Analysis of Internal Control Standards using Data Mining Techniques
Author:
Cosmin ŞERBĂNESCU, Adrian VINTILESCU BELCIUG
JEL:
H11, D73, E61, C23
DOI:
Keywords:
internal control, public institutions, data mining, public policy
Abstract:
Internal control is a process that is implemented by the management staff of the public entity, which must provide a reasonable assurance regarding the achievement of objectives, classified in the following categories: operations’ efficiency and effectiveness; financial information reliability; compliance with the regulatory framework, the working instructions and the applicable regulations.\r\nThe conclusions regarding the implementation degree of the internal control are annually analyzed by various public entities and institutions.\r\nThis study represents an analysis that uses advanced research instruments of the evolution of the managerial internal control standards implementation in the Romanian public institutions, which have the function of main credit release authority of the state budget, the social state insurances and the budget of any special fund.\r\nStatistical analysis results were compared to the conclusions of the public reports of the Romanian Court of Accounts, corresponding to the 2011-2013 period.\r\nThe study is based on annual data, corresponding to the 2011-2013 period, regarding the implementation degree of the managerial internal control standards, through the procedure of auto evaluating the internal/managerial control system, analyzed using statistical tests (Wilcoxon, Friedmann), data descriptive analysis, linear regression and data mining techniques (fuzzy logic techniques, cluster analysis, outliers analysis). The conclusions of the comparative analysis, between the results of the statistical analysis and the ones of the Romanian Court of Accounts, were quantitatively modeled, using the informational asymmetry theory as background.\r\nThe study also provides solutions for the construction of an efficient analysis system and a model regarding possible public verification and enforcement policies.\r\nThe conclusion of the analysis is that, besides the positive evolution of the managerial internal control standards implementation in Romania, we can also consider (the study presents a quantitative model to this extent) an enforcement policy, so that the processes corresponding to the implementation of the standards and according to the requirements of the OMPF 946/2005, reissued, will not be just formal.\r\nAnother conclusion is that, when analyzing the precursory data of some conclusions corresponding to an opinion regarding the implementation of internal control, besides the use of means, we also use a dispersion analysis and an enforcement policy.\r\n\r\n