Internal control plays a crucial role in financial planning and analysis (FP&A) processes.

Internal control plays a crucial role in financial planning and analysis (FP&A) processes. It ensures the accuracy, reliability, and integrity of financial data, which are essential for effective decision-making and accountability (Kamaruddin & Auzair, 2022). Internal control acts as a safeguard against errors, fraud, and mismanagement, providing assurance that financial information is complete and accurate (Kamaruddin & Auzair, 2022). One of the key findings from a study on the impact of financial management practices on accountability of Islamic social enterprises (ISEs) is that internal control has a direct relationship with accountability (Kamaruddin & Auzair, 2022). The study also reveals that other financial management practices, such as financial disclosure and financial performance management, indirectly influence accountability through internal control. This suggests that internal control acts as a mediator between financial management practices and accountability (Kamaruddin & Auzair, 2022). Furthermore, research indicates that a formal structure of financial planning and budgeting, supported by good internal control, improves accountability (Safriansah et al., 2021). The implementation of financial planning and budgeting, along with internal control practices, has been found to have a positive influence on accountability (Safriansah et al., 2021). This highlights the importance of integrating internal control into the FP&A process to enhance accountability. In addition to accountability, internal control also contributes to financial performance. Proper supervision of budget planning and implementation, which is part of internal control, can increase budget absorption and improve financial performance (Safriansah et al., 2021). The government's internal control system, including control environment, activities control, information and communication, and monitoring controls, has been found to have a positive and significant effect on financial performance (Safriansah et al., 2021). Overall, internal control plays a critical role in linking FP&A to accountability and financial performance. It acts as a mediator between financial management practices and accountability, ensuring the accuracy and reliability of financial data. By integrating internal control into the FP&A process, organizations can enhance accountability and improve financial performance.

References:

Kamaruddin, M. and Auzair, S. (2022). The impact of financial management practices on accountability of islamic social enterprise (ise). International Journal of Islamic and Middle Eastern Finance and Management, 16(4), 669-686. https://doi.org/10.1108/imefm-05-2021-0184

Safriansah, S., Zukhri, N., & Andriyansah, A. (2021). Analysis of financial performance using budget absorption indicators. Budapest International Research and Critics Institute (Birci-Journal) Humanities and Social Sciences, 4(1), 1467-1478. https://doi.org/10.33258/birci.v4i1.1775