Joural of Social Scieces (COES&RJ-JSS) ISSN (E): 30-949 ISSN (P): 30-9494 Publiser: Cetre of Excellece for Scietific & Researc Jouralism, COES&RJ LLC Olie Publicatio Date: st Jauary 07 Olie Issue: Volume 6, Number, Jauary 07 ttp://cetreofexcellece.et/j/jss/jss%0maipage.tm Te Importace of (COSO-ERM) Model Implemetatio i Eacig te Effectiveess of Iteral Cotrol Systems i te Jordaia Commercial Baks (Field Study) Dr.Abdulsattar A.jabbar Alkubaisi Associate Professor Departmet of Accoutig World Islamic Scieces & Educatio Uiversity Amma-Jorda Abstract : Tis study aimed to ivestigate te Importace of Committee of Sposorig Orgaizatios (COSO) Model for Eterprise risks maagemet (ERM) Implemetatio i Eacig te Effectiveess of Iteral Cotrol Systems i te Jordaia Commercial Baks. To acieve tis goal a questioaire was desiged ad distributed to a radom sample of (6) respodets icludig fiacial maagers, audit maagers, iteral auditors, ad departmet of IT. (8) Questioaires were valid for aalysis at rate of (89%). Te study populatio cosists of all commercial baks i Jorda (3). Te study ypoteses were tested usig te descriptive ad aalytical approac. Te fidigs sowed a ig level evaluatio accordig to study sample poit of view towards te importace of (COSO- ERM) Model Implemetatio i Eacig te Effectiveess of Iteral Cotrol Systems i te Jordaia Commercial Baks. Certai differeces i details of compoet evaluatio, Eterprise risk maagemet came first i rakig; followed by evets idetificatio; iteral cotrol eviromet, objective settig; iformatio ad commuicatio; risk assessmet; moitorig; risk respose, ad cotrol activities. Te study recommeds baks maagemet to give more attetio for cotiuous improvemet to teir iteral cotrol ad accoutig systems, to keep up wit Busiess eviromet improvemet especially te cotiuous follow-up of te cocered activities, ad armig te staff i various jobs ad levels wit ecessary educatios ad skills. Keywords: Iteral cotrol system, COSO-ERM model Citatio: Alkubaisi, Dr. Abdulsattar A. Jabbar (07); Te Importace of (COSO-ERM) Model Implemetatio i Eacig te Effectiveess of Iteral Cotrol Systems i te Jordaia Commercial Baks (Field Study) ; Joural of Social Scieces (COES&RJ-JSS), Vol.6, No., pp: 6-77. Tis work is licesed uder a Creative Commos Attributio 4.0 Iteratioal Licese.
Te Importace of (COSO-ERM) Model Implemetatio Itroductio Te world as kow te cotrol sice aciet times ad as evolved i its aims, structures, temes ad fuctios, weter i respect of istitutios or coutries, ad will remai i costat evolutio because it will cotiue to be subjected to criticism as log as it comes to seekig te best use of available resources. Peraps today tere is a eed to more effective cotrol systems to address te cases of fraud ad collapse accompayig major iteratioal ad domestic compaies ad led to a loss of ivestor cofidece, were te relatiosip trasferred from a relatiosip of trust to aoter domiated by crises of cofidece. So te iteral cotrol systems represets te safety valve to esure tat te ecoomic uit operates accordig to te laws, policies ad procedures adopted wit a ig level of efficiecy ad effectiveess i performace, assets protectio agaist misuse, ad make adequate care towards risks. Because commercial baks i Jorda do ot differ i coditios as oter ecoomic uits i te world i terms of te risks metioed, Tis study came to test Te Importace of (COSO-ERM) Model Implemetatio i Eacig te Effectiveess of Iteral Cotrol Systems i te Jordaia Commercial Baks. Problem of te Study Ecoomic uits facig may problems as a result of teir iteral cotrol systems weakess, due to Uavailability of te basic compoets, career iflatio, usoud orgaizatioal structure, duplicatio ad Power overlap, lack of clarity of plas, ad weak of accoutability wit formal role of board of directors, Wic requires te implemetig of a effective iteral cotrol systems to acieve te accuracy ad reliability of fiacial reportig, ecourage commitmet policies ad laws, ad to acieve efficiecy ad effectiveess of operatioal activities, So tis study tries to aswer if (COSO-ERM) model for eterprise risks maagemet adoptio, Is importat to eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks? Study Importace Because (COSO-ERM) model for eterprise risks maagemet, establises to a ig effectiveess of iteral cotrol systems, for its positive role o decisio makig i baks, especially to tose related to credit ad ivestmet, So te importace of te study come from te evaluatig to wic level tat te Implemetatio of tis Model Eacig te Effectiveess of Iteral Cotrol Systems i te Jordaia Commercial Baks. Procedural Defiitios ad Teoretical Framework of te Study Iteral cotrol: Committee of Sposorig Orgaizatio of te Trade Way Commissio (COSO), defied te iteral cotrol as a process desiged ad iflueced by maagemet, ad by wic it ca obtai reasoable assurace tat te objectives be acieved, credibility of fiacial statemets, effectiveess of operatioal operatios, compliace wit policies, laws ad regulatios. Commissio (COSO): Te Committee of Sposorig Orgaizatios (COSO) formed from te America Istitute of Certified Public Accoutats (AICPA), Fiacial Executives Istitute (FEI), te Istitute of Iteral Auditors (IIA), te America Associatio of Accoutats (AAA), Ad te Istitute of Maagemet Accoutats (IMA). I 99 (COSO) Orgaizatio issued a framework of itegrated iteral cotrol, wic is meat to provide guidace to assess ad stregte cotrol systems, wic form a acceptable referece for compaies i te desigig of policies, laws, ad regulatios used 7
