Title: Internal control weaknesses in a cooperative body: Malaysian experience

Authors: Shamsul Anuar Abd Rahim; Anuar Nawawi; Ahmad Saiful Azlin Puteh Salin

Addresses: Faculty of Accountancy, Universiti Teknologi MARA Kampus Puncak Alam, 42300 Bandar Puncak Alam, Selangor, Malaysia ' Faculty of Accountancy, Universiti Teknologi MARA Shah Alam, 40450 Shah Alam, Selangor, Malaysia ' Faculty of Accountancy, Universiti Teknologi MARA Perak Tapah Campus, 35400 Tapah Road, Perak, Malaysia

Abstract: The purpose of this study is to examine the current state of the internal control practices in the cooperative body, an organisation area that has always been neglected in governance empirical research. This study also provides recommendations to overcome those weaknesses. A case study approach was selected for this study by selecting one cooperative body as a case. This study employed document analysis as the method of data collection and the data were analysed by using the latest COSO Internal Control - Integrated Framework. This study found that the selected cooperative body had very poor internal control. There was low data integrity where too many errors were detected in both the financial and non-financial data, while its daily transactions were recorded by using manual tools but without proper security leading to possible fraud. Furthermore, the effort to automate the system by acquiring a new software program has miserably failed due to incompetency of the workforce. To worsen matters, the employees also did not appreciate the importance of internal control.

Keywords: internal control; cooperatives; fraud; risk; Malaysia; case study; cooperative movement.

DOI: 10.1504/IJMP.2017.083082

International Journal of Management Practice, 2017 Vol.10 No.2, pp.131 - 151

Received: 22 Jun 2015
Accepted: 16 Mar 2016

Published online: 25 Nov 2016 *

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