Chapter I
Problem Statement
1.1. Description of the problematic reality.
The problem has been identified in the financial management of the MYPES that function as drugstore. In this regard, financial management includes decisions on financing, investment, dividends (profitability) and risks; Also liquidity, management, solvency and profitability.
The company does not have an adequate financial capital structure, that is, of liabilities and assets; This means that you do not have the financial resources necessary to finance the investments you need to carry out your business activity. This is configured as a deficiency in the financing decisions of the financial management of the company.
The company does not have an adequate investment structure, that is, assets; it has been determined the existence of too many idle fixed assets that do not contribute to generating income to the company. Sometimes the company has deficiencies in financial working capital, that is, in current assets, either due to the lack of availability of income from cash or cash equivalents, merchandise to serve customers and other deficiencies in this area of balance sheet. The same situation happens with accounting working capital, that is, current assets minus current liabilities, is not enough to meet the entity's obligations. All this is configured as a deficiency in the investment decisions of the financial management of the company.
The company does not formulate financial budgets (cash flows) that allow it to measure a priori the projected profitability that it needs to deliver to shareholders as dividends or to be able to reinvest it in the activities of the company. Whereas any result that he obtains cannot be measured, because there is no instrument of comparison; Likewise, the results obtained are also not compared with companies of the same level and line of business. Nor does the company make comparisons with the profitability obtained in previous years (historical profitability). All this is configured as a deficiency in the decision of dividends or profitability.
Another important point that financial management has not been considering is the risks; Internal risks have not been analyzed, much less external or market risks. In the internal risks is the lack of planning, organization, direction, coordination and control of the company's resources; which have to be weighed to talk about financial management. Regarding unweighted external risks, there are fluctuations in the exchange rate, inflation, fierce competition from national and international groups, government measures, etc. all of which configures a deficiency in the risk decisions of the financial management of the company.
On the other hand, it has been determined that the company does not carry out the analysis and interpretation of the financial and economic information contained in the financial statements; therefore it does not have information on liquidity, management, solvency and profitability; neither of the evolution of investments and debts; income and expenses from one exercise to another. All this is configured as deficiencies in financial management.
To solve all this problem, an integrated internal control system is proposed that allows to have documents, actions, adjustments and feedback so that the company can plan, organize, direct, coordinate and control financial resources; and thus enter into a process of economy, efficiency, continuous improvement, effectiveness and competitiveness.
1.2. Research delimitations
a) Spatial delimitation.
The research work will be developed in the field of the MYPES that function as drugstores in Lima-Peru.
b) Temporal delimitation.
This is a current study; even when it will take into account information from previous financial years.
c) Social delimitation.
Personnel from the MYPES that function as drugstore in Lima will participate in this work.
1.3. Research problems.
1.3.1. Main problem.
In what way will the integrated internal control system affect the improvement of the financial management of the MYPES that function as drugstore in Lima?
1.3.2. Secondary problems.
1. How can the components of the integrated internal control system influence the decisions of the MYPES that function as drugstore in Lima?
2 How can the evaluation of the integrated internal control system facilitate the continuous improvement of the MYPES that function as drugstore in Lima?
1.4. Research objectives.
1.4.1. Overall objective.
Determine the way that the integrated internal control system will influence the improvement of the financial management of the MYPES that function as drugstore in Lima.
1.4.2. Specific objectives.
1. Establish the way in which the components of the integrated internal control system can influence the financial decisions of the MYPES that function as drugstore in Lima.
2 Determine the way in which the evaluation of the integrated internal control system can facilitate the continuous improvement of the MYPES that function as drugstore in Lima.
1.4. Justification and importance of the investigation.
1.5.1. Justification.
Methodological justification
In this work the scientific methodology will be applied; which consists of identifying the problem, and then after analyzing the theories formulate solutions through the hypothesis; as well as objectives that guide what the research seeks. All this by applying all the corresponding methodological elements.
Theoretical justification
The deficient financial management of the company requires the corresponding solution, the same one that comes through the application of an integrated internal control system that has documents, actions, evaluations and everything necessary to facilitate the improvement of the financial management of the company.; the same that is necessary to have the sources of financing that allow having the necessary investments for the development of the business or activity. As long as the investments are made, the necessary dividends or profitability that the company needs to pay the owners of the company, that is, the shareholders, will be generated.
Companies that have an integrated internal control system have shown to have all the elements to manage themselves financially and administratively in the best way. Control is a phase of business management; therefore, everything you do will affect management.
The control system with its components of the control environment, risk identification, control activities, information and communication and supervision facilitates the financial management and general management of the company.
