Accounting Horizons · 2000 · 104 citations · 2 references
BusinessAccountancyAccountingAuditingCorporate DisclosureCorporate ReportingFinancial ReportingFinancial StatementsInternal AuditInternal AuditingInternal ControlsInternal ReportingManagement Accounting Reports
The study analyzes the demand for reporting on internal control. The authors surveyed nine financial statement user groups to evaluate the usefulness, decision‑influence, and reporting improvement of management reports on internal control, comparing responses across broad versus narrow definitions of internal control and across user groups. Respondents agreed that internal controls are important, that voluntary MRICs improve controls and aid decision making, while mandatory MRICs improve controls but are less valued for decisions; a broad definition of controls heightened agreement on improvement and long‑term viability, and executives were less supportive of MRIC value than individual investors and internal auditors.
The purpose of this study is to analyze the demand for reporting on internal control. Nine financial statement user groups were identified and surveyed to determine whether they agree that: (1) management reports on internal control (MRIC) are useful, (2) MRICs influence decisions, and (3) financial reporting is improved by adding MRICs. In addition, the paper examined whether responses varied based on: (1) the definition of internal control used (manipulated as broad, operational definition vs. narrow, financial-reporting definition) and (2) user group. The results indicate that financial statement users agree that internal controls are important. Respondents agreed that voluntary MRICs improved controls and provided additional information for decision making. Respondents also agreed that mandatory MRICs improved controls, but did not agree about their value for decision making. Using a broad definition of controls, respondents strongly agreed that MRICs improved controls and provided a better indicator of a company's long-term viability. Executive respondents were less likely to agree about the value of MRICs than individual investors and internal auditors.
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