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Suppliers suffer losses when customers repudiate B2B order transactions in open account systems. Appropriate internal control measures should be implemented to address repudiation. According to the King Report on Corporate Governance for South Africa (2002), the responsibility for internal control lies with the management of a company. This article aims to assist management in reducing the risk of repudiation to an acceptable level, by providing a framework of recommended internal control measures. The framework was compiled after considering: Requirements in the Electronic Communications and Transactions Act that make digital contracts valid. Existing control frameworks, control objectives and internal control measures addressed by COBIT® and AICPA/CICA’s Trust Services Principles and Criteria.

There have been many studies that investigated the causes of workarounds, but there is less research on their outcomes, such as the impact on internal control. This study aims to investigate the use of workarounds by a multinational organization that implemented SAP about 10 years ago, and how those workarounds affected internal controls.

A qualitative study is performed by analyzing interviews with company personnel for a multinational organization. Employees selected for interviews are primarily users of SAP’s accounting functions.

Workarounds have significant impacts on the internal controls over financial reporting. Workarounds cause compensating controls to be implemented, which are often manual in nature, and decrease the organizational efficiency and effectiveness.

Workarounds become integrated into an organization’s activities to meet its business needs. This research raises questions to determine when maintaining organizational efficiency and control outweighs the need to provide customer service and other business needs.

Companies should consider whether their business processes can be modified to ensure that they can be handled within the enterprise system. In addition, the number of compensating controls required due to workarounds may decrease the organizational efficiency expected from having an enterprise resource planning system to ensure the integrity of financial information.

This paper moves beyond finding the causes of workarounds, and expands what is known about workarounds and their impact on an organization. An important contribution of this study is to consider the intersection of workarounds, ERP systems and internal controls.

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

This chapter adopts Porter’s ‘audit trinity’ approach comprising internal audit, external audit and audit committee to discuss the role auditing can play in the management of corporate fraud.

The chapter maps the historical background of and the developments in external audit as an assurance service, the internal audit function and the audit committee. Based on this, it explains the nature, types and possible causes of corporate fraud within the context of business risk with a view to establishing how auditing can help in managing such frauds.

The chapter highlights the relationships that should exist between the three audit types in order to support a sound internal control system as a tool for preventing and detecting corporate fraud.

The chapter identifies cost, opportunity, connivance and managerial override as factors that could limit the ability of auditing to manage corporate fraud. It also suggests ways of addressing these limitations.

As the current upward trend in IT adoption for corporate operations continue to open new sets of corporate fraud windows, this chapter examines how an entity’s internal controls can be used to prevent and detect these growing fraud schemes.

The chapter’s unique strength is its adoption of a holistic approach to auditing to suggest ways of managing corporate fraud – a novelty in the corporate fraud literature. It is hoped that future research in the area will bring empirical insights to the issues raised and perspectives covered in the chapter.

Internal auditors are struggling to maintain their identity and purpose as the organizations they audit undergo drastic changes. Total quality management, business process reengineering, globalization, and self‐directed teams are dismantling hierarchical command and control structures. Advances in information technology continuously render control procedures obsolete. The ‘value’ of traditional internal audit is seriously questioned from the board room to the show room. CoActive audit is an internal audit model designed for team/technology based organization cultures, where the focus is on process enhancement rather than assessment and reporting. It provides synergistic solutions to real problems, rather than a quasi‐independent appraisal offering recommendations of potentially marginal value. Auditing has its origins in antiquity, apparently when rulers with wealth had the objective of maintaining their wealth by detecting fraud on the part of their servants. While external auditing was originally formulated with the same objective, through the years it changed its primary objective to emphasize the ‘professional review of financial statements by an independent expert, so that a professional opinion indicating that financial condition and results of operation have been fairly presented can be given.’ While internal auditing formulated its objective to ‘assist members of the organization in the effective discharge of their responsibilities,’ it continued the basic doctrine that auditing is an expert, independent, appraisal function. While many internal auditors today keep auditing as they have in the past, the organizations they are auditing are undergoing drastic changes. Total Quality Management, Self Directed Teams, and Business Process Reengineering are dismantling the old hierarchical command and control systems that depended on auditors to verify compliance. Advances in Information Technology have rendered manual control procedures obsolete. While most internal auditors have successfully made the transition from a reactive audit process that basically reported on history to a proactive approach based on risk assessment and focused on the present, the changes occurring within our organizations demand even more fundamental changes. Contemporary internal auditors openly acknowledge that they feel change must occur within the internal auditing community, and these leaders are venturing forward trying new philosophies and approaches. CoActive Audit is a combination of these new philosophies and methodologies, with its roots in the teachings of the primary management visionaries of the times. It is a vehicle to help internal audit grow, to re‐energize, to expand both its reach and grasp. It is about change, about recognizing the world has drastically changed, about realizing that some of our most basic assumptions are no longer valid, about understanding that some of our codified standards may hinder rather than help, and about replacing the old that is no longer appropriate with a new that is. It is time to focus on enhancing internal control, not merely reporting on it. It is time to build control into business processes, not simply assessing compliance with policies and procedures. It is time to recognize that the traditional internal audit methodology may be counterproductive to the goal of ensuring a reliable internal control system. It is time for CoActive Audit: the next critical step for internal audit. CoActive Audit enhances management control processes using today's management philosophies and methodologies. It represents a fundamental transformation of traditional internal audit philosophy, a 180 shift in mental models and paradigms. The essential components are an audit approach that is: Concurrent — rather than historical; Collaborative — rather than autonomous; Consultative — rather than judgmental; Client‐based — rather than standards‐based; A Catalyst — rather than an inhibitor.

