Makarenko S., Shapovalova A.A. Assessing the effectiveness of the internal control system

Questions organization of internal control economic entities of individual organizational and legal forms are regulated by the following legislative acts of the Russian Federation:

1. Federal Law of December 26, 1995 No. 208-FZ “On joint stock companies", paragraph 1 of Art. 85;
2. Federal Law of 02/08/1998 No. 14-FZ “On Limited Liability Companies”, paragraph 1 of Art. 47;
3. Federal Law of 05/08/1996 No. 41-FZ “On Production Cooperatives”, paragraph 1 of Art. 18;
4. Federal Law of December 8, 1995 No. 193-FZ “On Agricultural Cooperation”, paragraph 1 of Art. 30.

It should be noted that in the texts of these legislative acts the concepts of “internal control” and “audit” are identified. In their content, these concepts are quite close to each other, which is confirmed by clause 18.1 of Information of the Ministry of Finance of Russia No. PZ-11/2013.

Taking into account what was said earlier, we can conclude that it is necessary to regulate and consolidate responsibilities regarding internal control in the administrative information of an economic entity.

Internal control- this is a process aimed at achieving a sufficient level of confidence that an economic entity ensures: the efficiency and effectiveness of its activities, including the achievement of financial and operational indicators, the safety of assets; reliability and timeliness of accounting (financial) and other reporting; compliance with applicable laws, including when committing facts economic life and management accounting.

Currently, the methodology for conducting internal control, as well as the methodology for assessing the effectiveness of internal control, are not established by law and are the object of research by many scientists and specialists, including R.A. Alborov, V.B. Ivashkevich, N.N. Khorokhordin and V.G. Shirobokov.

Unfortunately, not all economic entities, especially companies from the small business segment, have currently created internal control services. At the same time, in those companies where internal control is organized, an analysis of its effectiveness is often not carried out.

Internal control is one of the main functions of management, in the absence of which it is impossible effective management economic entity. It is internal control that allows us to develop and implement solutions for the efficient use of resources. The process of managing financial and economic activities can be characterized both as an interconnected, one-time or periodic targeted impact of the totality of its functions on an object, and as a process carried out in a temporal aspect and in a spatial hierarchy.

The management system of any economic entity is inextricably linked with accounting and control systems. The presence of accounting and control in corporate governance is explained by the need to generate information on every fact of economic life, including those related to the use of material, labor and financial resources, which makes it possible to increase the efficiency of financial and economic activity economic subject.

It should be noted that not all user groups have equal access to information generated by internal control and accounting services. As a rule, the administration can have unlimited access to information, and the owners can have partial access. Therefore, internal control must be organized in such a way as to realize the possibility of providing the necessary information for management purposes at different levels of the hierarchy, with different requirements for its completeness, form and content. Internal control in the management system of an economic entity can function effectively only in conjunction with other management functions. The connection between control, accounting and analytical processes allows us to best solve the problem of information support for management.

Interaction of powers control bodies is implemented through the function of managing an economic entity, which S.R. reveals quite fully in his work. Kontsevaya, V.A. Karasev and N.K. Kostenkova. The interrelation of management functions, reflected by these scientists in their work in the form of a diagram (Fig. 1).

Figure 1. Interrelation of management functions of a commercial organization when exercising control

Thus, the mutual influence of management functions is undeniable, which must be indicated when assessing the effectiveness of the organization's internal control.

The purpose of internal control is determined by each economic entity independently. Thus, according to information from the Ministry of Finance of Russia No. PZ-11/2013, internal control contributes to the achievement by an economic entity of the goals of its activities and should ensure the prevention or detection of deviations from established rules and procedures, as well as distortions of accounting data, accounting (financial) and other reporting. The implementation of control actions is impossible without considering its components.

IN specified information The Ministry of Finance of the Russian Federation identifies the following as the main elements of internal control of an economic entity:

• control environment;
• risk assessment;
• internal control procedures;
• information and communication;
• assessment of internal control.

Analysis of the above document and the work of individual specialists allows us to generate data to characterize the elements of internal control, including the use of the organization’s resources, which are systematized in Table. 1.

Table 1. Characteristics of internal control system elements

Control environment	Risk assessment	Internal control procedure	Information and communication	Assessing Internal Controls
A set of principles and standards for the activities of an economic entity	Risk identification and analysis process	Actions aimed at minimizing risks affecting the achievement of the goals of an economic entity	Ensures the functioning of internal control and the ability to achieve set goals	Carried out in relation to internal control elements in order to determine their effectiveness and efficiency, as well as the need for change
Focus. Timeliness. Effectiveness. Objectivity. Systematicity. Confidentiality. Flexibility. Simplicity	Origin and existence. Completeness. Rights and obligations. Evaluation and distribution. Presentation and disclosure	Documentation. Confirmation of correspondence between objects (documents) or their correspondence established requirements. Authorization (authorization) of transactions and operations, providing confirmation of the competence of their completion. Data reconciliation. Division of powers and rotation of responsibilities. Procedures for monitoring the actual presence and condition of objects, including physical security, access restrictions, inventory. Supervision that provides assessment of the achievement of set goals or indicators. Procedures related to computer information processing and information systems	Information systems of an economic entity. Dissemination of information	Monitoring of internal control. Periodic assessment of internal controls

We note that in the elements of internal control, the issue of assessing the effectiveness of internal control, both for management purposes and for the purposes of independent audit financial statements. As a result, there is no methodological basis that allows companies to effectively correct errors and influence management decision-making. Therefore, for the purposes of management, it is most important and necessary for economic entities to form a system of indicators and criteria for assessing the effectiveness of internal control over the use of resources, including material, labor and financial ones.

Another problem is the lack of general criteria for assessing efficiency in the Russian Federation, which is explained by the lack of internal control standards or their insufficient development. As noted in his work by R.O. Kostirko, the issue of assessing the quality of the activities of subjects of internal control is complicated by the fact that “in the economic literature, issues of the theory of the effectiveness of control and generalization of the characteristics of its quality are not sufficiently developed.” To assess the effectiveness of internal control, domestic scientists propose to use certain private indicators, and the proposed recommendations aimed at increasing the effectiveness of control are local in nature. Available methods for assessing the effectiveness of internal control are limited to assessing the effectiveness of internal control due to risk reduction.

In recent years, increased attention has been paid to internal control at the international level. The result of work in this area was the development of a number of documents that attempt to define, evaluate, describe and identify areas for improving internal control. Brief description individual documents are presented in table. 2.