Joural of Social Scieces (COES&RJ-JSS), 6(), pp. 6-77 to adjust work activities as well as te acceptace by govermet legislatio, icludig te law (SOX) of 00. Eterprise risk maagemet (ERM) Te Committee of Sposorig Orgaizatios of te Trade way Commissio (COSO) defied (ERM) as a process, effected by a etity s board of directors, maagemet ad oter persoel, applied i a strategy settig ad across te eterprise, desiged to idetify potetial evets tat may affect te etity, ad maage risk to be witi its risk appetite, to provide reasoable assurace regardig te acievemet of etity objectives. Te ERM framework is geared to acievig a orgaizatio s objectives, set fort i te followig four categories:. Strategic, -level goals, aliged wit ad supportig its missio.. Operatios, Effective ad efficiet use of its resources. 3. Reportig, Reliability of reportig. 4. Compliace, Compliace wit applicable laws ad regulatios. COSO- ERM framework It cosists of eigt iterrelated compoets:. Iteral eviromet, Te iteral eviromet sets te foudatio for ow risk is viewed ad addressed by a orgaizatio s people, icludig risk pilosopy; risk appetite; itegrity ad etical values; ad te eviromet i wic it operate.. Objective settig, Objectives must exist before maagemet ca idetify potetial risks affectig teir acievemet. ERM esures tat maagemet as i place a process to set objectives ad tat te cose objectives support ad alig wit te etity s missio ad are cosistet wit its risk appetite. 3. Evet idetificatio, Iteral ad exteral evets affectig te acievemet of a orgaizatio s objectives must be idetified, distiguisig betwee risks ad opportuities. 4. Risk assessmet, Risks are aalyzed, cosiderig likeliood ad impact, as a basis for ow tey sould be maaged. Risks are assessed o a ieret ad residual basis.. Risk respose, Maagemet selects risk resposes avoidig, acceptig, reducig, or sarig risk developig a set of actios to alig risks wit te orgaizatio s risk toleraces ad risk appetite. 6. Cotrol activities, Policies ad procedures are establised ad implemeted to elp esure te risk resposes are effectively carried out. 7. Iformatio ad commuicatio, Relevat iformatio is idetified, captured, ad commuicated i a form ad time frame tat eables people to carry out teir resposibilities. Effective commuicatio also occurs i a broader sese, flowig dow, across, ad up te orgaizatio. 8. Moitorig. Te etire ERM process is moitored ad modificatios are made as ecessary. Moitorig is accomplised troug ogoig maagemet activities, separate evaluatios, or bot. Literature Review () Al- Haii study (0), Tis study aimed to evaluate te reliability of te iteral cotrol metods o te computerized iformatio systems i baks operatig i Jorda. A questioaire was desiged ad distributed to te radom sample of te study wic cosisted of 0 respodets of te maagers ad te employees of te computer uits ad te braces maagers ad te fiacial maagers i te baks operatig i Jorda. After 8
Te Importace of (COSO-ERM) Model Implemetatio usig te Statistical Package (SPSS), it was cocluded tat te metods of te iteral cotrol used i te baks operatig i Jorda were reliable because tey met te requiremets of te availability priciple of te system; tey adopted policies ad cotrol ad precautioary procedures to reduce te system s dowtime as possible, tey met te requiremets of te security priciple of te system troug te protectio agaist te pysical ad logical access ad te protectio of te persoal computers ad te etworks. ad tey also met te requiremets of te priciple of te maiteace ad te adjustmet i terms of te existece of a strategic pla of maiteace, periodic evaluatio of te system, ad te use of te proper procedures of documetatios ad fially tey met te requiremets of itegratio were te baks adopted cotrol procedures o te sources of data, te iput, te processes, te outputs ad te trasfer operatios. Te most importat recommedatio of te study cocetrate o raisig te employees awareess of te importace of te cotrol procedures ad teir goals before beig traied to follow tem. () Gos study (03), Tis study aimed to test te effect of applyig (ERM) framework for project risks maagemet (settig goals, idetifyig evets, Risk assessmet, ad risk respose) i creatig value at Idia compaies, i additio to idetifyig te determiats ad costraits of applyig tis framework. Te study applied o 00 compaies listed o te Idia stock market, ad for te purpose of acievig its objectives a Questioaire was distributed to te CFOs, risk maagers, ad iteral auditors. Te results idicates tat compaies wit ig-volume, ig-profit ad complex operatios prefer adoptig (ERM) framework for te maagig its iteral ad exteral risk more ta small-sized compaies. Te results also idicate tat adoptig (ERM) framework for project risks maagemet affect positively i creatig value for compaies troug te ability to cope wit risk, ad get Competitive advatages, reduce stock prices fluctuatio ad reduce its costs. Te study recommeded te eed to icrease te participatio of Board of Directors ad improve its supervisor role i metorig risk process i tat compaies. (3) Scaell et al study (03), te study aimed to examie ow compaies idetify ad maage supply cai risks ad ow tose actios relate to systemic eterprise risk maagemet (ERM). To acieve tis goal, Data from 46 compaies at te Uited States of America were aalyzed to idetify wic