The evaluation of internal control will make it possible to determine the shortcomings of financial management and thus propose what is necessary to overcome this situation.
The integrated internal control system is a tool that directly affects financial management and is therefore necessary for the economy, efficiency, continuous improvement, effectiveness and competitiveness of the company.
Practical justification
This work will be very useful for the MYPES that function as drugstore in Lima; because it will allow you to order financial management by making decisions about financing, investment, dividends and risks at the right time and with the necessary advantage.
It will also be useful for other companies in the same sector or other sectors; because they all have financial management that needs to be efficient.
1.5.1. Importance.
This work will apply the scientific methodology; therefore that rigor to follow gives the importance of the case. It will also allow to capture the knowledge and experiences acquired in the studies carried out.
It is also the result of work experience.
1.5. Limitations.
There are several limitations to carry out the research, such as the lack of financial resources to acquire books, hire specialized advice, hire staff for statistical support; etc.
Another limitation is time, it is known that in our country you have to work, study and research at the same time.
Another limitation is the access to the real information of the company or similar companies. This company is not listed on the stock market, therefore it has no public information.
However, despite these limitations, the research will be removed, thanks to the effort, dedication and support of colleagues and friends.
Chapter II
Theoretical framework
2.1. Research related background.
The following antecedents have been identified:
- Hernández Fernández, Maritere (2005) Thesis: "Financial decisions for the continuous improvement of companies". Thesis presented to choose the Master's Degree in Finance at the Autonomous University of Mexico. The author describes a set of financing decisions that allow companies to make the investments needed to meet the needs of the community.
- Aguabarrena García, Carlo Magno (2004) Thesis: "Competitive financial administration with effective financial decisions". Thesis presented to opt for the Master's Degree at the Catholic University of Chile. The author makes a description of the financial decisions that allow having an adequate capital structure to dispose of the goods and rights they need to fulfill the institutional mission and thus ensure their continuity in the competitive Chilean market.
- Castillo Heredia, Gustavo (2005) Thesis: “Peru: Effective financial decisions for business development, within the framework of the social market economy”. Presented to opt for the Master's Degree in Finance at the Federico Villarreal National University. In this research work, the author describes how financial decisions, to the extent that they are effective, contribute to the continuous improvement, productivity, competitiveness and development of companies in the commerce, industry and services sector, all within the framework of the social market or free competition economy.
- Rojas Oblitas, Max Edinson (2005) Thesis: "Diversification of Financial Administration for optimal management". Presented to opt for the Master's Degree in Finance at the Federico Villarreal National University. The author presents financing alternatives through directly collected resources as an effective way to diversify financial administration, as a way to solve the financial problem faced by the entity and that does not allow the provision of services in the best conditions for the population.
- Mendoza Torres, Ana María (2005) Thesis: "Strategic financial management for the competitiveness of companies in the commerce sector". Presented to opt for the Master's Degree in Accounting in the Management Accounting mention at the Universidad Nacional Mayor de San Marcos. In this work, the author presents the effective management of investments and financing as the solution for companies in the commerce sector to obtain efficiency, effectiveness, economy; productivity, continuous improvement and competitiveness in the sub-sectors in which they carry out their business activities.
- Ángeles Macedo, Floriana Viviana (2005) Thesis: "Financial analysis and its impact on the decisions of outsourcing companies". Presented to opt for the Master's Degree in Finance at the Federico Villarreal National University. The author analyzes, synthesizes and interprets how the analysis of liquidity, management, solvency and profitability contributes to making effective financial decisions and therefore leads to the optimization and competitiveness of outsourcing companies.
- Rojas Guerrero, Ruth Odila (2005) Thesis: "Financial instruments in the optimal management of companies in the construction sector". Work presented to choose the Master's Degree in Finance at the Federico Villarreal National University. The financial instruments and the way in which they facilitate the optimal management of human, material and financial resources of companies in the construction sector are identified.
- Escobar Córdova, Gladys (2005) Thesis: "Financial administration in achieving the strategic plans of private educational entities". Work presented to choose the Master's Degree in Finance at the Federico Villarreal National University. In this work the author analyzes the way in which the financial decisions of investment, indebtedness and dividends of the business financial administration facilitate the achievement of the goals, objectives and mission contained in the strategic plans of private educational entities.
- Zambrano Calle, Abraham José (2005) Thesis: “Financial management and the development of SMEs in the textile industrial activity of Metropolitan Lima-Period 2002-2003”; presented to opt for the Academic Degree of Master in Finance at the Federico Villarreal National University. It analyzes financial management and its contribution to the development of SMEs.
