exist in the banking system. In addition, efficient internal control mechanisms have great impact on the strong and stable outlook of Turkish banking sector.
Implementing the Internal Control System in the Islamic Microfinance Institutions
AHKAM:Jurnal Ilmu Syariah, 2016
should further improve the prudential principles in giving credit to avoid things that are unintended. Therefore, it needs to improve the internal control system (ICS), so the risk of financing problems can be prevented. This study refers to the internal control system based on the COSO framework. The object of this study is 13 BMTs in Depok. The study found that the internal control system at 13 BMTs in Depok were effective. This is supported by the results of the answers to the questionnaire related to 86% effectiveness of internal controls. However, it is still found weaknesses in the lack of spontaneous checks on the use of funds by customers, incompleteness flowchart and pre-numbered documents.