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Abstract
Abstract: The Role of Javanese Culture in Implementing Internal Control: a Case Study
Purpose: To explore the role of Javanese culture in the implementation of internal control at CV BBI in East Java.
Method: The paradigm of this research is interpretive. Information was obtained through semi-structured interviews, observations of operational activities in the company, and collection of company documents and then analyzed using qualitative methods.
Results: Javanese culture which emphasizes respect and “sungkan”, “kekeluargaan”, “guyub’, “musyawarah” and “gotong royong” plays a role in the implementation of the five components of internal control
Novelty: This study explains the role of Javanese culture in the implementation of COSO (Committee of Sponsoring Organization) version of internal control.
Contribution: Business people can identify positive values from local culture and use them to support the implementation of internal control.
Abstrak: Peran Budaya Jawa dalam Penerapan Pengendalian Internal: Studi Kasus
Tujuan: Mengeksplorasi peran budaya Jawa dalam implementasi pengendalian internal pada CV BBI
Metode: Paradigma penelitian ini adalah intepretif. Informasi diperoleh melalui semi-structured interview, observasi serta dokumen perusahaan dan dianalisis dengan metode kualitatif.
Hasil: Budaya Jawa yang memberikan penekanan pada rasa hormat dan sungkan, keluargaan, guyub, musyawarah dan gotong royong berperan dalam implementasi lima komponen pengendalian internal
Kebaruan: Penelitian ini menjelaskan peran budaya Jawa terhadap implementasi pengendalian internal versi COSO (Committee of Sponsoring Organization).
Kontribusi: Pelaku bisnis dapat mengidentifikasi nilai positif dari budaya lokal setempat yang dianut dan memanfaatkannya untuk mendukung implementasi pengendalian internal.
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Article Details
Copyright (c) 2023 Ivan Tanujaya Sutanto, Yenny Sugiarti
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
References
- Armani M. Apa Itu Evergrande? Kasusnya Berpotensi Picu Krisis Ekonomi Global. KompasCom 2021.
- Hinata Y. Evergrande’s poor internal controls allowed loan scheme: probe. Nikkei Asia 2023. https://asia.nikkei.com/Business/Markets/China-debt-crunch/Evergrande-s-poor-internal-controls-allowed-loan-scheme-probe (accessed April 16, 2023).
- Association of Certified Fraud Examiners. Occupational Fraud 2022: Report to The Nations. Austin: 2022.
- Committee of Sponsoring Organization of The Treadway Commission. Internal Control Integrated Framework: Executive Summary. 2013.
- Muraleetharan P. Impact Internal Control on Efficiency of the Organizations in Jaffna District. International Journal of Accounting and Financial Reporting 2019;9:313. https://doi.org/10.5296/ijafr.v9i4.15992.
- Cheng Q, Goh BW, Kim JB. Internal Control and Operational Efficiency. Contemporary Accounting Research 2018;35:1102–39. https://doi.org/10.1111/1911-3846.12409.
- Alawaqleh QA. The Effect of Internal Control on Employee Performance of Small and Medium-Sized Enterprises in Jordan: The Role of Accounting Information System. Journal of Asian Finance, Economics and Business 2021;8:855–63. https://doi.org/10.13106/jafeb.2021.vol8.no3.0855.
- Ershaid DJ, Abdullah A, Mohamed M. Internal Control System Role in Moderating the Effect of Organizational Culture and Organizational Performance: An Empirical Evidence from Developing Economy 2019;21:8–17. https://doi.org/10.9790/487X-2112020817.
- Feng M, Li C, Mcvay S, Skaife H. Does Ineffective Internal Control over Financial Reporting affect a Firm’s Operations? Evidence from Firms’ Inventory Management. Accounting Review 2015; 90:529-57. https://doi.org/10.2308/accr-50909.
- Wardayati SM, Miqdad M, Efendi HI, Arisandy FN. Performance improvement through internal control, experience and individual rank. Journal of Contemporary Accounting 2019;1:107–19. https://doi.org/10.20885/jca.vol1.iss2.art4.
- Weiss D. Internal controls in family-owned firms. European Accounting Review 2014;23:463–82. https://doi.org/10.1080/09638180.2013.821814.
- Lari Dashtbayaz M, Salehi M, Safdel T. The effect of internal controls on financial reporting quality in Iranian family firms. Journal of Family Business Management 2019;9:254–70. https://doi.org/10.1108/JFBM-09-2018-0047.
- Adeyemi FK, Olarewaju OM. Internal Control System and Financial Accountability: An Investigation of Nigerian South-Western Public Sector. vol. 15. 2019.
- Bimo ID, Prasetyo CY, Susilandari CA. The effect of internal control on tax avoidance: the case of Indonesia. Journal of Economics and Development 2019;21:131–43. https://doi.org/10.1108/jed-10-2019-0042.
- 2019 Deloitte ICFR Survey The evolving landscape of Internal Control Over Financial Reporting. n.d.