- Begazo Villanueva, José Domingo (1996) Thesis: "The small clothing company in Villa El Salvador and its competitiveness"; presented to opt for the Master's Degree in Economic and Social Development at the Federico Villarreal National University.
- Pedro Teodomiro Cruz Alberca (2009) Thesis: “Financial management and direction, tools for the effectiveness of micro and small businesses in the commerce sector of Metropolitan Lima”, presented to obtain the Master's Degree in Finance at the Federico Villarreal National University. In this work the author defines the decisions that must be taken to achieve the goals and objectives of micro and small businesses in the commerce sector. It also analyzes risk and returns for the purpose of doing good business deals.
2.2. Historical review.
One of the MYPES that function as a drugstore in Lima made its appearance in October 2007 in the district of Rímac with 10 employees as personnel for the purposes of marketing and distribution of multiple drugstore products, the development in the drug store business economic context has in In 2008, it is more relevant that it manufactures two products to order, so its assets have a greater connotation, it is also diversifying its business development in such a way that in July 2008 it has 06 pharmacies and each one with 3 people integrated in its organization, in By virtue of this and its business expansion, the integrated internal control system is vital to ensure the achievement of the objectives and goals to be achieved.
2.3. Legal base.
For the development of business activity it is necessary to take into account many rules, such as the following:
a) Political Constitution of the State
b) General Law of Companies
c) Civil Code
d) Penal Code
e) Commercial
Code f) Tax Code
g) Law No. 28015, Law for the promotion and formalization of Micro and small businesses.
h) Other legal, tax, financial, labor and accounting regulations.
2.4. Conceptual framework.
2.4.1. Theories of integrated internal control system
Analyzing the COSO Report (1997), it is determined that Internal control is a process integrated into the processes, and not a set of heavy bureaucratic mechanisms added to them, carried out by the board of directors, the management and the rest of the staff of an entity, designed in order to provide a reasonable guarantee for the achievement of objectives included in the following categories: Effectiveness and efficiency of operations; Reliability of the financial information; Compliance with laws, regulations and policies; Some fundamental concepts complete the definition: Internal control is a process, that is, a means to achieve an end and not an end in itself; It is carried out by people who act at all levels, it is not just about organization manuals and procedures;It can only bring a reasonable degree of safety, not total safety, to driving; It is designed to facilitate the achievement of objectives in one or more of the indicated categories, which, at the same time, tend to have points in common. When speaking of internal control as a process, reference is made to a chain of actions extended to all activities, inherent to management and integrated into its other basic processes: planning, execution and supervision. Such actions are incorporated (not added) to the entity's infrastructure, to influence the fulfillment of its objectives and support its quality initiatives.they usually have points in common. When speaking of internal control as a process, reference is made to a chain of actions extended to all activities, inherent to management and integrated into its other basic processes: planning, execution and supervision. Such actions are incorporated (not added) to the entity's infrastructure, to influence the fulfillment of its objectives and support its quality initiatives.they usually have points in common. When speaking of internal control as a process, reference is made to a chain of actions extended to all activities, inherent to management and integrated into its other basic processes: planning, execution and supervision. Such actions are incorporated (not added) to the entity's infrastructure, to influence the fulfillment of its objectives and support its quality initiatives.to influence the achievement of your objectives and support your quality initiatives.to influence the achievement of your objectives and support your quality initiatives.
According to the INTOSAI Internal Control Standards Commission, internal control can be defined as the organizational plan, and the set of plans, methods, procedures and other measures of an institution, tending to offer a reasonable guarantee that they are fulfilled. the following main objectives: Promote methodical, economic, efficient and effective operations, as well as products and services of the expected quality; Preserve assets from losses due to waste, abuse, mismanagement, mistakes, fraud or irregularities; Respect the laws and regulations, as well as the directives and at the same time stimulate the adherence of the members of the organization to the policies and objectives of the same; Obtain complete and reliable financial and management data presented through timely reports.For senior management it is essential to achieve the best results with economy of effort and resources, that is, at the lowest possible cost. For this, it must be controlled that its decisions are adequately fulfilled, in the sense that the actions carried out correspond to those, within a basic scheme that allows the initiative and contemplates the current circumstances at all times. Therefore, following the INTOSAI guidelines, the higher authority bears the responsibility for establishing a suitable and efficient internal control structure, as well as its periodic review and updating.in the sense that the actions executed correspond to those, within a basic scheme that allows the initiative and contemplates the current circumstances at all times. Therefore, following the INTOSAI guidelines, the higher authority bears the responsibility for establishing a suitable and efficient internal control structure, as well as its periodic review and updating.in the sense that the actions executed correspond to those, within a basic scheme that allows the initiative and contemplates the current circumstances at all times. Therefore, following the INTOSAI guidelines, the higher authority bears the responsibility for establishing a suitable and efficient internal control structure, as well as its periodic review and updating.
