The Effect of Internal Control Systems and Procrastination on Public Sector Employees

  • Afzal Izzaz Zahari Accounting Research Institute (ARI), UiTM Shah Alam, Selangor, Malaysia
  • Jamaliah Said Accounting Research Institute (ARI), UiTM Shah Alam, Selangor, Malaysia
  • Roshayani Arshad Accounting Research Institute (ARI), UiTM Shah Alam, Selangor, Malaysia
Keywords: Effectiveness, Internal Control Systems, Public Sector, Procrastination

Abstract

Internal control is a control mechanism that keeps in check the structure for it to operate within the intended parameters and target objectives. The paper offers an overview effectiveness of internal control on whether it achieves the purpose of control the organisation in reducing the laziness in public sector employees. The overall design approach is through the analysis of internal control systems from the Committee of Sponsoring Organisation (COSO) framework. Data was collected through the distribution of questionnaires towards 106 government organisations based on the contents of five components of internal control, which consist of the control environment, risk assessment, control activities, information and monitoring activities. A total sample of 118 government employees returned the questionnaires. Through the analysis of the internal control system, the overview is then observed on whether it would improve overall organisational performance. The study indicated that only a single component of internal control systems (monitoring) is an effective mechanism towards reducing procrastination. The usefulness on whether having strong controls can improve overall organisation performance in the public sector provides a different perspective as government employees have different motivations from private sector employees. The paper contributes towards understanding human behaviour in terms of its reaction towards control systems. It is also from a public sector viewpoint of which internal control effectiveness must be strong in order to increase effectiveness.

References

Afzal, S., & Jami, H. (2018). Time Perspective, Control, and Affect Mediate The Relation Between Regulatory Mode and Procrastination. Journal of Behavioural Sciences, 28(1), 51–69.

Agbejule, A., & Jokipii, A. (2009). Strategy, Control Activities, Monitoring and Effectiveness. Managerial Auditing Journal, 24(6), 500–522. https://doi.org/10.1108/02686900910966503

Ahmad, H. A., Othman, R., Othman, R., & Jusoff, K. (2012). The Effectiveness of Internal Audit in Malaysian Public Sector. Journal of Accounting and Auditing, 5(OCTOBER).

Arwinge, O. (2013). Internal Control: A study of Concept and Themes. Springer Science & Business Media. United Kingdom: Springer. https://doi.org/10.1007/978-3-7908-2151-2

Atkinson, A. A., Kaplan, R. S., Matsumura, E. M., & Young, S. M. (2012). Management Accounting: Information for Decision-making and Strategy Execution. Essex: Pearson (6th ed.). Pearson.

Babatunde, S. A., & Dandago, K. I. (2014). Internal Control System Deficiency and Capital Project Mis-management in the Nigerian Public Sector. Procedia - Social and Behavioral Sciences, 164(August), 208–221. https://doi.org/10.1016/j.sbspro.2014.11.069

Besley, T., & McLaren, J. (1993). Taxes and Bribery : The Role of Wage Incentives. The Economic Journal, 103(416), 119–141.

Bierstaker, J. L., Brody, R. G., & Pacini, C. (2006). Accountants’ Perceptions regarding Fraud Detection and Prevention Methods. Managerial Auditing Journal, 21(5), 520–535. https://doi.org/10.1108/02686900610667283

Bowen, E. R. (2003). Student engagement and its relation to quality work design: A review of the literature. Action Research Exchange, 2(1), 1–13.

Bowrin, A. R. (2004). Internal control in Trinidad and Tobago Religious Organizations. Accounting, Auditing & Accountability Journal, 17(1), 121–152. https://doi.org/10.1108/09513570410525238

Chen, C. X., & Sandino, T. (2012). Can Wages Buy Honesty? The Relationship Between Relative Wages and Employee Theft. Journal of Accounting Research, 50(4), 967–1000. Retrieved from http://onlinelibrary.wiley.com/doi/10.1111/j.1475-679X.2012.00456.x/abstract

COSO. (2013a). Internal Control: Integrated Framework, (May), 10. https://doi.org/978-1-93735-239-4

COSO. (2013b). Internal Control: Integrated Framework (Executive Summary). Retrieved from http://coso.org/IC-IntegratedFramework-summary.htm

Creswell, J. W. (2003). Research Design: Qualitative, quantitative, and mixed methods approaches. SAGE. Retrieved from https://books.google.com.my/books?id=YcdlPWPJRBcC&printsec=frontcover&source=gbs_ViewAPI&redir_esc=y#v=onepage&q&f=false

