Control Environment as an Element of the Coso Framework AR (1) Model Vs IV-GMM Model Case Study Republic of Kosovo

Session

Management, Business and Economics

Description

The need to clarify the factors and processes that combine to build effective internal control systems was recognized in the United States of America by the Committee of Sponsors of Organizations of the Treadway Commission (COSO). Concerns were also raised about the impact of fraudulent finance, fraud on auditing standards, and most importantly, a wider understanding of financial control was needed. Since the COSO framework is considered to be the foundation of the modern control approach, in September 1992, COSO published another report entitled "Integrated Internal Control Framework", which was then republished in 1994 with some changes small. As a result, the COSO framework identifies five key components of internal control. The importance of this research is to look at the impact of one of the five elements of the COSO framework, which is Environmental Control, as well as to see which has the most impact on the good management of public funds in the case of Kosovo. Control Environment has 5 (five) principles, namely: (1) commitment to integrity and ethical value; (2) responsible oversight; (3) the determination of structure, authority and responsibility; (4) commitment to competence; (5) enforcement of accountability. We use the statistical method of evaluating the instrumental variables (IV) with the exact "Generalized Method of Moments (GMM)" for the primary data. As for the model for secondary data, we have used the "Autoregressive Model of order (1)" or "AR (1) Model" in our research. It turns out that the Control Environment as the first element in the COSO framework from the primary data ordered by the IV-GMM model has an impact on the good management of funds in the case of the Republic of Kosovo. Whereas from the secondary data in this regression model, the order of an auto-regression is the number of immediately previous values in the series that are used to predict the value at the present time and from the second model that the financial budgets of some Institutions are taken and are analyzed for a period of 20 years with the help of time series, it turns out that the control environment has an impact on the good management of funds.

Keywords:

COSO framework, Environmental Control, IV-GMM Model, AR (1) Model, Performance, Public Sector, Republic of Kosovo.

Proceedings Editor

Edmond Hajrizi

ISBN

978-9951-550-50-5

Location

UBT Kampus, Lipjan

Start Date

29-10-2022 12:00 AM

End Date

30-10-2022 12:00 AM

DOI

10.33107/ubt-ic.2022.402

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Control Environment as an Element of the Coso Framework AR (1) Model Vs IV-GMM Model Case Study Republic of Kosovo

UBT Kampus, Lipjan

The need to clarify the factors and processes that combine to build effective internal control systems was recognized in the United States of America by the Committee of Sponsors of Organizations of the Treadway Commission (COSO). Concerns were also raised about the impact of fraudulent finance, fraud on auditing standards, and most importantly, a wider understanding of financial control was needed. Since the COSO framework is considered to be the foundation of the modern control approach, in September 1992, COSO published another report entitled "Integrated Internal Control Framework", which was then republished in 1994 with some changes small. As a result, the COSO framework identifies five key components of internal control. The importance of this research is to look at the impact of one of the five elements of the COSO framework, which is Environmental Control, as well as to see which has the most impact on the good management of public funds in the case of Kosovo. Control Environment has 5 (five) principles, namely: (1) commitment to integrity and ethical value; (2) responsible oversight; (3) the determination of structure, authority and responsibility; (4) commitment to competence; (5) enforcement of accountability. We use the statistical method of evaluating the instrumental variables (IV) with the exact "Generalized Method of Moments (GMM)" for the primary data. As for the model for secondary data, we have used the "Autoregressive Model of order (1)" or "AR (1) Model" in our research. It turns out that the Control Environment as the first element in the COSO framework from the primary data ordered by the IV-GMM model has an impact on the good management of funds in the case of the Republic of Kosovo. Whereas from the secondary data in this regression model, the order of an auto-regression is the number of immediately previous values in the series that are used to predict the value at the present time and from the second model that the financial budgets of some Institutions are taken and are analyzed for a period of 20 years with the help of time series, it turns out that the control environment has an impact on the good management of funds.