Table 2. Characteristics of internal control models

Document (model)	Brief description
Standard “Control Objectives for Information and Related Technology” (COBIT)	Developed by the Audit and Control Association information systems ISACA (Informatio№Systems Audit and Control Foundation's Control Objectives for Informatio№and Related Technology). Contains tools for complete and effective execution responsibilities for monitoring the security of information systems
Report “Control and audit of systems” (Security access control, SAC)	Prepared by the Institute of Internal Auditors Research Foundation's Systems Auditability and Control. Provides guidance to internal auditors on control and auditing of information systems and technology.
Report “Internal control: an integrated approach” (COSO model - Committee of Sponsoring Organizations of the Treadway Commission)	Prepared by the Committee of Sponsoring Organizations of the Treadway Commission's Internal control - Integrated Framework. Contains recommendations to management on assessing, describing and improving control systems
Statement on Auditing Standards 55, SAS 55	Adopted by the American Institute of Certified Public Accountants" Consideration of the Internal Control Structure i№a Financial Statement Audit, as amended (SAS 78). SAS 55 and SAS 78 provide guidance to external auditors regarding the influence of internal control over planning and conducting an audit of the organization’s financial statements

Since the listed documents were developed by different bodies for different target groups, there may be some inconsistencies between them. However, each document focuses on internal control and a specific target group. A comparison of the documents shows that each one uses ideas from previous documents.

The comparison of internal control concepts, which is given on the Bankir.ru website, deserves attention (Table 3).

Table 3. Comparative analysis internal control concepts

Comparison criterion	Regulatory document
	COBIT	S.A.C.	COSO	SAS 55/78
Main target group	Management. Users. Information systems auditors	Internal auditors	Management	External auditors
Internal control	A set of processes, including norms, procedures, practices and organizational structures	A set of processes, subsystems and people	Process	Process
Organizational objectives of internal control	Efficient and effective operations. Confidentiality, integrity and availability of information. Reliable financial reporting. Compliance with laws and regulations		Efficient and effective operations. Reliable financial reporting. Compliance with laws and regulations	Reliable financial reporting. Efficient and effective operations. Compliance with laws and regulations
Components or Zones	Zones: planning and organization; acquisition and implementation; delivery and support; monitoring	Components: control environment; manual and automatic systems; control procedures	Components: control environment; risk management; control actions; information and communication; monitoring	Components: control environment; risk assessment; control actions; information and communication; monitoring
Focus	Information Technology	Information Technology	Entire organization	Financial reporting
Assessing the effectiveness of internal control	Over a period of time	Over a period of time	At a point in time	Over a period of time
Responsibility for Internal Control	Management	Management	Management	Management

Assessing the effectiveness of internal control must begin with its organization, since only a well-organized system can be effective. Quite detailed requirements for organizing internal control are set out in the already mentioned information of the Ministry of Finance of Russia No. PZ-11/2013.

The system of internal control over the use of resources cannot be effective without clearly delineated powers of the control bodies of an economic entity. The delimitation of control powers between divisions is an internal matter of each organization and depends entirely on interaction corporate governance, risk management systems and internal control itself. Organizing effective interaction between departments involved in management is another problem when assessing the effectiveness of internal control. The diagram of interaction between divisions of an economic entity when implementing control measures is presented in Fig. 2.

Figure 2. Interaction of competencies (authorities) of the control divisions of the organization

When developing a methodology for assessing the effectiveness of internal control, it is necessary to clearly formulate methods for its implementation depending on the goals set by corporate management. Therefore, control measures may vary. At the same time, the lists of procedures for assessing the effectiveness of internal control used within each event will be similar:

• control and approval of documents;
• checking arithmetic records;
• maintaining and checking analytical statements;
• Preparation and approval of reports, as well as communication of reports to management.

When assessing the effectiveness of internal control, the hierarchical “ladder” of techniques and assessment methods shown in Fig. 3.

Figure 3. Hierarchy of techniques and methods for assessing the effectiveness of internal control

Internal control procedures are actions aimed at minimizing risks that affect the ability to achieve the goals of an economic entity.

A survey of the personnel of an economic entity is carried out in order to assess their knowledge and qualifications, as well as to obtain information about the procedure for carrying out the facts of economic life and the functioning of internal control. Observation of the facts of economic life and the implementation of internal control allows us to confirm the fact of its existence and effectiveness. Analytical techniques are used when it is necessary to identify formalized indicators for assessing internal control.

Verification of evidence of internal control and its results is applied if its results have been documented.

Repeated implementation of the internal control procedure is used if all other methods could not provide sufficient evidence of the effectiveness of internal control and its effectiveness. documentation absent.

The inspector's opinion, which is formed during the assessment of the effectiveness of internal control, serves as the basis for making any decisions based on it.

According to the authors, the results of assessing the effectiveness of internal control should be documented. There are no special requirements for the preparation of the final document based on the results of the internal control assessment. At the same time, it should be noted that the generated document must be sufficient and appropriate and meet such criteria as: simplicity; visibility; understandability; neutrality of information, etc.

It is advisable to assess internal control based on the following requirements for control activities: the proportion of the sample of documents or control objects; validity of identified deviations; consideration possible reasons errors occur; developing recommendations for correcting errors; assessing the impact of errors on management decision-making (risks of ineffective management decisions caused by undetected errors).

Based on these criteria, the benchmarks should be summarized on a special checklist. Internal control is assessed as a percentage. 100% is assigned if all documents have been checked and there are no comments on the control results. Accordingly, zero percent is assigned if no control measures were carried out in any area.

As can be seen from the specified file, in paragraph 1 of the checklist, the assessment result of 80% was obtained in the following way:

• 100% of the available sample (documents) were subject to control actions in terms of internal control regulation;
• during internal control, inspectors provided recommendations for eliminating violations;
• Internal control specialists decided that 80% of the recommendations were feasible and effective.

Total 80% (80% x 100%).

Based on the data set out in the checklist, an assessment of the effectiveness of the organization's internal controls should be made based on the professional judgment of the person performing the effectiveness assessment. As noted in their works by N.V. Generalov and S.N. Karelskaya, one of the most frequently cited definitions of “professional judgment” is presented by L.Z. Shneidman:

Professional judgment is an opinion, a conclusion that is the basis for making a decision under conditions of uncertainty. It is based on the knowledge, experience and qualifications of relevant specialists.

The article notes that “professional judgment can be characterized as the informed opinion of a professional accountant, expressed under conditions of uncertainty when qualifying, measuring, classifying and assessing the significance of facts of economic life for the purposes of financial statements, based on the currently available complete, reliable and objective information, as well as the peculiarities of the functioning of an economic entity.” According to the authors, from the point of view of assessing internal control, no one can characterize internal control more reliably than professional accountant or auditor.

If we take into account the requirements for internal control, we can formulate separate approaches to standardizing the quality of assessments to form the professional judgment of the inspector:

• validity of professional judgment (based on documented and verified results);
• consistency (the obtained performance evaluation data does not contradict other relevant information);
• consistency (performance assessment is based on a system of indicators and criteria established by internal documents of the organization);
• observance of the priority of economic content over form (the elevation of economic information over legal information during the assessment of the internal control system);
• objectivity (comprehensive consideration of criteria and indicators for assessing the effectiveness of the internal control system of an economic entity).

