Uemura, Hiroshi (2020) Does Control Self-Assessment Influence Financial Reporting Quality? International Journal of Management and Humanities, 5 (4). pp. 70-76. ISSN 23940913
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Abstract
The aim of this study is to examine the effect of control self-assessment (CSA) on financial reporting quality by using CSA as a proxy of monitoring quality. CSA has an important feature that allows the employees themselves to become involved in the assessment of internal controls’ effectiveness. Moreover, CSA has two important monitoring functions. First, it can add value to internal auditing. Second, because all employees of operational units participate in the assessment of internal controls in CSA, that control environment is expected to be mature. The investigation of this study used data from 3,517 Japanese firms listed on the First Section, Second Section, Mothers, and JASDAQ of the Tokyo Stock Exchange. The result of 2SLS regression shows that CSA adoption has a negative relationship with the number of financial restatements and audit fees, and therefore, I conclude that CSA has positive consequences for financial reporting quality. This result indicates that the internal monitoring mechanism that continuously monitors internal control over financial reporting (ICFR) effectiveness and in which all employees participate has some positive effects on financial reporting quality. There are two reasons for this result. First, employees have easier access to negative information concerning ICFR effectiveness than outsiders and can share that information with the internal personnel in charge of monitoring (e.g., internal auditors). Moreover, CSA is expected raise an entity’s awareness of ICFR, that is, the control environment of ICFR components is made into an environment that prevents and detects impropriety in the accounting process.
Item Type: | Article |
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Subjects: | Apsci Archives > Medical Science |
Depositing User: | Unnamed user with email support@apsciarchives.com |
Date Deposited: | 21 Apr 2023 05:32 |
Last Modified: | 07 Feb 2024 04:46 |
URI: | http://eprints.go2submission.com/id/eprint/788 |