factors affect te decisio to develop a supply cai risk maagemet (SCRM) system ad ow te resultat systems compare to a ERM system. Te study cocluded tat project risk maagemet system compoets (ERM) of (COSO) 004 Provides a reasoable framework wic eables compaies to acieve itegratio betwee te (ERM) system ad supply cai risk maagemet (SCRM) system. Te study recommeded te eed to lik risk maagemet system wit supply cai risk maagemet system at compaies to develop teir strategies. (4) Barakat study (009), te study aimed at ivestigatig te degree of applicatio of Basel s committee requiremets by Jorda baks. A questioaire was developed ad distributed over 40 subjects from all commercial baks i Jorda, te data was aalyzed by usig Statistical Package for Social Scieces (SPSS). Te results revealed tat all baks i Jorda are applyig Basel s II orms. Results do ot reveal ay sigificat differece o te extet of implemetig Basel II committee resolutios. It seems tat availability of iteral cotrol systems ad providig te same wit work freedom sall ot be limited oly to Jorda baks but te existece of Arab, ad foreig baks i Jorda. Moreover te results revealed tat tere were sigificat differeces i applicatio of 9
Joural of Social Scieces (COES&RJ-JSS), 6(), pp. 6-77 Basel s II orms betwee local baks ad foreig baks. To maage risks, te executive maagemet eeds periodical evaluatios of followed procedures, its appropriateess, te availability of maagerial autorities, efficiet uma resources ad maagemet of fruitful discourse to eace iteral cotrol system. Te study recommeds te eed to test bak loas ad foreig credit compaies, ad ot rely solely o te iteral cotrol operatios i gratig te loas. () Ritteberg study (006), wic aimed to clarify te role of Iteral Cotrol Stadards guidelies i preparig te fiacial statemets for small-sized public compaies, wic Issued by te Commissio (COSO) i 006 i respose to te request of te US Securities Excage to elp small-sized public compaies i te approval of te fiacial reports to Sectio 404 requiremets of te Sarbaes-Oxley Committee for te year 00, te study cocluded tat despite of te fact tat te ew stadard does ot modify or alter te origial stadard documets, but it covers te calleges facig small-sized busiesses to te ew stadard guidace icludes tree sectios eac wit a specific goal, te first overviews te seior maagemet ad oter committees, te secod goal presets practical guidace wit practical examples of small busiesses, ad te tird goal Provides evaluatio tools to elp orgaizatios to implemet ad evaluate te iteral cotrol systems wit regard to fiacial statemets preparatio. Cotributio of te Study A part of previous studies focused o te aalysis of iteral cotrol systems i terms of styles, applicatios, objectives ad teir impact o eterprise performace, aoter part focused o te structures of iteral cotrol systems ad certai compoets impacts accordig to (COSO) model or SOX Act, a tird part of researces ave studied te framework (ERM) for te maagemet of eterprise risk separately from te metioed model (COSO). Tis study is caracterized by evaluatig te iteral cotrol systems at a differet eviromet, wit takig i te cosideratio all te eigt compoets of te (COSO-ERM) model I order to test teir importace i Eacig te Effectiveess of Iteral Cotrol Systems i te Jordaia Commercial Baks. Metodology of te Study To realize te study objective, a descriptive aalytical approac was used i collectig ad aalyzig data, for tis purpose a questioaire icludes te eigt compoets of te metioed model (COSO) were desiged. Te metodology of te study recovers: a. populatio ad sample Te study populatio cosisted of Jordaia commercial baks (3) baks, wile te study sample ecompassig te CFOs, directors of iteral audit, iteral auditors, directors of risk maagemet, egieers at Computer ceter) i tese baks. Te questioaires were distributed to a radom sample at a rate of () questioaires for eac bak, were te umber of distributed questioaires was (6). Te (8) questioaire was recovered ad valid for aalysis i rate of (89%). b. data sources Te study is based o two types of data sources, secodary sources wic represeted i books, periodicals, reports ad publicatios related to te subject of te study, Primary sources wic cosisted maily troug te questioaire prepared for tis purpose ad were desiged i two parts as follows: Part I: A letter addressed to te study sample wic illustrates te scope ad te study objectives, as well as private data of te sample (suc as specialty ad years of experiece), as follows: 60
Te Importace of (COSO-ERM) Model Implemetatio Table (): study sample qualificatio Variable Class No. Percetage B.A 36 6.07 Master 6.07 Educatioal PHD. 8.6 qualificatio Oters 3.4 Total 8 00.00 professioal certificates Experiece Traiig Courses CIA 7 9.3 CPA 0 34.48 CMA 9 3.76 JCPA 9 3.76 Oter 9. Less ta years 4 6.90 From years to less ta 0 years 3.4 From 0 years to less ta years 9 3.76 From years to less ta 0years 0 7.4 From 0 years ad more 0.69 Total 8 00.00 Maagig risks i baks 4 7.4 COSO Commissio Decisios ad its relatio to bakig risks 30.7 Risk assessmet Ad its ecessary solutios 9 3.76 Te table above idicates: - Te proportio of (6%) of te study sample was from tose wo ave a prelimiary (B.A) degree, wic meas tat te study populatio was scietifically qualified to aswer te study questios. - Te proportio of (70.34%) of te study sample ave a experiece i bakig busiess