STATUS OF CONTROL ENVIRONMENT IN BOSNIA AND HERZEGOVINA - EMPIRICAL STUDY

Abstract

The subject of this research is the status of the control environment in the organizations of Bosnia and Herzegovina perceived by the internal auditors. The aim is to identify the best, but also the weakest practices that the organizations and internal auditors are facing within the domestic environment, and to indicate some future actions needed in order to improve this element of the whole internal control system. The research is organized in the form of a self-assessment questionnaire by applying the 11-Point Likert Scale. The given assessments indicate that the major focus is on the formal structures, while soft controls are represented to a much lesser extent. The majority of examinees have confirmed that the weakest link refers to the top management, i.e. boards. Comparing the assessments from different industries, it is evident that the control environment management, including its audit, is under a strong impact of laws, regulations and the related accountabilities of organizations and internal auditors. Although the research has shown that there are cases of best practices applied, in-depth data analysis and informal interviews with individual internal auditors give the impression that knowledge, experience, interest and awareness in the organizations of Bosnia and Herzegovina are not on a satisfactory level required in order to grasp the significance of corporate culture and to give it due attention. This situation relates not only to top management but also to internal auditors dealing with the assessment and improvement of the control environment.