Davila, A., & Foster, G. (2007). Management control systems in early-stage startup companies. Accounting Review, 82(4), 907–937. https://doi.org/10.2308/accr.2007.82.4.907

Denison, D., Ashkanasy, N., Wilderom, C., Peterson, M., Cooper, C. L., Cartwright, S., & Earley, P. C. (2003). The Handbook of Organizational Culture and Climate. Administrative Science Quarterly (Vol. 48). https://doi.org/10.1017/CBO9781107415324.004

Department of Information Malaysia. (2017). Senarai Jabatan atau Agensi Kerajaan Persekutuan. Retrieved May 25, 2017, from http://pmr.penerangan.gov.my/index.php/maklumat-kenegaraan/12071-senarai-jabatanagensi-kerajaan-persekutuan.html

Dorminey, J., Scott Fleming, A., Kranacher, M. J., & Riley, R. A. (2012). The Evolution of Fraud Theory. Issues in Accounting Education, 27(2), 555–579. https://doi.org/10.2308/iace-50131

Douglas, P. C., Davidson, R. A., & Schwartz, B. N. (2001). The Effect of Organizational Culture and Ethical Orientation on Accountants’ Ethical Judgement. Journal of Business Ethics, 34(2), 101–121.

Fernie, B. A., Bharucha, Z., Nikčević, A. V., Marino, C., & Spada, M. M. (2017). A Metacognitive Model of Procrastination. Journal of Affective Disorders, 210(August 2016), 196–203. https://doi.org/10.1016/j.jad.2016.12.042

Ferrari, J. R., Johnson, J. L., & McCown, W. G. (1995). Procrastination Research. In Procrastination and Task Avoidance (pp. 21–46). Springer.

Field, A. (2013). Discovering Statistics Using IBM SPSS Statistics (4th Edition). SAGE Publications Limited.

Frank, S. A., & Lewis, G. B. (2004). Government Employees: Working Hard or Hardly Working? The American Review of Public Administration, 34(1), 36–51. https://doi.org/10.1177/0275074003258823

Gibson, J. L., Donnelly, J. H., Ivancevich, J. M., & Konopaske, R. (2014). Organizations: Behaviour, Structure, Processes. McGraw-Hill Irwin.

Graaf, G. de, Huberts, L., & Strüwer, T. (2017). Integrity Violations and Corruption in Western Public Governance: Empirical Evidence and Reflection from the Netherlands. Public Integrity, 0(0), 1–19. https://doi.org/10.1080/10999922.2017.1350796

Gregory, B. T., Harris, S. G., Armenakis, A. A., & Shook, C. L. (2009). Organizational Culture and Effectiveness: A study of values, attitudes, and organizational outcomes. Journal of Business Research, 62(7), 673–679. https://doi.org/10.1016/j.jbusres.2008.05.021

Grund, A., & Fries, S. (2018). Understanding Procrastination: A motivational approach. Personality and Individual Differences, 121(March 2017), 120–130. https://doi.org/10.1016/j.paid.2017.09.035

Hair, J. F., Anderson, R. E., Tatham, R. L., & Black, W. C. (2010). Multivariate Data Analysis: A global perspective. Upper Saddle River (7th Editio). New Jersey: Prentice Hall.

Hansen, S. C. (1997). Designing Internal Controls: The interaction between efficiency wages and monitoring. Contemporary Accounting Research, 14(1), 129–163. https://doi.org/10.1111/j.1911-3846.1997.tb00522.x

Hassan, N., Rahmat, M. M., & Muhammudun, Z. M. (2015). Sistem kawalan dalaman, sokongan pengurusan dan keberkesan audit dalaman sektor awam di Malaysia. Asian Journal of Accounting and Governance, 12, 1–12. Retrieved from http://journalarticle.ukm.my/9581/1/8518-33162-1-PB.pdf

Hauner, D., & Kyobe, A. (2010). Determinants of Government Efficiency. World Development, 38(11), 1527–1542. https://doi.org/10.1016/j.worlddev.2010.04.004

Henle, C. A., Reeve, C. L., & Pitts, V. E. (2010). Stealing time at work: Attitudes, social pressure, and perceived control as predictors of time theft. Journal of Business Ethics, 94(1), 53–67. https://doi.org/10.1007/s10551-009-0249-z

Hirschi, T., & Gottfredson, M. R. (1995). Control Theory and The Life-course Perspective. Studies on Crime & Crime Prevention. Retrieved from http://psycnet.apa.org/psycinfo/1996-34555-001

Hollinger, R. C., & Clark, J. P. (1983). Theft by Employees. Lexington, MA: D.C. Heath.