This study aims to examine how the legitimacy of internal auditing is reconstructed during enterprise resource planning (ERP)-driven technological change.

The study is based on the comparative analysis of internal auditing and its transformation due to ERP implementations at two case firms operating in the food sector in Egypt – one a major Egyptian multinational corporation (MNC) and the other a major domestic company (DC).

Internal auditors (IAs) at MNC saw ERP implementation as an opportunity to reconstruct the legitimacy of internal auditing work by engaging and partnering with actors involved with the ERP change. In doing so, the IAs acquired system certifications and provided line functions and external auditors with data-driven business insights. The “practical coping mechanism” adopted by the IAs led to the acceptance (and legitimacy) of their work. In contrast, IAs at DC adopted a purposeful strategy of disengaging, blaming and rejecting since they were skeptical of the top management team's (TMT's) sincerity. The “disinterestedness” led to the loss of legitimacy in the eyes of the stakeholders.

The article offers two contributions. First, it extends the literature by highlighting a spectrum of behavior displayed by IAs (coping with impending issues vs strategic purposefulness) during ERP-driven technological change. Second, the article contributes to the literature on legitimacy by highlighting four intertwined micro-processes – participating, socializing, learning and role-forging – that contribute to reconstructing the legitimacy of internal auditing.

This study aims to investigate the relationship between information technology and internal controls of state agencies in Iran.

The research population includes all auditors and managers working in public sector. Data collection instrument is a questionnaire designed by the researcher and administrated during March 5, 2016. The collected data are analyzed through descriptive and inferential statistics (binomial test).

The findings of the research show that there is a significant relationship between information technology and internal controls (administrative, financial and accounting controls, risk assessment, information and communication, control activities and monitoring). Moreover, the alteration of data collection methods (from traditional to modern) and the written instructions (in information technology) have a positive effect on the internal control and its subscales.

With regard to the emphasis on the development of computer application and the use of new processing facilities and the exchange of information and its specific controlling consequences, this is an innovative research.

The purpose of this paper is to examine if a conflict of interest arises when auditors opine on an internal control system that consists of an information system recently designed and implemented by their own firm.

A sample of companies was selected that had a financial information design and implementation service (FISD) disclosure in 2000‐2001 and a Section 404 internal control report issued in 2004‐2005. Both descriptive statistics and logistic regression results provide insight into the relation between the type of internal control report issued and the FISD provider.

After considering the type of auditor change (forced versus voluntary) and the timing of the consulting division split‐offs, the results suggest that a material weakness internal control report is less likely if the same audit firm issued the internal control opinion and performed the FISD service. This result lends some support to the regulator's concern that certain types of non‐audit services (NAS) may cause auditors to audit their own work.

This study contributes to the literature by examining if the performance of a certain type of NAS (FISD) resulted in auditors auditing their own work when opining on certain internal control systems. To the author's knowledge, this is the first study of its type in relation to auditors auditing their own work.