for more ta 0 years, wic meas tat te sample as a great practical experiece eablig tem to aswer te study questios. - Te majority of te study sample obtais professioal certificates of accoutig ad auditig, wic gives tem additioal capacity to aswer te questioaire wit te quality required. - Most of te study sample was from tose wo ave received traiig i te field of bakig risk maagemet ad decisios of COSO Commissio ad its relatiosip to bakig risks. Part II: Te sample respodet's aswers will be measured accordig to te Likert ladder. c. statistical metods used By usig (SPSS), te appropriate statistical metods for data aalyzig ad ypoteses testig were: Measures of cetral tedecy, suc as te mea variace ad frequecies, percetages, to describe te study sample opiios about te variables of te study ad to determie te importace of te statemets i te questioaire, as well as te use of te stadard deviatio to describe te dispersio extet of te aswers from teir meas. 6
Joural of Social Scieces (COES&RJ-JSS), 6(), pp. 6-77 Crobac's alpa test, ad Spearma-Brow test were used, i order to test te stability of questioaire paragraps. T-test for oe sample (T-Test) to fid out if te respose average ad reaced a middle class wic is 3 or augmeted or dimiised it. All of tis as bee doe. d. test te validity ad reliability of te istrumet Validity ad reliability study tool were cofirmed i two ways: To esure te validity, ad i order to detect te ability of its data to acieve te desired goals, ad to clarify te draftig prases, ad te suitability of eac prase of te axis wic tey belog to, te study tool was distributed i its primary form to a group of judges cosisted of (8) members from te Jordaia uiversities faculty members wo as qualificatio ad experiece accoutig ad Statistics fields, Crobac's alpa metod was used for measurig te stability of te questioaire, ad as sow i Table () i te areas of iteral cotrol systems assessmet i te Jordaia commercial baks, accordig to te (COSO-ERM) model for project risks maagemet, te iteral cosistecy as ig degrees, were ragig betwee 0.904 stability i te area of respodig to te risks ad 0.730 for te goals idetificatio, it was 0.943 for wole te questioaire, all values were sufficiet values to acieve te purpose for te study. Table () Crobac's alpa coefficiet to measure te stability of te questioaire No. Field No. of Crobac's paragrap alpa value Iteral cotrol Eviromet 0 0.76 Objective Settig 8 0.730 3 Evet Idetificatio 0.786 4 Risk Assessmet 8 0.78 Risk Respose 3 0.904 6 Cotrol Activities 3 0.899 7 Iformatio & Commuicatios 3 0.8 8 Moitorig 7 0.73 Total 64 0.943 Study Hypoteses Accordig to te problem s questio, te Mai Hypotesis (H0) ca be formed:"no importace to te (COSO-ERM) model implemetatio i eacig te effectiveess of iteral cotrol systems i te Jordaia Commercial Baks", ad from tis ypotesis come te followig sub-ypoteses: H0. "No importace to te iteral cotrol eviromet as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". H0. "No importace to te objective settig as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". H03. No importace to te evet idetificatio as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". 6
Te Importace of (COSO-ERM) Model Implemetatio H04. No importace to te risk assessmet as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". H0. No importace to te risk respose as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". H06. No importace to te cotrol activities as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". H07. No importace to te iformatio ad commuicatios as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". H08. No importace to te moitorig as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". Hypoteses Testig ad Discussig te Study Results Oe-sample T-test was used to test te study (mai ypotesis ad sub-ypoteses) associated, were te followig tables sow te results of testig tese ypoteses: H0 Testig: Te followig table sows te statistical details of tis ypotesis: Table (3): t-test results of te importace to te (COSO-ERM) model implemetatio i eacig te effectiveess of iteral cotrol systems i te Jordaia Commercial Baks Variable iteral cotrol systems accordig to (COSO- ERM) model mea stadard deviatio T. value 4.37 0.3 3. Level of sigificace 0.000 Decisio Rejected Te table above sows tat te aritmetic mea value of te importace to te (COSO- ERM) model implemetatio i eacig te effectiveess of iteral cotrol systems i te Jordaia Commercial Baks reaced (4.37) wit stadard deviatio of (0.3). tis meas tat te estimates of te study sample clearly idicate tat tere is a great covictio about tat importace, were te average value of te sample aswers came iger ta te ypotetical average of te study estimated at value (3), accordig to Likert ladder, T. value was (3.), at te level of sigificace (0.000), wic is less ta te expected error degree of te study (0.0), so we rejects te ull ypotesis of te study, ad accept te alterative ypotesis, wic states: "Tere is a importace to te (COSO-ERM) model implemetatio i eacig te effectiveess of iteral cotrol systems i te Jordaia Commercial Baks". H0 Testig: Te followig table sows te statistical details of tis ypotesis: Table (4): T-test results of te importace to te iteral cotrol eviromet as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks 63