It is advisable to establish the procedure for assessing internal control in the local regulatory act of the organization. This can be either an accounting policy or separate document, for example, a provision on internal control, the formation of a second document seems to be the most rational.

The regulations on internal control of the organization should set out the internal principles of conducting audits of facts of economic life and other accounting objects, reflected in 402-FZ and other federal standards accounting. The development of internal control standards requires significant labor and financial resources.

In the regulations on internal control of an organization or in another local act of an economic entity, it is necessary to define the indicators that the inspector will use to assess the effectiveness of internal control. Thus, for large organizations it seems preferable to create a separate standard, for small and medium-sized enterprises - to introduce a separate paragraph. In addition, it is very important for the organization’s management to carry out work aimed at improving the quality of internal control. It is advisable to carry out additional activities: surveying employees, analyzing archival data and conducting statistical studies, within the framework of which the percentage of correctly executed documents, the percentage of claims of the Federal Tax Service Inspectorate (IFNS) that were successfully defended in the framework of pre-trial challenges to decisions, etc.

An economic entity needs to carry out work aimed at integrating individual components of internal control into a single environment and a single information field. All functions of controlling units must be clearly defined (enshrined in a local act reflecting their interaction and functions) and complement each other, creating a single protective space. In addition, it seems advisable to create a unified automated system for risk control, including a unified database of risk events of an economic entity. The latter will undoubtedly help prevent risks and increase the efficiency of internal control of an economic entity. To assess the effectiveness of internal control, it is advisable, according to the authors, to use tests developed by Professor R.A. Alborov and used in practical audits by many audit firms.

From the analysis of the presented testing data, it follows that in this example the level of organization of internal control over research issues is low and below average. The main disadvantage of on-farm control is the lack of actual control over the receipt, availability and use of materials.

If, during the study and assessment of the effectiveness of the internal control system, individual deficiencies are identified, it is recommended to use the following procedures:

• consideration of the nature and causes of ineffectiveness of internal control;
• Carrying out additional verification or testing of the system (if the inspector considers it necessary);
• identifying directions and formulating recommendations to eliminate identified deficiencies.
• When forming recommendations to eliminate identified deficiencies in internal control, it is necessary to:
• describe the lack of internal control and the associated risk;
• describe the actions that need to be taken to eliminate the deficiency;
• appoint a person responsible for eliminating the deficiency;
• set deadlines for eliminating the deficiency.

It should be noted that internal control should be aimed at identifying and preventing all errors, both significant and non-significant. Internal control is carried out by both the accounting service and the internal control service or audit departments, and if the internal control service can use selective methods during inspections, then the accounting service has a method of complete verification.

The recommended working document generated in the internal control system, containing recommendations for eliminating identified deficiencies in the internal control system using the example of the use of materials, is presented in the following example.

Thus, during the assessment of control procedures, it is very important to minimize the risks associated with accounting, which is achieved by developing recommendations for eliminating identified deficiencies in the internal control system.

Figure 4. Scheme of formation of information flows in the process of assessing the effectiveness of the internal control system

In conclusion, it should be noted that due to the lack of a clearly formulated standard for assessing the effectiveness of internal control, economic entities have to independently form an opinion about the compliance of internal control with the goals and objectives of their activities, as well as check the effectiveness of control measures according to their professional judgment.

References:

1. Alborov R.A. Audit in organizations of industry, trade and agro-industrial complex: Textbook. allowance. M.: Business and Service, 2003. 464 p.
2. Belik V.D., Skakun L.S. Development methodological approaches to assessing the quality of activities of internal control subjects: application of qualimetric methods // International accounting. 2012. No. 42. pp. 48-57.
3. Generalova N.V., Karelskaya S.N. Application of professional judgment at different periods of development regulatory regulation accounting in Russia // International accounting. 2013. No. 33.
4. Gorodilov M.A. International Auditing Standard No. 610 “Use of the results of the work of internal auditors”: new edition // Auditor. 2013. No. 8. pp. 56-63.
5. Gubaidullina A.R. Accounting principles governing the use of an accountant's professional judgment in the transition to international standards financial reporting // International accounting. 2012. No. 28.
6. Kontsevaya S.R., Karasev V.A., Kostenkova N.K. Development of internal control in the agricultural production management system // International accounting. 2014. No. 2.
7. Kotlyachkov O.V. Criteria and evaluation indicators in the audit of the efficiency of using investment funds // Bulletin of IPB. 2013. No. 4. pp. 39-48.
8. Ostaev G.Ya., Kontsevaya S.R., Gallyamova T.R. Formation and standardization of internal audit in commercial organizations// International accounting. 2012. No. 45.
9. Shirobokov V.G., Katelikova T.I. Directions for auditing agricultural supply and marketing consumer cooperatives// Accounting in agriculture. 2012. №4.
10. Khorokhordin N.N. Internal audit service: stages of creation, goals and objectives // Audit statements. 2007. No. 10.
11. Kostirko R.O. Assessment of the effectiveness of internal control in the management of receipts.

Economics and mathematics

modeling

USE OF MATHEMATICAL MODELS IN ASSESSING THE EFFECTIVENESS OF THE INTERNAL CONTROL SYSTEM

V.I. THROAT,

Candidate of Economic Sciences, Associate Professor Bryansk State Agricultural Academy

The internal control system as a branched organizational structure is a set of units staffed with personnel of appropriate qualifications and authority, carrying out information interaction in the form of direct and reverse connections, having the appropriate material, technical and information support and subordinate to the relevant executive body.

The main task of internal control at an enterprise is to reduce financial losses arising for various reasons. The more developed and structured the control system, the higher the result of its action, expressed in a reduction in losses.

Efficiency assessment allows us to consider the qualitative and quantitative certainty of individual elements of the internal control system and establish their differences. Assessing the effectiveness of the internal control system is a summary of indicators of its effectiveness and efficiency. A measure of quantitative assessment of the result of the effectiveness of the internal control system can be the indicator of the average mathematical expected value of an event or result. Such assessments are usually based on expert opinions and are subjective.

In absolute terms, the result of the control system at the enterprise, according to the author, is the amount of loss savings that arose in connection with the functioning of the control system:

where R is the result of the functioning of the control system;

T0 - losses (losses) in the absence of control;

T1 - losses (damages) under the current control system.