Huberts, L., & Lasthuizen, K. (2014). The Integrity of Governance. (R. Fouchet & T. Brandsen, Eds.), Palgrave Macmillan, London (First Edit). France.

Jack, D., Arron Scott, F., & Mary-Jo, R. (2010). Beyond The Fraud Triangle. THE CPA Journal2, 80(7), 17–23.

Jami, H., & Afzal, S. (2018). Prevalence of Academic Procrastination and Reasons for Academic Procrastination in University Students. Journal of Behavioural Sciences, 28(1).

Jensen, M. C. (1993). The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems the Failure of Internal Control Systems. Journal of Finance, 48(3), 831–880. https://doi.org/10.1111/j.1540-6261.1993.tb04022.x

Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3(4), 305–360.

Jokipii, A. (2009). Determinants and Consequences of Internal Control in Firms: A contingency theory based analysis. Journal of Management and Governance, 14(2), 115–144. https://doi.org/10.1007/s10997-009-9085-x

Kantor, J. R. (1953). The logic of modern science.

Kendrick, M. (2000). Internal Control: Guidance for Directors on the Combined Code (The Turnbull Report). Risk Management, 2(4), 65–69. https://doi.org/10.1057/palgrave.rm.8240072

Khlif, H., & Samaha, K. (2016). Audit committee activity and internal control quality in Egypt: Does external auditor’s size matter? Managerial Auditing Journal, 31(3), 269–289. https://doi.org/10.1108/02656710210415703

Koh, H. C., & Boo, E. H. Y. (2001). The link between organizational ethics and job satisfaction: A study of managers in Singapore. Journal of Business Ethics, 29(4), 309–324. https://doi.org/10.1023/A:1010741519818

Lansiluoto, A., Jokipii, A., & Eklund, T. (2016). Internal Control Effectiveness: A clustering approach. Managerial Auditing Journal, 31(1), 5–34. https://doi.org/10.1108/MAJ-08-2013-0910

Lasthuizen, K., Huberts, L., & Heres, L. (2011). How to Measure Integrity Violations: Towards a Validated Typology of Unethical Behavior. Public Management Review, 13(3), 383–408. https://doi.org/10.1080/14719037.2011.553267

Lee, S. (2016). Sabah Water Department Director Released on Bail. The Star Online, p. 1. Retrieved from https://www.thestar.com.my/news/nation/2016/10/16/sabah-water-ops-director-released/#4G8tZtk5cOKTBWfl.9

Lewis, W. E. (2016). Control Environment for Ethical Behaviour.

Ling, S. (2018). Four BTN Officers among 10 Arrested Over RM600,000 in False Claims. The Star Online, p. 1. Retrieved from https://www.thestar.com.my/news/nation/2018/08/02/four-btn-officers-among-10-arrested-over-rm600000-in-false-claims/

Lyubomirsky, S., King, L., & Diener, E. (2005). The benefits of frequent positive affect: Does happiness lead to success? Psychological Bulletin, 131(6), 803–855. https://doi.org/10.1037/0033-2909.131.6.803

Malaysian Ministry of Human Resource. (2013). Malaysian Standard Classification of Occupation. Synthesis (3rd ed.). Ministry of Human Resources Malaysia. Retrieved from http://www.mohr.gov.my/index.php/en/2015-05-06-04-09-30/publication/2016-03-08-02-07-00/167-masco-2013

Mansor, N., & Kennedy, J. (2000). Malaysian Culture and the Leadership of Organisations : A GLOBE Study.

Martin, G. S., Keating, M. A., Resick, C. J., Szabo, E., Kwan, H. K., & Peng, C. (2013). The meaning of leader integrity: A comparative study across Anglo, Asian, and Germanic cultures. Leadership Quarterly, 24(3), 445–461. https://doi.org/10.1016/j.leaqua.2013.02.004

Mintzberg, H. (1973). The Nature of Managerial Work. Harper and Row.