Joural of Social Scieces (COES&RJ-JSS), 6(), pp. 6-77 Variable Iteral cotrol Eviromet Mea 4.46 0.3 stadard deviatio t valu e 3. Level of sigificace Decisio 0.000 Rejected Te table (4) idicates tat te aritmetic mea value of iteral cotrol eviromet as reaced a value of (4.46) ad stadard deviatio (0.3) ad tis clearly sows te great importace to te iteral cotrol eviromet as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks. te t value was (3.) at level of sigificace(0.000), so we rejects te ull ypotesis of te study, ad accept te alterative ypotesis wic states: "Tere is a importace to te iteral cotrol eviromet as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". H0 Testig: Te followig table explais te results of tis ypotesis: Table () t-test results of te importace to te objective settig as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks stadard T Level of Variable Mea Decisio deviatio value sigificace Objective Settig 4.38 0.0 0.98 0.000 Rejected Te table idicates tat te aritmetic mea value of te variable objectives settig reaced (4.38) wit a stadard deviatio of (0.0), te mea value of te study sample estimates idicates clearly teir belief i te importace of objective settig i te importace to te objective settig as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks, te t value was (0.98) at level of sigificace (0.000) ad were te sigificace level value less ta 0.0, so we rejects te ull ypotesis of te study ad accept te alterative ypotesis wic states: "Tere is a importace to te objective settig as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks ". H03 Testig: Te followig table sows te results of tis ypotesis: Table (6) t-test results for te importace of Evet Idetificatio as oe of (COSO- ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks stadard T Level of Variable mea Decisio deviatio value sigificace Evet Idetificatio 4.0 0.43 6.6 0.000 Rejected Te table (6) idicates tat te aritmetic mea value of evet idetificatio as reaced (4.0) wit a stadard deviatio (0.43), te mea value of te study sample estimates clearly idicate te importace of evet idetificatio as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks. Te value of t was (6.6) at level of sigificace (0.000) ad were it 64
Te Importace of (COSO-ERM) Model Implemetatio is less ta 0.0, so we rejects te ull ypotesis ad accept te alterative ypotesis wic states: "Tere is importace to te evet idetificatio as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". H04 Testig: Te followig table sows Te results of tis ypotesis: Table (7): t-test results for te importace of risk assessmet as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks stadard T Level of Variable Mea Decisio deviatio value sigificace Risk Assessmet 4.36 0.4 4.6 0.000 Rejected Te table umber(7) idicates tat te aritmetic mea value of risk assessmet as reaced (4.36) wit a stadard deviatio (0.4), te mea value of te study sample estimates clearly idicate teir belief i te importace of risk assessmet as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks. Te t value was (4.6) at level of sigificace (0.000), so we reject te ull ypotesis ad accept te alterative oe wic states: "Tere is a importace to te risk assessmet as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". H0 Testig: Te followig table sows te results of tis ypotesis: Table (8): t-test results for te importace of risk respose as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks stadard T Level of Variable mea Decisio deviatio value sigificace Risk Respose 4.3 0.6 6.3 0.000 Rejected Te above table idicates tat te aritmetic mea value of risk respose as reaced (4.3) wit stadard deviatio (0.6), te mea value of te study sample estimates clearly idicate teir belief i te importace of risk respose as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks. Te t value was (6.3) at level of sigificace (0.000) ad te sigificace level value was less ta 0.0, so we reject te ull ypotesis ad accept te alterative ypotesis wic states: "Tere is a importace to te risk respose as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". H06 Testig: Te followig table sows te results of tis ypotesis: Table (9 t-test results for te importace of cotrol activities as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks 6
Joural of Social Scieces (COES&RJ-JSS), 6(), pp. 6-77 Variable Cotrol Activities Mea stadard deviatio t value Level of sigificace Decisio 4.8 0. 7.84 0.000 Rejected Te table (9) idicates tat aritmetic mea value of te cotrol activities as reaced (4.8) wit stadard deviatio (0.), te mea value of te study sample estimates clearly idicate teir belief i te importace of cotrol activities as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks. Te t value was(7.84) at level of sigificace (0.000) ad te sigificace level value was less ta 0.0, so we reject te ull ypotesis ad accept te alterative ypotesis wic states: "Tere is a importace to te cotrol activities as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". H07 Testig: Te followig table sows te results of tis ypotesis: Table (0): t-test results for te importace of iformatio ad commuicatios as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks Variable Iformatio Commuicatios & mea stadard deviatio T value Level of sigificac e Decisio 4.37 0.4.4 0.000 Rejected Te above table idicates tat te aritmetic mea value of iformatio ad commuicatio as reaced (4.37) wit stadard deviatio (0.4), te mea value of te study