However, establishing and maintaining an internal control system requires certain costs. Without taking into account investments in creating a control system, an enterprise's savings from implementing a control system is the difference between the result of the system's functioning and the cost of maintaining it: E = ^C,

where E is loss savings (efficiency); C is the cost of the control system. It is obvious that the use of an internal control system will bring benefits to the enterprise only if the result of its operation exceeds the cost of its maintenance:

E > 0 or R > C. The degree of complexity of the control system is directly related to the cost of using specific controls and potential losses in the event of their absence. When costs exceed outputs, it is obviously unprofitable, and if the sum of the costs of maintaining the internal control system (in years 1 to 2) exceeds outputs, those controls should not be used. To monitor system efficiency

it is necessary to evaluate and compare the potential losses of the enterprise, the expected result of the system and the costs of its maintenance. Thus, the effectiveness of the internal control system is the difference between the predicted losses before and after the predicted impact of the internal control system.

We propose further development of this approach. Let us determine the effectiveness of the internal control system using the example of the internal control system operating at Krasnogorsk Cheese Factory OJSC from 2001 to 2005.

The effectiveness of the internal control system is determined by saving losses arising in connection with the functioning of the control system. A formula is proposed for assessing the result of the control system as the amount of savings in losses from the operation of the control system.

Let's present the formula in the following form.

Let x be the organizational level of maintaining the internal control system. We understand that our approach is controversial, but many different approaches are possible here.

L1(x) - system losses at the appropriate level of the internal control system. It is easier to measure this indicator as a percentage of some base, for example from b0, and, therefore, b0 = 100%. The complexity of the problem lies in the measurement of indicators, which are more qualitative than quantitative. Research is needed to clarify this issue. special purpose, and this does not fit into the scope of our study. In our consideration, this problem is not the main one, since we are trying to build a general mathematical model, with the help of which we should obtain the basic properties of the behavior of the internal control system.

C (x) - costs of maintaining the internal control system. Here it is also very difficult to isolate this part from the total cost, but a rough estimate of the costs of maintaining an internal control system is possible.

R (x) - the effectiveness of the system from the implementation of the internal control system, expressed in the amount of reduction in losses from maintaining the internal control system. It is logical to believe that this indicator should increase to a certain value x, then decrease, since we postulated this behavior (exactly the opposite) for L1(x) - the loss function, then

R(x) = ^(x). (2)

Let us show that bx(x) - as x increases, it decreases to a certain Xm, further growth of x leads to an increase in b1(x). The simplest form of the relationship can be a parabola or an exponential. It is easier to take a parabola as a model loss function L1(x), since if empirical data are available, it is possible to determine the parameters of the equation using the least squares method.

As a result of the study, the effectiveness of the internal control system can be represented as the following formula:

R (x) = b - (ax2+bx+c). (3)

From here the optimum efficiency point is easily determined:

R(x) = - 2ax - b = 0;

When constructing a specific parabola based on the data of points and losses of the system at the appropriate level of the internal control system, the optimum point is determined, i.e., the value of the quality of the internal control system at which the best efficiency of the control system is achieved.

The proposed indicators allow us to assess the effectiveness of the internal control system at enterprises and determine the optimal values ​​for the level of the internal control system and possible losses corresponding to a given level of organization of the accounting and internal control system (see table).

As a result of the calculations, the following model for determining the value of losses (regression equation) was obtained:

y = 164.73 - 27.4x + 1.23x2.

In this case, the optimal value of the level of the internal control system will be:

^optim= 11.04.

This value x (the level of organization of the internal control system) corresponds to the optimal value of losses:

U Hoptim.) = 14.92.

The efficiency will be 85.08%.

Taking into account some conditionality of the initial data, it can, however, be argued that the best level for the organization is the level of organization of the internal control system of 10-12 points of the test survey. In this case, losses amount to 15% compared to the situation when

Determining the effectiveness of the internal control system at OJSC Krasnogorsk Cheese Factory

Year X X2 Y Y cal. I)

2001 6,00 36,00 24,00 46,15 53,85

2002 9,50 90,25 19,00 17,84 82,16

2003 11,00 121,00 10,00 14,92 85,08

2004 12,15 147,62 21.00 16,43 83,57

2005 15,70 246,49 29.00 41,58 58,42

Optimum point 11.04 121.91 14.92

The following notations are used in the table:

x - score of the level of organization of the internal control system at OJSC Krasnogorsk Cheese Factory (from 2001 to 2005); y - losses from the level of organization of the internal control system (the figures were obtained as a result of processing an expert survey, or otherwise - expert assessments); R (x) - effectiveness of the internal control system.

the enterprise does not have an internal control system or when control is weak.

Schematically, the graph of the loss functions and the effectiveness of the internal control system can be presented as follows (Fig. 1).

In turn, on the other hand, the costs of maintaining the internal control system increase with the increase in the quality of maintaining the internal control system.

C (x) = kx, which implies x = -

As a result, the formula for the effectiveness of the internal control system based on the costs of its operation will look like this:

The optimal cost value is determined by the formula:

C = - b x k/2a

This follows from the formula: R (x) = 0,

ICS level Efficiency loss

R"(x) = - 2a/K2 C(x) - bD = 0.

This condition is a necessary condition for the presence of an optimum (minimum or maximum of a function). The calculation of parameters a, b, c and k, as well as data preparation problems, is an independent and thorough study.

On the other hand, starting from considering the internal control system as a “black box” (costs at the input - results at the output), it is obvious that costs are the input parameters of the system, and losses are the output parameters of the system. Therefore, we can assume that losses are a function of costs.

We believe that it is plausible to say that the effectiveness of the internal control system increases with increasing costs up to a certain optimal value, after which, with the continued growth of costs for the internal control system, the effectiveness of the internal control system decreases.

This statement can be described by the following function:

R(^ = a0 - C^-C + C0. (5)

Thus, approaching the characterization of the effectiveness of the internal control system in two different ways, we obtained, in general, the same dependence of effectiveness on the implementation of the internal control system.

To implement the previously described approaches, three parameters are assessed:

The quality of maintaining the internal control system;

Costs of maintaining an internal control system;

Losses from maintaining the internal control system.

If it is possible to collect appropriate statistical material, then in principle it is possible

evaluate the parameters of specific dependencies described earlier. As x it is quite possible to take score internal control system that we proposed when testing accounting.

A simpler approach to solving this problem can be presented as follows. As mentioned earlier, the effectiveness of the internal control system is determined by saving losses arising in connection with the functioning of the control system. A formula was proposed for assessing the result of the control system as the amount of savings in losses from the operation of the control system.

On the graph we can present the function in the following form (Fig. 2):

When there is no control system, i.e. b0 = 0, then R (0) = L0, i.e. losses (damages) with the current control system are equal to zero, then the result of the functioning of the control system will be equal to losses (damages) in the absence of control. In case maximum efficiency, i.e. when R (b) = 0, bk should be equal to b0, i.e. the losses from implementing an internal control system are the same as in the absence of an internal control system.

