Theresia Dwi Hastuti, Theresia ICBE 2018 the effect of international financial accounting standards, business complexity, ablilty to generate profit and company size on effectiveness of internal control system. ICBE 2018 the effect of international financial accounting standards, business complexity, ablilty to generate profit and company size on effectiveness of internal control system.

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Abstract

Internal controls implemented in the company are expected to be able to support the implementation of good corporate governance of the company. Internal controls based on the Professional Standards of Certified Public Accountants include management control and control culture that reflect the control environment, risk understanding, control activities and separation of functions, information and communication, and monitoring and correction activities on deficiencies. The control environment reflects the overall behavior, awareness and actions of the board of commissioners, managers and stockholders. The preparation of financial statements based on accounting standards requires conditions that ensure sound financial management. Application of IFRS as a standard which is a must for companies that go public requires the company must be able to guarantee the organization has good internal control. Cartwright (1999) states that effective internal control is a tool that reinforces good access to capital and ensures sustainability. An effective internal control system provides a moral enlightenment for leaders and staff to be able to deal with the dilemma of ethics while still acting on the foundations and building of good corporate governance. Suyono and Hariyanto (2012) disclose that all sections within the board of commissioners, board of directors, audit committees must improve the effectiveness of internal control, internal audit function and organizational commitment as it will improve good corporate governance. This research is an explanatory research that will link the effectiveness of internal control system with various independent variables (IFRS, business complexity, ablilty to generate profit and company size). The object of this research is a manufacturing company listing in Indonesian Stock Exchange in 2011 until 2014. The test is done using eviews 8, and the result of IFRS has positive effect on the effectiveness of internal control system, the ability to generate profit also influence the implementation of internal control system while the business and firm size does not affect the implementation of internal control system. Keyword: Effectiveness of internal control system, IFRS, business complexity, ROA

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