sample estimates clearly idicate teir belief i te importace of iformatio ad commuicatio as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks. Te t value was (.4) at level of sigificace (0.000) ad te sigificace level value was less ta 0.0, so we reject te ull ypotesis ad accept te alterative ypotesis wic states: "Tere is a importace to te iformatio ad commuicatio as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". H08 Testig: Te followig table sows te results of tis ypotesis: Table (): t-test results for te importace of moitorig as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks stadard t Level of Variable Mea Decisio deviatio value sigificace Moitorig 4.3 0.43 4.0 0.000 Rejected Te above table idicates tat te aritmetic mea of moitorig as reaced (4.3) wit stadard deviatio (0.43), te mea value of te study sample estimates clearly idicate teir belief i te importace of moitorig as oe of (COSO-ERM) model compoets 66
Te Importace of (COSO-ERM) Model Implemetatio i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks. Te t value was (4.0) at level of sigificace (0.000) ad te sigificace level value was less ta 0.0, so we reject te ull ypotesis ad accept te alterative ypotesis wic states: "Tere is a importace to te moitorig as oe of (COSO-ERM) model compoets i eacig te effectiveess of iteral cotrol systems i te Jordaia commercial baks". Coclusios - Geerally, all (COSO-ERM) model compoets revealed playig big ad importat role i te effectiveess eacig of te iteral cotrol systems i Jordaia commercial baks, wic reaced at 87%, but altoug of tis god result te studied commercial baks must try to treat te deviatio of 3 % wic ca be traslated from oter side by waste at same rate i te bak resources. - I details: - Tere is a differece of % betwee lowest ad igest value, wic also meas tat te lowest value reac to % i term of dimiisig i iteral cotrol effectiveess. - Te biggest stadard deviatio of te study sample is 0.6 wic reflect tat te sample be more dissimilar to risk respose, wile te sample is more similar i te case of cotrol eviromet importace i eacig te iteral cotrol effectiveess of tat baks. - Te differeces of deviatios at te level of eac iteral cotrol compoet, is clearly fluctuated by compariso wit meas, tey are 4% for cotrol eviromet; 33% objective settig; 3% evet idetificatio; 3% risk assessmet; % risk respose; 34% cotrol activities; 39% iformatio ad commuicatios; ad 3% moitorig Recommedatios Based o te coclusios, tis study recommeds te followig: - Need to arm all idividuals i all admiistrative jobs wit ecessary skills ad qualificatios, to esure teir relevat participatio i risig te role of all iteral cotrol compoets at same level, i te eacig of its effectiveess, because iteral cotrol process is affected by employees ad affect tem. - Developig te applicatio process of all iteral compoets begiig wit less situatio i te effectiveess eacig, edig wit tis ave biggest role, tat is because all metioed compoets take te same importace i objectives realizatio. 3- Need to develop more researc i tis area, especially o te efficiecy domai to obtai a clear portrait eeded for best performace i tose baks. Refereces - Amad Rizal Razali, & Iza Moammed Tair(0), Review of te Literature o EterpriseاRisk Maagemet, Busiess Maagemet Dyamics, Vol., No., Nov,pp8-6. - Al-Haii, Ema(0),Evaluatig te Reliability of te Iteral Cotrol o te Computerized Accoutig Iformatio Systems: A Empirical Study o Baks Operatig i Jorda", Researc Joural of Fiace ad Accoutig,Vol.6, No.8, 0, Pp 76-86 3- Ayagre, Pilip (04), Te effectiveess of Iteral Cotrol Systems of baks: Te case of Gaaia baks, Iteratioal Joural of Accoutig ad Fiacial Reportig Vol. 4, No., pp 377-389 67
Joural of Social Scieces (COES&RJ-JSS), 6(), pp. 6-77 4- Barakat, Abdulla.(009), Baks II orms requiremet regardig iteral cotrol, Field study o Jorda Baks, Deli Busiess Review, Vol. 0, No.,pp 3-48. Gos, Arpit.(03), A Empirical Ivestigatio ito Eterprise Risk Maagemet i Idia, Idia Accoutig Review Idia Accoutig Associatio Researc Foudatio, 7 (), Jue 03, pp -. - Basel committee. BBC (0, December ). ttp://www.bbc.com/ews/busiess- 0673466 6- Gos, Arpit.(03), A Empirical Ivestigatio ito Eterprise Risk Maagemet i Idia, Idia Accoutig Review Idia Accoutig Associatio Researc Foudatio, 7 (), Jue 03, pp -. 7- IFAC. (0). Fial Prooucemet: Jue, Evaluatig ad Improvig Iteral Cotrol i Orgaizatios: ttp://www.ifac.org. 8- INTOSAI. (004). Guidelies for iteral cotrol stadards for te public sector. ttp://www.itosai.org 9- Ritteberg, Larry E (006), INTERNAL CONTROL: NO SMALL MATTER, Te iteral Cotrol, Vo. 63, No., Pp.47-. 0- Romey, Marsal B.& Steibart Paul J.(009), Accoutig Iformatio Systems, PEARSON, editio, 0. - Tomas, Scaell, Sime Curkovic, Bret J. Wager & Micael J.V. (03), Supply cai Risk Maagemet witi te cotext of COSO s Eterprise Maagemet Framework, Joural of Busiess Admiistratio Researc, Vol., No..pp - 8. Sites - ttp://www.upet.ro/aals/ecoomics/pdf/0/njaike-mutegezawa-gombarume.pdf - ttp://project00-07.ia-maager.org/files/summary_of_ifca_priciples.pdf - ttps://www.coso.org/pages/default.aspx Appedix Table(): Meas, stadard deviatio for Iteral cotrol Eviromet Compoet COSO ERM model (i descedig order) 68