This conclusion is illogical, since losses from the implementation of an internal control system cannot be the same as in the absence of an internal control system.

By modernizing the efficiency formula (1), introducing the efficiency coefficients of different structures of the control system, we obtain the following formula for determining efficiency:

R (1K) = b - kbk (6),

where k is the efficiency coefficient;

R (b) = 0 at 1K = b 0/k.

On the graph, the function will look like this (see figure).

The system is effective if L1 is as small as possible. And this is possible if k > 1.

The system is less efficient if k< 1.

Practical implementation This approach is fraught with many difficulties, in particular the inability to determine damages in different cases.

Creating and maintaining an internal control system requires certain costs. Without taking into account investments in the creation of an internal control system, the enterprise's savings from the implementation of an internal control system take the form of the following formula:

E = R - C, where C is the cost of the control system.

If we assume that L1 is an internal control system and a variable value, then: E b) = R (bv) - C (b)

Naturally, if we assume that the more perfect the internal control system, the greater the costs, i.e.:

Efficiency is determined by the inequality E > 0 or R > C:

b0 - kk bk > K bc.

The degree of complexity of a control system is directly related to the cost of using specific controls and the potential losses if they are absent.

We consider the formulation of this problem in theoretical aspect. When the formula R (b1) = b0 - b1 was proposed, where b1 is the loss from the

establishing the internal control system, it was clear that D should be considered as a variable value. Only this assumption made it possible to reach theoretical analysis and generalizations. Next, it was proposed to introduce an abstract, difficult-to-define value for the quality of the internal control system, which was also presented in quantitative form. Finally, when the dependence of the effectiveness of the internal control system on the costs of its operation was modeled, it was believed that costs were not literally calculated expenses for individual items, but more complex, not entirely observable expenses.

Literature

Thus, the construction of models characterizes the assessment of the effectiveness of the implementation of the internal control system, taking into account the characteristics of losses as a constant, given by the stipulated costs of its maintenance or changing according to a linear law.

Advanced Applications mathematical methods and models there is an objective trend associated with the level of development of specific industries. The use of mathematics in auditing is justified by the fact that it allows us to conduct extensive reasoning of the nature described. An audit takes place with quantitative relationships, which in turn inevitably requires the use of mathematical approaches.

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2. Gubanov A. G., Vasilenko A. A., Stefanova S. N. Features of accounting, control and economic analysis at processing enterprises of the agro-industrial complex: Textbook. allowance. - Rostov-on-Don, 1997. - 71 p.

3. Karamayki D. R., Benis M. Standards and norms of auditing. - M.: Audit, UNITY, 1995. - 527 p.

4. Organization audit activities in AIC: Sat. normative and methodological materials on audit / Comp. D. N. Pismennaya and others - M.: RAM i A, 1994. - 48 p.

5. Rules (standards) of auditing activities / Comp. and the author of the introduction N.A. Remizov. - Mu: Publishing House FBK-PRESS, 2000. - 384 p.

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The publishing house "Finance and Credit" provides services for the publication of books, brochures, monographs, textbooks, educational and methodological and fiction. The publication is carried out at the expense of the author. The production time for monographs of 10 printed sheets in paperback is 40 days.

In accordance with FPSAD No. 8 “Understanding the activities of the audited entity, the environment in which it is carried out and assessing the risks of material misstatement of the audited financial (accounting) statements”, the internal control system is a set of organizational measures, methods and procedures used by the management of the audited entity as means for the orderly and efficient conduct of financial and economic activities, ensuring the safety of assets, identifying, correcting and preventing errors and distortion of information, as well as the timely preparation of reliable accounting financial statements.

The basis of internal control of an economic entity includes five elements (Fig. 2.2).

Rice. 2.2 – Elements of the internal control system.

The control environment refers to the awareness and actions of the audited entity's management aimed at establishing and maintaining an internal control system, as well as an understanding of the importance of such a system. The auditor's knowledge and understanding of the specific environment allows him to determine whether the control conditions are sufficient to ensure an effective internal control system, and whether it helps to minimize misstatements in financial statements.

The control environment includes the following components:

The style and basic principles of management of this audited entity;

Organizational structure audited entity;

Distribution of responsibilities and powers;

Implemented personnel policy;

The procedure for preparing financial (accounting) statements for external users;

The procedure for carrying out internal management accounting and reporting for internal purposes;

Ensuring compliance of the audited entity’s business activities with legal requirements;

Availability and features of work organization audit commission, internal audit service as part of the management body of the audited entity.

During the study of the control environment of KP Sibirsky Gurman LLC, it was revealed that the internal control system in the organization is based on compliance with the following principles:

1. Timely and proper documentation of transactions;

2. Actual control over property and documentation;

3. Availability of effective procedures for authorizing transactions;

4. Carrying out independent checks.

The executive body exercises control over the conduct of the company's economic activities by issuing relevant orders and instructions.

The chief accountant exercises control over ensuring compliance of ongoing business transactions with the legislation of the Russian Federation, control over the movement of property and the fulfillment of obligations.

The second component of the ICS is the assessment of business risk by the audited entity as a process of identifying risks, their possible consequences and responding to them. The auditor must understand how the entity identifies and addresses business risks that are relevant to the financial reporting objectives and what results this produces.

Risks related to the financial (accounting) statements of KP Sibirsky Gurman LLC are associated with both external and internal events and circumstances. When identifying possible risks, management considers their importance, the likelihood of their occurrence and how to manage them. Management makes plans, programs, and implements appropriate actions to eliminate these risks or decides to ignore risks due to the high cost of possible controls in relation to these risks or for other reasons. Risks may arise or change due to a number of circumstances, such as macroeconomic changes, new staff(new employees may have a different point of view on the internal control system or other priorities); the introduction of new or changes to existing information systems, new technologies, new types of goods, works, services, reorganization of the audited entity may be accompanied by a reduction in the number of personnel and changes in the distribution of responsibilities, as well as control functions performed by employees, which may also affect the risk associated with internal control system.

The third component of the ICS is an information system related to the preparation of financial statements and consisting of procedures and records. The auditor must understand how the organization communicates the roles and responsibilities of specific employees and significant matters relevant to the financial statements. The accounting department must clearly outline who does what and who is responsible for what. The auditor should check how well the job instructions are prepared and how conscientiously they are followed.

At KP Sibirsky Gurman LLC, the functioning of information systems related to the preparation of financial (accounting) statements is ensured by:

a) technical means;

b) software;

c) personnel;

d) relevant procedures;

e) databases.

An integral part information systems is a personnel information system that ensures that employees understand the duties and responsibilities associated with the organization and application of the internal control system in relation to financial (accounting) reporting.

The personnel information system can take such forms as internal regulations, guidelines for the preparation of financial (accounting) statements, instructions and guidelines. Information can be brought to the attention of employees using electronic communications, orally, and through instructions from management.

