| Abstract [eng] |
In the market environment every company is seeking to obtain and maintain the best market share. One of the mechanisms in achieving this goal is an effective internal control of the company. With growing competition, fast development and introduction of new technologies, progressing complexity of business projects, and enlarging business diversity, company management is becoming increasingly more complicated. Consequently, company internal control is becoming a more and more complicated task. A good company internal control system is one of the guarantees of effective company business. Following Lithuanian accession to the EU the economy grows fast and organisations look for new courses of action, expand the scope of their activities and thus face new types of risk. To achieve the best possible results a company must exploit all possible resources. Under such circumstances it may be difficult to acquire a competitive potential in the European Union unless there is an efficient internal control in place. Huge financial scandals of the end of the 20th century, such as Enron, WorldCom, Ahold, Parmalat, etc. made it obvious that companies without an internal control system are destined to die. Moreover, those bankruptcy cases revealed insufficient regulation of internal control. The current global crisis showed that corporate internal control failed to reveal major business risks faced by companies and to minimize such risks to an acceptable level. Likewise, corporate management systems failed to introduce urgent anti-crisis measures. The above prompts the relevance and importance of the topic. Research object: corporate internal control system under the conditions of transformation. Research objective: to analyse the changes in the corporate internal control system predetermined by the transformation period and to suggest an internal control pattern that focuses on risk management. Key scientific findings of the research 1. For the first time, analysis of different approaches towards the internal control was performed. After they were systematised, two directions of the internal control analysis were established: 1) internal control structure; 2) internal control implementation process. If the internal control is considered from a single of the above aspects, all the essential qualities fail to be revealed. Consequently the aforesaid directions have to be combined and the internal control system should be considered as a process defined by the actions of the management, which is based on provisions of ethics and social responsibility and is meant to secure the implementation of the business policy of the company and to achieve the set objectives. 2. Comparative analysis of internal control patterns was performed. 3. For the first time, legal framework regulating internal control of economic entities engaged in different business sectors in Lithuania was analysed. It was discovered that Lithuanian legislation fails to offer a systematic approach towards internal control. 4. The internal control system of Lithuanian companies was analysed. The corporate internal control was researched in 2001 and 2007 in order to determine the changes in the internal control of the companies. 5. Improvements were introduced in the internal control model for small and medium enterprises by including the following key elements: 1) control environment, 2) risk management, 3) information system and informing; 4) control factors; and 5) monitoring. 6. It was suggested that the research into the control environment should focus on the aspects of ethics and socially responsible company. 7. It was suggested that while evaluating the financial activities of a company at the risk management stage it is expedient to: 1) perform analysis of relative indices, 2) to assess the probability of company bankruptcy, 3) to forecast cash flow from the main business activities of the company. 8. It was suggested to investigate and manage the fraud risk at the risk management stage. An algorithm of auditor's actions was developed, which can be applied when circumstances indicating a possibility of errors and fraud are observed. 9. It was suggested that the analysis of the accounting system should include the following areas that are significant with respect of the internal control: selection of accounting policy and individual accounting processes. For the purpose of control, it is important to investigate both the policy of financial and management accounting. Key applicable findings of the research 1. Improved internal control system evaluation methodology for small and medium enterprises, which is designed for practical application by independent and internal auditors and company management in deciding the standing of the company control. 2. Internal control measures for individual accounting processes were systemized and presented. The urgency of analysing the accounting policy as a system of prevention control measures was substantiated. 3. After the possibilities at Lithuanian companies were analysed with the help of the recourse analysis of forecasting cash flows from main activities, a pattern for forecasting the future cash flows was suggested. 4. A system of prevention measures for organisational and technical aspects of financial accounting policy was brought forward. A special emphasis was placed on control measures in changing the accounting policy. 5. A modified production cost calculation methodology was designed for small and medium enterprises, where the production costs are accounted by using traditional cost price calculation methods, while operation costs are calculated by using elements of modern management accounting theory. |