- Tsai Y. Relationship between organizational culture, leadership behavior and job satisfaction. BMC Health Serv Res 2011;11. https://doi.org/10.1186/1472-6963-11-98.
- Caban-Garcia MT, Ríos Figueroa CB, Petruska KA. The impact of culture on internal control weaknesses: Evidence from firms that cross-list in the U.S. Journal of International Accounting Research 2017;16:119–45. https://doi.org/10.2308/jiar-51916.
- Kanagaretnam K, Lobo GJ, Ma C, Zhou J. National culture and internal control material weaknesses around the world. Journal of Accounting, Auditing and Finance 2016;31:28–50. https://doi.org/10.1177/0148558X14560897.
- Zare M, Mohammadi MHK. Effect of Culture on Quality of Interna, Controls in Companies Listed on Tehran Stock eXCHANGE. International Journal of Humanities and Culture Studies (IJHCS). 2016:1782–9. http://dx.doi.org/10.18052/www.scipress.com/ILSHS.21.36.
- Reginato L, Guerreiro R. Relationships between environment, culture, and management control systems. International Journal of Organizational Analysis 2013;21:219–40. https://doi.org/10.1108/IJOA-02-2011-0477.
- Abernethy MA, Li W, Zhang Y, Shi H. Firm culture and internal control system. Accounting and Finance 2022. https://doi.org/10.1111/acfi.13020.
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- Malmi T, Bedford DS, Brühl R, Dergård J, Hoozée S, Janschek O, et al. Culture and management control interdependence: An analysis of control choices that complement the delegation of authority in Western cultural regions. Accounting, Organizations and Society 2020;86:101116. https://doi.org/10.1016/J.AOS.2020.101116.
- Caban-Garcia MT, Ríos Figueroa CB, Petruska KA. The impact of culture on internal control weaknesses: Evidence from firms that cross-list in the U.S. Journal of International Accounting Research 2017;16:119–45. https://doi.org/10.2308/jiar-51916.
- Selvarajah C, Meyer D. Human capacity development in Indonesia: leadership and managerial ideology in Javanese organizations. Asia Pacific Business Review 2017;23:264–89. https://doi.org/10.1080/13602381.2017.1299401.
- Santoso B. The Influences of Javanese Culture in Power of Making Decisions in Indonesian Universities: Case Studies in MM Programmes. Journak of Indonesian Economy and Business 2012; 27:224-41. https://doi.org/10.22146/jieb.6248.
- Irawanto DW, Ramsey PL, Ryan JC. Challenge of leading in Javanese culture. Asian Ethnicity 2011;12:125–39. https://doi.org/10.1080/14631369.2011.571829.
- Hermawan MS, Loo MK. The Construction of Kekeluargaan as an Indonesia’s Organizational Culture. Jurnal Humaniora 2019;31:1. https://doi.org/10.22146/jh.v31i1.42851.
- Lukiyanto K, Wijayaningtyas M. Gotong Royong as social capital to overcome micro and small enterprises’ capital difficulties. Heliyon 2020;6. https://doi.org/10.1016/j.heliyon.2020.e04879.
- Nofrima S, Sudiar S, Purnomo EP. How Javanese Culture Shaping Political Ideology (Case Study of the People in Yogyakarta). Jurnal Ilmiah Peuradeun 2021;9:435. https://doi.org/10.26811/peuradeun.v9i2.500.
References
Armani M. Apa Itu Evergrande? Kasusnya Berpotensi Picu Krisis Ekonomi Global. KompasCom 2021.
Hinata Y. Evergrande’s poor internal controls allowed loan scheme: probe. Nikkei Asia 2023. https://asia.nikkei.com/Business/Markets/China-debt-crunch/Evergrande-s-poor-internal-controls-allowed-loan-scheme-probe (accessed April 16, 2023).
Association of Certified Fraud Examiners. Occupational Fraud 2022: Report to The Nations. Austin: 2022.
Committee of Sponsoring Organization of The Treadway Commission. Internal Control Integrated Framework: Executive Summary. 2013.
Muraleetharan P. Impact Internal Control on Efficiency of the Organizations in Jaffna District. International Journal of Accounting and Financial Reporting 2019;9:313. https://doi.org/10.5296/ijafr.v9i4.15992.
Cheng Q, Goh BW, Kim JB. Internal Control and Operational Efficiency. Contemporary Accounting Research 2018;35:1102–39. https://doi.org/10.1111/1911-3846.12409.
Alawaqleh QA. The Effect of Internal Control on Employee Performance of Small and Medium-Sized Enterprises in Jordan: The Role of Accounting Information System. Journal of Asian Finance, Economics and Business 2021;8:855–63. https://doi.org/10.13106/jafeb.2021.vol8.no3.0855.
Ershaid DJ, Abdullah A, Mohamed M. Internal Control System Role in Moderating the Effect of Organizational Culture and Organizational Performance: An Empirical Evidence from Developing Economy 2019;21:8–17. https://doi.org/10.9790/487X-2112020817.