The fourth component of the internal control system is control actions. They refer to the policies and procedures that help ensure that management's orders are followed. These include procedures and activities carried out by the audited entity and beyond the scope of direct accounting and reporting. Examples of such specific control actions are: authorization by the management of the audited entity of control actions; checking the implementation of control actions; processing information obtained as a result of control actions; checking the presence and condition of the objects of the audited entity; division of responsibilities between employees of the audited entity during control actions and others.

The fifth component of the ICS is monitoring of controls. It refers to the process of assessing the quality of functioning of the internal control system. It is carried out through ongoing monitoring, individual assessments of the reliability of controls and ensures that controls are functioning effectively.

Controls must achieve the following objectives:

1) sufficient separation of duties;

3) correct documentation of transactions and their accounting;

4) ensuring the safety of assets and accounting records;

5) independent audits of activities.

In order to evaluate the internal control system, audit tests are carried out in areas of internal control.

The first stage of the audit was familiarization with the internal control system of the accounting organization.

Responsibility for the organization and state of internal control lies with the head of Sibirsky Gurman Semi-Finished Products Plant LLC. The accounting policies are drawn up in accordance with the legislation of the Russian Federation and the Tax Code of the Russian Federation. The accounting policy of the organization is important means formation of the values ​​of the main indicators of the organization’s activity, tax planning, pricing policy. It must provide complete and timely information about all facts of economic activity. Assessing the completeness of the content and compliance of the accounting policies with the requirements regulatory documents presented in the appendix

The accounting department of Siberian Gourmet Semi-Finished Products Plant LLC operates as a structural unit headed by a chief accountant. The accounting department includes

· material group responsible for accounting for the acquisition of material assets, their receipt and expenditure. In the same group, as a rule, they keep records of fixed assets;

· the wage accounting group, which records the labor costs of workers, calculates wages to employees, controls the use of the wage fund, records all settlements with employees of enterprises, and the budget. Foundation social insurance and other departments related to wages;

· production and costing, which keeps track of production costs and calculates the cost of production;

· general group, whose employees keep records of other transactions and the General Ledger, make up balance sheet and other forms of financial reporting.

When conducting an audit, at the first stage, a test is drawn up to assess the internal control of product sales (Table 2.1), which reflects the main issues of auditing the financial results of the enterprise.

In this case, the test can be compiled for individual components of the formation of financial results: accounting for revenue from sales of products and services; accounting for the cost of manufactured products and services, etc.

Table 2.1 Test for assessing internal control over product sales

1

The effectiveness of internal control means its effectiveness and efficiency. Efficiency has two sides: qualitative and quantitative. Qualitative characteristics determined through a logical assessment of changes. Quantitative indicators represent numerical data, including those expressed through coefficients, characterizing specific processes or events occurring in the internal control system. It is not correct to assume that the effectiveness of internal control can be measured by the ratio of the costs of control activities with the obtained quantitative data from the control impact - effect. Internal control can be considered at two levels: both built into business processes and built on top of them. In our opinion, the effectiveness of internal control should be assessed at the second level, i.e. specially created bodies or specially appointed specialists.

effectiveness of internal control.

property safety

control

1. Throat V.I. The use of mathematical models in assessing the effectiveness of the internal control system // Economic analysis: theory and practice. - 2007.- No. 4 - p. 57-61.

2. Elin A.I. Some approaches to assessing the effectiveness of control measures in credit institutions. [ Electronic resource] / A.I. Elin, I.K. Kobozev // Controlling - No. 3. - 2005. - Access mode: http://bankir.ru/analytics/svk/216/44073.

3. Eliseev A.A. Using analysis in monitoring the activities of a consumer society / A.A. Eliseev, T.Yu. Serebryakova. - Cheboksary: ​​RIO CHKI RUK, 2011. - 107 p.

4. Nazarova M.A. Assessing the effectiveness of the internal control system using mathematical methods / M.A. Nazarova. - M.: Finizdat, 2002. - 250 p.

5. Serebryakova T.Yu. Theory and methodology of end-to-end internal control (monograph). - M.: Infra-M, 2012. - 328 p.

The problems of assessing the effectiveness of internal control are quite complex, both theoretically and practically. They are relevant for any sector of the economy, including consumer cooperation, since control is directly related to the implementation of management decisions and the timeliness and correctness of the assessment of the results of management decisions by both the management of consumer companies and their executive body depends on how effective it is.

Control must be effective and efficient; if such control results are available, we can speak of its effectiveness. The effectiveness of control can be assessed from both qualitative and quantitative points of view. Qualitative characteristics are determined through a logical assessment of changes in the control system; it is implemented by analytically summarizing the results of control actions from the standpoint of reducing various types of risks of the organization.

Quantitative indicators represent numerical data, including those expressed through coefficients, characterizing specific processes or events occurring either in the internal control system or in connection with changes under the influence of internal control. Quantitative assessments are based on economic and mathematical calculations related to the study of relative or average values.

Often, positive changes in indicators characterizing the effectiveness of an organization’s activities are associated with the effectiveness of control, however, in our opinion, such indicators do not characterize the effectiveness of internal control, although indirectly the influence of internal control on them takes place. At the same time, it is very difficult to isolate the component of this influence.

On the other hand, we believe that it is not entirely correct to assume that the effectiveness of internal control can be measured by the ratio of the costs of control activities with the obtained quantitative data from the control impact - effect. In the works of V.I. Gorlo and M.A. Nazarova, A.I. Elina and E.K. Kobozev examines economic and mathematical models for determining the effectiveness of internal control. The methods proposed in their works certainly deserve attention, but they are quite cumbersome and arbitrary, and are not always effective in themselves from the point of view of the cost-benefit ratio. Research in this area has shown that the most reliable way to determine the effectiveness of control is through analytical procedures in the form of testing on certain design issues analytical reviews special indicators characterizing the effectiveness of internal control.

The development of criteria or indicators of control effectiveness is based on the components of effectiveness: effectiveness and efficiency. Effectiveness means that control procedures have an impact on the object of control, effectiveness means that this impact is positive.

The effectiveness of the internal control system can be considered as a whole in relation to the entire control system or its parts and in relation to certain forms of control.

An effective internal control system presupposes the effective and high-quality application of control procedures, which can be determined through testing. Testing of control system procedures is carried out in two directions:

• checking compliance with existing regulations of control procedures;
• identifying errors in activities structural divisions or in processes occurring that were not prevented by the control system.

Compliance with the developed regulations is assessed through a random check of documents that should reflect the fact of control.

Tests make it possible to determine whether the regulated procedures and control methods used in the organization are sufficient or whether they need to be changed.