Te Importace of (COSO-ERM) Model Implemetatio No. Paragrap Mea 4 3 9 7 0 Pilosopy of risk maagemet i te bak is a beavior ad cofidece of a commo perceptio tat te way te bak deal wit risk i all te work exercised startig from te developmet of te strategy troug to daily work activities. It must be available to te bak's maagemet full trasparecy for te disclosure of all risks. Must be efficiet ad professioal staff is available at te bak's risk maagemet i it. Tere must be a special pilosopy ad style of maagemet ave tured positive o te fiacial ad admiistrative tasks ad auditig Risk maagemet pilosopy affect te culture ad operatig style, icludig ow to idetify ad clarify te risks, ad te quality of acceptable risk ad ow to maage tem. Must be cotaied ay pilosopy of risk maagemet at te bak i teir ow policy statemets, ad i oral ad writte commuicatio wit te stakeolders, ad employees i te decisio-makig processes. Seior maagemet of te bak is cosidered a importat part of te iteral eviromet ad effect te elemets sigificatly Sould be available i te bak's system of iteral tuig cotributes to adjust te performace of employees as well as well as te writte rules defie te duties ad resposibilities of te bak employees 69 Importa ce % Stadar d deviatio 4.69 0.4 93.80 leve l 4. 0.66 90.40 4. 0.66 90.00 4. 0.60 90.00 4.48 0.0 89.60 4.43 0.60 88.60 4.4 0.3 88.0 4.4 0.77 88.00 6 Orgaizatioal structure of te bak 4.33 0.69 86.60 9 Ra k 3 6 7 8 4
Joural of Social Scieces (COES&RJ-JSS), 6(), pp. 6-77 8 must ave a appropriate regularity for te ature of te work ad te size of te bak. Maagemet must ave a good styled evolutio of powers as well as te existece of effective polices for employmet i te bak. Average 4.3 0.68 86.0 4.46 0.3 89.0 0 Table (3): Meas, stadard deviatio for Objective Settig Compoet COSO ERM model (i descedig order) No. Paragrap Mea Importac e % Stadard deviatio leve l Ra k 4 6 3 7 Te admiistratio sould put te ecessary plas to acieve goals, ad tat tere is a coectio betwee te various admiistrative levels alerted to te existece of ay relatio to te risk of ot acievig tose goals. Te moral values ad itegrity of maagemet affect te way te implemetatio of all of te strategic objectives of te bak Te geeral goals of te bak must be specify ad sub-goals o te level of activity ad te lik betwee tem, i order to idetify potetial risks Idetificatio of te Bak's objectives is first step to assess te risks, ad is cosidered targets as criteria used to assess te admiistratio's performace. Strategic plas sould be put i a cosistet maer wit te overall objectives of te bak. Te Bak sall be commuicated to all employees i all of te mai objectives ad sub eve available for all basic uderstadig tem. Te bak s maagemet segmetig te overall objectives of te subgoals are derived from te overall 70 4.3 0.63 90.60 4.48 0.88 89.60 4.43 0.70 88.60 4.4 0.68 88.0 4.38 0.7 87.60 4.6 0.78 8.0 4.6 0.78 8.0 3 4 6 6
Te Importace of (COSO-ERM) Model Implemetatio 8 objectives ad eac stage of te work Effective risk maagemet i te bak cosidered a guaratee appropriate to acieve operatioal objectives, reportig ad compliace i te bak Average 4.4 0.80 84.80 4.38 0.0 87.60 8 Table (4): Meas, stadard deviatio for Evets Idetificatio Compoet COSO ERM model (i descedig order) No. Paragrap Mea By maagemet to idetify te likely occurrece ad classificatio of evets tat may ave a egative impact o te bak's ability to acieve te goals ad strategic We idetifyig evets maageme t takes ito accout te iteral ad exteral risks tat affect te acievemet of goals Importa ce % Stadar d deviatio 4.9 0.0 9.80 lev el 4.4 0.6 88.0 Average 4. 0.43 90.00 Ra k Table (): Meas, stadard deviatio for Risk Assessmet Compoet COSO ERM model (i descedig order) No. Paragrap Mea Importa ce% 8 6 Te Audit Committee report to te board regardig te risks ad te cages tat may ave a impact o te bak Te risks are o te level of all operatioal activities evaluated. Te bak's maagemet to risk assessmet as part of te desig of te iteral cotrol system ad tur it to reduce errors ad irregularities 7 Stadar d deviatio 4.3 0.7 90.60 4. 0.66 90.00 4.4 0.6 88.0 lev el Ra k 3
Joural of Social Scieces (COES&RJ-JSS), 6(), pp. 6-77 3 7 4 Te Executive Directors or te Audit Committee or risk maagemet to idetify risks tat ca be cotrolled ad tose risks are ot subject to cotrol. Te Bak as a appropriate ad a variety of mecaisms for risk assessmet Te Executive Directors or te Audit Committee or maagemet determies te risk of iteral ad exteral risk ad expected Te Executive Directors or te Audit Committee's risk maagemet or risk assessmet periodically. Te Executive Directors or te Audit Committee or Risk Maagemet classifies all kids of risks ad evaluated i terms of its impact o te bakig activities ad to acieve its goals. Average 4.36 0.8 87.0 4.34 0.8 86.80 4.9 0.73 8.80 4.8 0.67 8.60 4. 0.6 8.40 4.36 0.4 87.0 4 6 7 8 Table (6): Meas, stadard deviatio for Risk Respose Compoet COSO ERM model (i descedig order) No. Paragrap Mea 3 Importa ce % Stadar d deviatio level It is updated budget for te followig year to reflect te cage i 4.34 0.83 86.80 circumstaces resultig i risk durig te year. After te relevat risk maagemet determie ow to 4.3 0.68 86.0 respod to tis risk assessmet. Te Executive Directors or te Audit Committee or te risk maagemet measures 4.8 0.74 8.60 3 developed as quickly as possible to cope wit te risks Average 4.3 0.6 86.0 Ra k 7
