CAUSALITY AND MULTIDIMENSIONALITY OF INTERNAL CONTROLS: IMPACT ON ORGANIZATIONS

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Abstract

This study analyzes the managers’ (Chief Financial Officer (CFO)) perception of impact of implementation of internal controls. It investigates the causes of adoption in the multidimensionality of internal control of the Brazilian companies traded in the New York Stock market. A survey sent to the CFOs of the 70 companies listed in the NYSE collected empirical data from these companies. The final response rate was 15.16 %. The study uses partial least squares modeling for statistical analysis to test the research question. Our empirical evidence supports the hypotheses that “the greater the level of multidimensionality of controls in an organization the lower the level of causal effects and damage to the control environment. Based on work performed, one is able to infer that overall, there is a significant relationship between causal effects on operating activities, financial reporting and compliance in relation to the multidimensionality of internal controls, thus, when there are uncommon features, depending on the level of multidimensionality special attention should be paid to the causes of adoption of controls to track risks posed to business.

Keywords: Causality, Multidimensionality, Internal Controls, Dysfunction, COSO.

How to cite this paper: Imoniana, J. O., Costa, V. M., Araujo, M., Alberto, L. H. P., & Alves, P. P. (2011). Causality and multidimensionality of internal controls: Impact on organizations. Corporate Ownership & Control, 8(2-5), 502-515. https://doi.org/10.22495/cocv8i2c5p2