Let's consider how you can monitor the effectiveness of internal control in consumer societies when working with material assets. It is advisable to monitor effectiveness, including using analytical methods. This procedure will be even more effective if it is an addition to the documentary verification of commodity and settlement transactions. For example, in consumer cooperation at the level of a district consumer society and at the level of a regional consumer union, based on internal reporting data, the state of preservation of cooperative property is analyzed as an indicator of the effectiveness of the internal control system (ICS). At the same time, such an analysis makes it possible to promptly respond to negative dynamics in terms of such indicators as the number of inventories, the number of cases of identified shortages, the total amount of shortages, including the average per case, etc. Assessing the movement of shortages in a segmental context allows us to study the state of preservation of cooperative property in individual divisions and identify those divisions in which it is assessed as unfavorable. In order to draw objective conclusions, possible factors that influenced negative changes in indicators due to changes in technological processes, the mode of operation of enterprises, the system of stimulating the work of materially responsible persons.

Having found out in which area of ​​activity of the consumer society the largest amount of shortages arises, it is necessary to pay attention to carrying out preventive measures in this area. To do this, it is advisable to study and further test the supply of stores cash registers, weighing equipment, establish control over the timely delivery of revenue, compliance with inventory standards approved by the board of the consumer society, etc.

Particular attention should be paid to the causes of shortages in the group that accounts for the largest share and number of cases. The main reasons may be poor quality of inventory, violations of established rules for acceptance, sale and accounting of valuables, low qualifications of materially responsible persons, etc.

Practice shows that the internal control system is capable of consistently ensuring the safety of material assets in those organizations where accounting, with its internal means of control, ensures the conditions of safety, i.e. where there is an appropriate control environment that prevents the occurrence of shortages, namely: the accountant deeply and comprehensively analyzes business transactions at the time of their completion, monitors compliance with the deadlines for submitting reports by materially responsible persons and the quality of paperwork, checks the timeliness of delivery of trade proceeds and the amount of commodity stocks.

An indicator of the effectiveness of the internal control system is the effectiveness of inventories carried out in a consumer society, the quality of control over material assets by accounting employees.

The regional consumer union is studying the effectiveness of internal control, including security, that takes place in each consumer society included in the system. In this case, comparison of effectiveness can be carried out on the basis of rating assessment.

Thus, analysis as an internal control tool makes it possible to provide management with information about the effectiveness of the internal control system regarding risks associated with the safety of organizations’ funds, to identify weaknesses in internal safety control, contributes to making optimal decisions to reduce risks.

As studies show, test and analytical procedures for the effectiveness of internal control necessarily lead to the need to conduct documentary or thematic audits of internal control systems. At the same time, in our opinion, documentary checks as a way of assessing the effectiveness of internal control are more appropriate in relation to accounting, while thematic checks are more appropriate in relation to all other systems of an economic entity and its management system: functional activity subsystems, security subsystems, personnel management subsystems, sales , supplies, etc. We believe that for these purposes, management and functional activity subsystems should be identified, including subsystems of procurement, sales, production, etc., the management of which should be controlled and such control is carried out analytically and test-wise in monitoring mode. All data on their functioning is reflected in the accounting system, the effectiveness of which should be monitored, not forgetting the control procedures for management. Because of this, control over documents, and this is precisely what is possible to establish the effectiveness of the accounting system itself and the internal control system in its environment, is advisable to carry out following the logical chain of accounting:

1) chronological documentation of all operations, i.e. chronologically;

2) systematic recording of facts using a system of accounts, i.e. on a systematic basis.

As a result, the documentary check should cover all business transactions by their types (accounts, since accounts are classified by type of property, i.e. transactions).

Thus, the main tool for checking the effectiveness of internal control is a documentary audit, the main emphasis of which is on those types of operations for which the risks are not minimized to the optimal value, or, in other words, when the effectiveness of other forms of internal control requires clarification or is not high.

In general, the main indicator of the effectiveness of internal control is the absence of extraordinary losses and ineffective operations. These indicators can partially be found in the financial statements, namely in the “Report on financial results", when deciphering other expenses, which should be given close attention, since the write-off of under-depreciated fixed assets, their sale at a loss, the write-off of unrealistic receivables (especially) and payables, various losses, damage, penalties and interest, damage caused to third parties - all this is reflected in this report and, what is most unpleasant, indicates an ineffective internal control system. Low efficiency of internal control is also observed during accumulation. inventories above the norm, an increase in accounts receivable and payable, unused fixed assets, which should serve as an impetus for economic justification and elimination of such phenomena. Thus, to control the internal control system, not only testing and monitoring areas are developed, but also scientifically based benchmark criteria, which is the responsibility of other services, but not internal control. Internal control services should carry out monitoring based on such data in order to notice negative trends in a timely manner.

Internal control can be considered at two levels: both built into business processes and built on top of them. In our opinion, the effectiveness of internal control should be assessed at the second level, i.e. specially created bodies or specially appointed specialists. This is due to the fact that the performance indicator is related to the evaluation of performance. In this case - the results control activities within business processes. The holders of these processes are managers different levels, starting with linear ones, ending with higher ones executive body. Control over all line managers is assigned to higher management, to help which control bodies are created.

Only an outside perspective makes it possible to assess the effectiveness of internal control within each division as a result of the line manager’s activities in monitoring processes and compliance with regulations. At the same time, the effectiveness of internal control also determines the effectiveness of management, including the organization as a whole. In consumer cooperation, in our opinion, the most appropriate model is the one developed on the basis of the methods outlined above, presented in Fig. 1.

The effectiveness of internal control, therefore, should be assessed through its own indicators. In this regard, the position of researchers who consider good indicators of financial condition and business activity organization, which they explain in this way: since the financial condition of the organization is normal, then internal control is at its best. In fact, one does not follow directly from the other. Firstly, one should consider economic indicators in dynamics, it is this approach that allows you to catch negative trends, if they exist, and think about their origin. Among the reasons for this, among many others, may be the unsatisfactory state of internal controls. Secondly, the state of internal control and its effectiveness should be determined through indicators characterizing the state of the organization’s management information systems. However, in our opinion, it is not possible to establish a comprehensive mathematical indicator of efficiency, but it is possible to derive the principles of an effective internal control system. These are the following: timeliness, regulation of duties, delimitation of functions and responsibilities, expediency, safety of property.