Te Importace of (COSO-ERM) Model Implemetatio Table (7): Meas, stadard deviatio for Cotrol Activities Compoet COSO ERM model (i descedig order) No. Paragrap Me a 0 9 4 3 Tere must be at te bak brocures systems use eiter maual or electroic (ie explai te use of te systems) procedures Regulatory activities are te policies ad procedures tat elp esure te implemetatio of risk maagemet resposes i te bak. It must be cecked from fiacial trasactios importat evets before ad after tey occur. Tere must be adequate separatio betwee te fuctios of te calculator divisio, wic icludes (systems programmer aalyst, operator calculator, a libraria). Risk maagemet i te bak to cosider regulatory activities as a importat part of te process wic seeks to acieve busiess goals. It must be a review of bak policies ad procedures periodically to determie weter tey are still appropriate. Tere must be a pysical cotrol over te use of assets ad records (i. e tat te use of assets ad records is limited to autorized persoel oly). Te bak's maagemet sould risk assessmet as a prerequisite for determiig cotrol activities. Te oversigt activities ito practice i te bak cofirms to 73 Importa ce % Stada rd deviati o 4.4 0.80 89.00 4.43 0.77 88.60 4.4 0.84 88.00 4.36 0.8 87.0 4.3 0.63 86.0 4.9 0.77 8.80 lev el 4.9 0.7 8.80 4.8 0.70 8.60 Ra k 3 4 6 4. 0.77 84.0 9 6 8
Joural of Social Scieces (COES&RJ-JSS), 6(), pp. 6-77 6 7 3 8 adere to establised policy ad Implemetatio of actios for addressig te risks associated. Cotrol activities must be specified witi te bak witi four categories: prevetio, guidelies, verificatio, ad corrective. Te cotrol iclude all aspects of bakig activity i te bak's activities. Is placed regulatory activities i ge eral to esure tat te risk respose appropriately ad timely. Tere must be adequate separatio of fuctios (madate, operatig, D ate acquisitio of assets, traded, audited) 4.7 0.8 83.40 4.7 0.7 83.40 4.4 0.87 8.80 4.4 0.89 8.80 Average 4.8 0. 8.60 0 0 Table (8): Meas, stadard deviatio for Iformatio & Commuicatios Compoet COSO ERM model (i descedig order) No. 3 3 Paragrap It must be coected to violatios to te resposible autorities witi te bak witout disclosig te idetity of te perso reported as irregularities. Tere is a eed to devise metods of commuicatio to employees for reportig relevat risk to te Supreme maagers of te bak Sould idetify relevat iformatio ad keep tem ad reported i te form of a time frame ca staff to carry Me a 74 Importa ce % Stada rd deviati o 4. 0.78 90.00 lev el g 4.48 0.63 89.60 g 4.43 0.7 88.60 Ra k 3
Te Importace of (COSO-ERM) Model Implemetatio 4 6 8 9 7 out teir resposibilities ad effective commuicatio wit tem as well, were it sould flow troug all parts of te bak. Tere are iformatio systems i te bak icludes all te fiacial ad o-fiacial iformatio regardig suspesio of iteral ad exteral evets to stroll te realizatio of te bak ad make decisios. Tere must be suitable polices for modificatio ad developmet of accoutig iformatio ad cotrols systems ad mecaisms face risks i baks. Tere must be effective cotrol of iformatio systems to reduce risk. Te bak sould respod to te coectios of tird parties (customers, suppliers, govermet agecies) properly ad i a timely maer. Sould te Bak as adequate ad effective lies of commuicatio deals trougout te bak Te developmet of iformatio systems o te basis of te developmet of plas to cope wit risks. Tere must be ope commuicatio caels betwee te bak's maagemet ad staff so tat te staff of te delivery of importat iformatio to te maagemet of all te risks faced by It must be reported to te supervisory staff cotrols ad ow to deal wit it ad resposibility for compliace. It must be commuicated to te staff regulatios ad laws across 4.4 0.6 88.0 4.38 0.7 87.60 7 g g g 4.38 0.6 87.60 g 4.38 0.70 87.60 g 4.36 0.6 87.0 4.34 0.66 86.80 4.33 0.63 86.60 4.3 0.7 86.0 g g g g 4 8 9 0 4.8 0.70 8.60
Joural of Social Scieces (COES&RJ-JSS), 6(), pp. 6-77 0 te lies of commuicatio as well as te policies ad procedures establised by te bak's maagemet. Havig te rigt people wit te rigt iformatio, at te rigt time ad te rigt place is a must to ifluece te maagemet of risk i te Bak 4.4 0.80 84.80 Average 4.37 0.4 87.40 g g g 3 Table (9): Meas, stadard deviatio for Moitorig Compoet COSO ERM model (i descedig order) No. Paragrap Mea Importa ce % 6 4 Te bak's maagemet cotiuously moitors te cotrol compoets to reac for excellece oversigt. bak's maagemet must take appropriate actio i a timely maer to correct deficiecies i te cotrols reported by te Iteral Auditor Autorities sould moitor risk maagemet to assess te performace of its compoets over time, ad tis ca be acieved troug cotiuous moitorig of activities ad separate evaluatio or a combiatio of bot Te bak's maagemet followup process to determie te extet of implemetatio of cotrol patc ad subject tem to determie weter adjusted i lie wit te ligt coditios Stadar d deviatio 4.48 0.7 89.60 lev el 4.43 0.6 88.60 g 4.34 0.8 86.80 4.33 0.63 86.60 g Ra k g 3 g 4 76
Te Importace of (COSO-ERM) Model Implemetatio 7 3 Te bak's maagemet to issue a report o te resposibility for desigig ad maitaiig a effective iteral cotrol system. It is adjusted policies ad procedures i accordace wit te regulatory cages ad te required bak iterest. Bak maagemet must respo d appropriately ad i a timely maer to te results ad recommedatios of te Exteral Auditor o te iteral cotrol auditor. 4.3 0.7 86.0 4.8 0.70 8.60 4.6 0.66 8.0 Average 4.3 0.43 87.00 g g g g 6 7 -------------------------- xxxxxxxxxxxxxxx -------------------------- 77