Feng M, Li C, Mcvay S, Skaife H. Does Ineffective Internal Control over Financial Reporting affect a Firm’s Operations? Evidence from Firms’ Inventory Management. Accounting Review 2015; 90:529-57. https://doi.org/10.2308/accr-50909.
Wardayati SM, Miqdad M, Efendi HI, Arisandy FN. Performance improvement through internal control, experience and individual rank. Journal of Contemporary Accounting 2019;1:107–19. https://doi.org/10.20885/jca.vol1.iss2.art4.
Weiss D. Internal controls in family-owned firms. European Accounting Review 2014;23:463–82. https://doi.org/10.1080/09638180.2013.821814.
Lari Dashtbayaz M, Salehi M, Safdel T. The effect of internal controls on financial reporting quality in Iranian family firms. Journal of Family Business Management 2019;9:254–70. https://doi.org/10.1108/JFBM-09-2018-0047.
Adeyemi FK, Olarewaju OM. Internal Control System and Financial Accountability: An Investigation of Nigerian South-Western Public Sector. vol. 15. 2019.
Bimo ID, Prasetyo CY, Susilandari CA. The effect of internal control on tax avoidance: the case of Indonesia. Journal of Economics and Development 2019;21:131–43. https://doi.org/10.1108/jed-10-2019-0042.
2019 Deloitte ICFR Survey The evolving landscape of Internal Control Over Financial Reporting. n.d.
Tsai Y. Relationship between organizational culture, leadership behavior and job satisfaction. BMC Health Serv Res 2011;11. https://doi.org/10.1186/1472-6963-11-98.
Caban-Garcia MT, Ríos Figueroa CB, Petruska KA. The impact of culture on internal control weaknesses: Evidence from firms that cross-list in the U.S. Journal of International Accounting Research 2017;16:119–45. https://doi.org/10.2308/jiar-51916.
Kanagaretnam K, Lobo GJ, Ma C, Zhou J. National culture and internal control material weaknesses around the world. Journal of Accounting, Auditing and Finance 2016;31:28–50. https://doi.org/10.1177/0148558X14560897.
Zare M, Mohammadi MHK. Effect of Culture on Quality of Interna, Controls in Companies Listed on Tehran Stock eXCHANGE. International Journal of Humanities and Culture Studies (IJHCS). 2016:1782–9. http://dx.doi.org/10.18052/www.scipress.com/ILSHS.21.36.
Reginato L, Guerreiro R. Relationships between environment, culture, and management control systems. International Journal of Organizational Analysis 2013;21:219–40. https://doi.org/10.1108/IJOA-02-2011-0477.
Abernethy MA, Li W, Zhang Y, Shi H. Firm culture and internal control system. Accounting and Finance 2022. https://doi.org/10.1111/acfi.13020.
McShane S, Glinow M Von. Organizational Behavior. 5th ed. McGraw Hill eBook; 2022.
Audit Financiar X V, Domnişoru N, Ogarcă S, Dragomir R. Organizational culture and internal control. Organizational Culture and Internal Control 2017;XV:628–43. https://doi.org/10.20869/AUDITF/2017/148/628.
Malmi T, Bedford DS, Brühl R, Dergård J, Hoozée S, Janschek O, et al. Culture and management control interdependence: An analysis of control choices that complement the delegation of authority in Western cultural regions. Accounting, Organizations and Society 2020;86:101116. https://doi.org/10.1016/J.AOS.2020.101116.
Caban-Garcia MT, Ríos Figueroa CB, Petruska KA. The impact of culture on internal control weaknesses: Evidence from firms that cross-list in the U.S. Journal of International Accounting Research 2017;16:119–45. https://doi.org/10.2308/jiar-51916.
Selvarajah C, Meyer D. Human capacity development in Indonesia: leadership and managerial ideology in Javanese organizations. Asia Pacific Business Review 2017;23:264–89. https://doi.org/10.1080/13602381.2017.1299401.
Santoso B. The Influences of Javanese Culture in Power of Making Decisions in Indonesian Universities: Case Studies in MM Programmes. Journak of Indonesian Economy and Business 2012; 27:224-41. https://doi.org/10.22146/jieb.6248.
Irawanto DW, Ramsey PL, Ryan JC. Challenge of leading in Javanese culture. Asian Ethnicity 2011;12:125–39. https://doi.org/10.1080/14631369.2011.571829.
Hermawan MS, Loo MK. The Construction of Kekeluargaan as an Indonesia’s Organizational Culture. Jurnal Humaniora 2019;31:1. https://doi.org/10.22146/jh.v31i1.42851.
Lukiyanto K, Wijayaningtyas M. Gotong Royong as social capital to overcome micro and small enterprises’ capital difficulties. Heliyon 2020;6. https://doi.org/10.1016/j.heliyon.2020.e04879.
Nofrima S, Sudiar S, Purnomo EP. How Javanese Culture Shaping Political Ideology (Case Study of the People in Yogyakarta). Jurnal Ilmiah Peuradeun 2021;9:435. https://doi.org/10.26811/peuradeun.v9i2.500.