Reconsidering the Role of Internal Controls in the Covid-19 Era


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Kızıl C., Kızıl F., Dolaz B.

The Institute for Internal Controls (IIC) e-Magazine, vol.2, no.2, pp.9-19, 2021 (Peer-Reviewed Journal)

  • Publication Type: Article / Article
  • Volume: 2 Issue: 2
  • Publication Date: 2021
  • Journal Name: The Institute for Internal Controls (IIC) e-Magazine
  • Page Numbers: pp.9-19

Abstract

The term internal controls has a variety of definitions. But generally speaking, internal controls is a process designed to provide reasonable assurance concerning the achievement of specific aims in effectiveness and efficiency of operations, relability of financial reporting and compliance with laws and regulations. Internal controls protects an organization. It also helps the organization to meet its targets. Internal controls is critical, since it minimizes the risks, protects assets, guarantees the accuracy of records and provides the motivation to staff to follow corporate policies (Michigan Technological University, 2021).

Today, internal controls has been adopted and applied in both the public and private sectors. Therefore, the internal controls system is one of the main components of enterprises rather than being an extra application added to the organizations. Undoubtedly, internal controls system should be implemented when businesses are first established and should be improved gradually. The existence of an internal controls system has very positive results in a business. For this reason, the internal controls system is developing and progressing day by day in today's business world. (Sabuncu, 2017).

Still, the distinction between internal controls and internal auditing is clear. Although many definitions also exist for the internal auditing, one of them is widely accepted. According to the Institute of Internal Auditors (IIA), internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It assists an organization to reach its objectives by bringing a systematic, disciplined approach to evaluate and develop the effectiveness of risk management, control and governance processes (IIA, 2021).

Covid-19, which manifested itself in 2019, has affected human life in every way, especially in health, education and business. During this period, many restrictions were imposed on the whole world. In this study, it is discussed what kind of regulations and changes the Covid-19 epidemic brought to the internal controls system. Controls in businesses are very important and critical.

This paper argues that, internal controls is being reshaped and taking on a different character in the Covid-19 era. Controlling the operations, ensuring the reliabilities, running auditing and evaluating the risks via remote work include very comprehensive efforts. In this context, how to make the remote work effective and the advantages/disadvantages of the recent internal controls applications in the Covid-19 era are discussed. Finally, although the internal controls and internal auditing are not identical, specific implications are also made for the internal auditing since internal controls and internal auditing are interconnected.