Mizan, K., Nawawi, Z. A., Azlin, A. S., & Salin, P. (2016). Internal Controls and Fraud: Empirical evidence from oil & gas company. Journal of Financial Crime, 23(4). https://doi.org/10.1108/13590791011082797

Mucciarone, M. A. (2008). Accountability and Performance Measurement in Australian and Malaysian Government Departments.

Mucciarone, M. A., & Neilson, J. (2011). Performance Reporting in The Malaysian Government. Asian Academy of Management Journal of Accounting and Finance, 7(2), 35–77. https://doi.org/10.1057/jdg.2010.4

Ofori, W. (2011). Effectiveness of Internal Controls: A perception or Reality? The Evidence of Ghana Post Company Limited in Ashanti Region, 69.

Petrovits, C., Shakespeare, C., & Shih, A. (2011). The causes and consequences of internal control problems in nonprofit organizations. Accounting Review, 86(1), 325–357. https://doi.org/10.2308/accr.00000012

Poole, S. (2013). The Right to be Lazy. New Statesmen, 142(5187), 22–25. https://doi.org/10.1016/S0262-4079(14)61810-8

Public Service Department of Malaysia. (2002). Laporan Penggredan Jawatan. Malaysia. Retrieved from http://docs.jpa.gov.my/docs/pekeliling/pp02/bil04/Lampiran-B3.pdf#p1

Publics Service Department of Malaysia. (2011). Public Service Department Annual Report. Malaysia.

Reckless, W. C. (1961). A New Theory of Deliquency and Crime. Federal Probation, 25(42).

Rosli, M. H., Aziz, M. A., Mohd, F., & Said, J. (2015). Integrity Systems in Malaysian Public Sector: An Empirical Finding. Procedia Economics and Finance, 28(April), 260–265. https://doi.org/10.1016/S2212-5671(15)01109-0

Schraw, G., Wadkins, T., & Olafson, L. (2007). Doing the things we do: A grounded theory of academic procrastination. Journal of Educational Psychology, 99(1), 12–25. https://doi.org/10.1037/0022-0663.99.1.12

Servais, J.-M., & Blanpain, R. (2011). International Labour Law. Kluwer Law International Alphen aan den Rijn.

Shields, M. D., Deng, F. J., & Kato, Y. (2000). The design and effects of control systems: tests of direct- and indirect-effects models. Accounting, Organizations and Society, 25(2), 185–202. https://doi.org/10.1016/S0361-3682(99)00041-0

Simer, J. B. and B. (2013). COSO Enhances Its Internal Control - Integrated Framework. Retrieved December 6, 2016, from http://deloitte.wsj.com/riskandcompliance/2013/06/12/coso-enhances-its-internal-control-integrated-framework/

Snider, L. (2002). Theft of Time : Disciplining Through Science and Law. Sociology The Journal Of The British Sociological Association, 40(1), 89–112.

Soans, A., & Abe, M. (2016). Bribery, Corruption and Bureaucratic Hassle: Evidence from Myanmar. Journal of Asian Economics, 44, 41–56. https://doi.org/10.1016/j.asieco.2016.04.003

Spira, L. F., & Page, M. (2003). Risk management: The reinvention of internal control and the changing role of internal audit [Electronic Version]. Accounting, Auditing & Accountability Journal, 16(4), 640–661. https://doi.org/10.1108/09513570310492335

Staicu, A. M., Tatomir, R. I., & Lincă, A. C. (2013). Determinants and Consequences of “ Tone at the Top .” International Journal of Advances in Management and Economics, 2, 76–88.

Wessel, J., Bradley, G. L., & Hood, M. (2019). Comparing Effects of Active and Passive Procrastination: A field study of behavioral delay. Personality and Individual Differences, 139(July 2018), 152–157. https://doi.org/10.1016/j.paid.2018.11.020

White, M. D. (2012). Kantian Moral Psychology and Criminal Behavior. Journal of Criminal Psychology, 2(1), 67–76. https://doi.org/10.1108/20093821211210503

Yu, S., & Neter, J. (1973). A Stochastic Model of the Internal Control System. Journal of Accounting Research, 273–295. https://doi.org/10.1360/zd-2013-43-6-1064

Published
2019-01-01
How to Cite
Zahari, A. I., Said, J., & Arshad, R. (2019). The Effect of Internal Control Systems and Procrastination on Public Sector Employees. Indian-Pacific Journal of Accounting and Finance, 3(1), 50-64. Retrieved from http://ipjaf.omjpalpha.com/index.php/ipjaf/article/view/65
Section
Main Section