The Association Between Local Government Organization Structure and Internal Controls: The Case of North Carolina Counties
DOI:
https://doi.org/10.60154/jaepp.2024.v25n1p71Keywords:
Internal controls, government accounting, government auditsAbstract
Government staff are charged with the simultaneous responsibility of budget execution while adhering to generally accepted accounting principles. Precipitating factors encompassing this process can provide issues related to sustaining proper internal controls within the organization. This study examines the underlying factors contributing to internal control problems among county governments in North Carolina. A multivariate analysis provides an overall measurement of total number of material weaknesses and significant deficiencies based on audit information for fiscal year 2018-2019. The empirical analysis suggests that organizational factors have an impact on the number of material weakness findings while auditor specialization, higher audit fees, a higher number of accounts payable personnel, and additional government employees lead to an increase in significant deficiency findings. Findings also suggest any questionable cost finding can lead to any type of internal control problem. Overall, the findings suggest the enormous pressure on finance staff due to the demands of stakeholders becomes the synergist for weaknesses and deficiencies in internal controls.
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