Type of control	Objects of control	Indicators
Built-in control (audit bodies)	Activities of heads of functional and industry departments	Indicator of efficiency of departments functioning based on management accounting data
		No risk events
	State of the accounting system	Timely generation of financial statements
		Timely closure of reporting periods
		Timely formation information base
	State of budgeting and management accounting	Timeliness of budget formation
		Completeness of formation of the management accounting information base
		Quality of budget formation
	Working with risks	Absence of risk events or state of their minimization
Built-in control (management of functional and industry departments)	Compliance with department regulations	Timely generation of internal reporting information
	Risk identification	No risk event
	Compliance with employee work regulations	Timely documentation of operations

Fig.1. Model for assessing the effectiveness of internal control in consumer cooperation organizations

If we approach the problem under study narrowly, starting from the goal of internal control, which is understood in the context of management as ensuring an assessment of the completeness of the implementation of a management decision, then effective internal control through a system of indicators should signal the failure to achieve the goal of the implemented management decision. And that's all. The more deviations from the goal are identified, the more effective the control, and the more ineffective the management. The fewer deviations are identified, the less effective the control or the more effective the management. However, both the first and second conclusions are flawed, because in the first case, perhaps, errors are identified at the formation stage management system, and in the second case, the absence of errors means that effective control helped the management to function effectively. The above approach illustrates the imperfection of quantitative characteristics of control effectiveness and leads to the idea of ​​​​using qualitative indicators.

Working with risks is of great importance for assessing the effectiveness of the internal control system, since an effective internal control system must successfully minimize them. However, even in this issue Neither a direct nor an inverse relationship can be identified, so it is difficult to determine the quantitative characteristics of the indicator efficient work with risks.

As we see, the problem has a deep philosophical meaning, which is difficult to reduce to mathematical expression and representation. However, this does not mean that one should not search for a universal formula or, more realistically, a universal method for determining the effectiveness of the internal control system.

Reviewers:

Kalinina G. V., Doctor of Philological Sciences, Candidate of Economic Sciences, Professor, Vice-Rector for educational work ANO VPO Central Union of the Russian Federation "RUK" Cheboksary Cooperative Institute (branch), Cheboksary.

Fedorova L.P., Doctor of Economics, Professor, Head. Department of Economics, Management and Cooperation of ANO VPO Centrosoyuz of the Russian Federation "RUK" Cheboksary Cooperative Institute (branch), Cheboksary.

Bibliographic link

Serebryakova T.Yu. ON THE QUESTION OF ASSESSING THE EFFECTIVENESS OF INTERNAL CONTROL OF THE CONSUMER SOCIETY // Contemporary issues science and education. – 2013. – No. 5.;
URL: http://science-education.ru/ru/article/view?id=10720 (access date: 02/01/2020). We bring to your attention magazines published by the publishing house "Academy of Natural Sciences"

One of the tasks of the IAS in the conditions strategic management the company is to assess the adequacy and effectiveness of the internal control system, as well as assess the consequences of non-compliance with the procedures established within the internal control system.
The effectiveness and adequacy of a company’s internal control system must be understood as a set of the following conditions:
internal control means are formalized;
internal regulatory documents (plans, budgets, regulations, instructions, etc.) have been developed and approved;
the company’s employees are familiar with the current regulations, well understand their essence and the need for implementation;
company employees know the company’s mechanism for updating, changing and monitoring compliance with regulations by management;
management decisions with a high level of risk are identified, the degree of risk and the consequences of such decisions are assessed;
IAS employees have high professional competence, deep knowledge of the company’s business, and the ability to analyze management decisions and their consequences.
The main elements of the ICS are:
control environment - the general attitude of the company's management towards internal control, its awareness and practical actions aimed at organizing and maintaining the internal control system;
regulation - development, approval and compliance with internal regulations;
control procedures - methods and rules for controlling the company’s business processes, aimed at preventing, identifying and correcting errors and deviations;
monitoring of the internal control system - constant monitoring of the functioning of the internal control system by the management and employees of the company, including internal internal control, in order to identify deviations in its work and assess its compliance strategic goals companies. It is obvious that there are many interrelated criteria that determine the effectiveness of the internal control system. Each company must select the criteria that best suit its management strategy.
For example, when assessing the effectiveness of the internal audit function, the following important criteria should be taken into account:
the specific organizational status of the IAS in the structure of the company (structural unit) and its impact on the objectivity of control assessments;
content and scope of IAS functions;
professional competence of auditors;
the integrity of auditors when planning, carrying out inspections, and drawing up conclusions about their results.
Evaluation of the IAS performance results may be based on the following criteria:
audits are carried out in accordance with programs consistent with the objectives of the audit;
internal audit is carried out by specialists with the appropriate level of education, experience, and skills;
audits are carried out in a qualified manner and properly documented;
based on the results of audits, conclusions are drawn that correspond to the identified circumstances and facts;
The auditors' comments have been eliminated and the problems they identified have been resolved.
Experts include the most significant criteria:
1) customer satisfaction (board of directors, top managers, heads of structural divisions, etc.) - shows how well the IAS’s work meets their expectations;
the degree of coverage of key risks - shows how fully the IAS, during its audits, analyzes the shortcomings of the company’s risk management system (the risk of financial irregularities, possible fraud, incorrect reflection of business transactions in accounting, distortion of reporting, etc.);
percentage of implemented recommendations - shows how clearly the problems and their consequences are defined, as well as how acceptable the proposals for eliminating them were.
When assessing the effectiveness of the internal control system, auditors study common system organization of internal control in the audited division or business process, actual compliance with current internal regulations, organization of control over the safety of assets, correct organization of the accounting system, compliance with established control procedures aimed at identifying and eliminating distortions and errors. To assess the effectiveness of an internal control system, a testing method is usually used, on the basis of which a conclusion is made about the magnitude of the risk of control failure. Another important criterion for assessing the effectiveness of an internal control system by auditors is the interaction of its individual components. This takes into account the complementarity of control mechanisms, which eliminates unnecessary expenditure of time and effort. The effectiveness of the internal control system is assessed for individual business processes and structural units.
From the point of view of auditors, an internal control system can be considered effective if, on the one hand, it promptly warns management about the occurrence of unreliable information, and on the other hand, it identifies distortions within a limited time after their occurrence.
The main reasons for the ineffective functioning of the internal control system include the following:
requirement minimum costs on the organization of the internal control system on the part of management;
insufficient control over unusual transactions;
misunderstanding of regulatory documents, negligence in their implementation;
deliberate violation of internal control procedures by department managers and employees.
In general, the criterion for the effectiveness of an internal control system is compliance with the principles of its functioning, already described earlier. If all principles are observed in the company, then the internal control system can be considered effective provided that the benefits from its use exceed the sum of the costs of its organization.
It is quite difficult to compare costs and benefits, since costs can be expressed in monetary terms, but benefits cannot always be expressed. At the same time, it is important to focus on the goals of creating the internal control system, the focus of the internal control system’s work and the expected results.
The main benefits include increasing the degree of controllability of business processes and the activities of the company’s structural divisions, efficiency, improving corporate governance, preventing and detecting fraud, increasing credit ratings companies.
The calculation of the costs of organizing an internal control system includes: payment of internal internal control staff, business travel expenses, employee training costs, expenses for professional services external experts and consultants, other expenses (documentation and software, etc.).