The effect of applying COSO-ERM model on reducing fraudulent financial reporting of commercial banks in Jordan

This study examines whether a suitable control environment increases the value relevance of earnings by providing greater assurance on the reliability of financial reporting. Specifically, the level of suitable control environment is assessed by considering the quantity and quality of IC personnel, which are closely related to the personnel integrity/ethical values, competence, and authority/responsibility. Using a sample of 1,834 firm-year observations of Korean listed companies covering 2005–2010, the author finds that earnings are more value relevant when the increase in the average work experience of IC personnel is greater. However, no evidence is found that the value relevance of earnings is positively associated with the increase in the proportion of IC personnel. The findings suggest that a suitable control environment, established by deployment of qualified IC personnel with more work experience, improves the IC effectiveness and, thus, provides greater assurance on the reliability of financial reporting to market investors.

This study was conducted to examine the factors affecting the level of disclosure of local government financial statements. The study uses the internal control system as a moderating variable. Local government financial reports in Indonesia were the subject of this study’s audit by the Supreme Audit Agency. The number of research samples used was 487 local/city governments in Indonesia for the 2021 period with purposive sampling as a sampling technique. In this study, the Structural Equation Model-Partial Least Square (SEM-PLS) Version 3 data analysis method was employed. Based on the test results, it was found that local government budget expenditures (β = 0.263; p < 0.05) have a significant effect on the level of financial statement disclosure. Meanwhile, financial condition (β = 0.173; p > 0.05) has no significant effect on the level of financial statement disclosures. The internal control system as a moderating variable can moderate the influence of local government budget expenditure (β = 0.263; p < 0.05) on the level of disclosure of financial statements, but cannot moderate the effect of financial condition (β = –0.073; p > 0.05) on the level of disclosure of financial statements. Local governments in Indonesia are expected to be able to further optimize disclosure in accordance with Government Regulations in the future. One of the approaches used by regional governments to execute financial report transparency is the use of information technology to satisfy social expectations more effectively and efficiently.