Both definitions (COSO and INTOSAI) complement each other and make up a broad version of internal control: the first emphasizing its nature as a process consisting of a chain of actions integrated into management, and the second fundamentally addressing its objectives. The integrated control framework proposed by the COSO report consists of five interrelated components, derived from the management style, and integrated into the management process: Control environment; Risks evaluation; Control activities; Information and communication; Supervision. The control environment reflects the ethical spirit in force in an entity regarding the behavior of agents, the responsibility with which they face their activities, and the importance they assign to internal control. It serves as the basis for the other components,since it is within the prevailing environment that risks are evaluated and control activities designed to neutralize them are defined. Simultaneously, the relevant information is captured and the pertinent communications are made, within a supervised and corrected process according to the circumstances. The model reflects the dynamism of internal control systems. Thus, risk assessment not only influences control activities, but can also highlight the desirability of reconsidering the management of information and communication. It is not a serial process, in which one component affects exclusively the next, but is multi-directional interactive in that any component can influence, and in fact does, any other.There is also a direct relationship between the objectives (efficiency of operations, reliability of information and compliance with laws and regulations) and the five referenced components, which is permanently manifested in the field of management: the operating units and each agent of The organization sequentially conform a scheme oriented to the results that are sought, and the matrix constituted by this scheme is in turn crossed by the components.and the matrix constituted by that scheme is in turn crossed by the components.and the matrix constituted by that scheme is in turn crossed by the components.
Control environment
The control environment defines the set of circumstances that frame the actions of an entity from the perspective of internal control and that are therefore determining the degree to which the principles of the latter prevail over the organizational behaviors and procedures. It is, fundamentally, a consequence of the attitude assumed by senior management, management, and reflexively, the other agents in relation to the importance of internal control and its impact on activities and results. It sets the tone of the organization and, above all, provides discipline through the influence it exerts on the behavior of the staff as a whole. It constitutes the scaffolding for the development of the actions and from there its transcendence becomes, since as a conjunction of means, operators and previously defined rules,it translates the collective influence of various factors in the establishment, strengthening or weakening of effective policies and procedures in an organization. The main factors of the control environment are: The philosophy and style of the leadership and management; The structure, the organizational plan, the regulations and the procedure manuals; The integrity, ethical values, professional competence and commitment of all the components of the organization, as well as their adherence to the established policies and objectives; The forms of assignment of responsibilities and of administration and development of personnel; The degree of documentation of policies and decisions, and the formulation of programs that contain goals, objectives and performance indicators. The prevailing control environment will be so good,regular or bad as are the factors that determine it. The greater or lesser degree of development and excellence of these will, in the same order, affect the strength or weakness of the environment they generate and consequently the tone of the organization.
Risks evaluation
Internal control has been designed essentially to limit the risks that affect the activities of organizations. Through the investigation and analysis of the relevant risks and the point to which the current control neutralizes them, the vulnerability of the system is evaluated. For this, a practical knowledge of the entity and its components must be acquired in order to identify weak points, focusing on risks at both the organization (internal and external) and the activity level. Goal setting precedes risk assessment. Although they are not a component of internal control, they are a prerequisite for its operation. The objectives (related to operations, financial information and compliance), can be explicit or implicit,general or particular. By setting global and activity objectives, an entity can identify critical success factors and determine criteria for measuring performance. In this regard, it should be remembered that the control objectives must be specific, as well as adequate, complete, reasonable and integrated into the overall objectives of the institution. Once identified, the risk analysis will include: An estimate of their importance / significance, An assessment of the probability / frequency; A definition of how they will be handled. Given that the conditions in which entities operate tend to vary, mechanisms are needed to detect and address the treatment of risks associated with change. Although the assessment process is similar to that of the other risks,Change management deserves to be carried out independently, given its great importance and the possibilities that they go unnoticed by those who are immersed in the routines of the processes. There are circumstances that may deserve special attention based on the potential impact they pose: Changes in the environment; Redefinition of institutional policy; Internal reorganizations or restructurings; Entry of new employees, or rotation of existing ones; New systems, procedures and technologies; Growth acceleration; New products, activities or functions. Mechanisms to anticipate, identify and manage changes must be forward-looking,in order to anticipate the most significant ones through alarm systems complemented with plans for an adequate approach to variations.
Control activities
They are made up of specific procedures established as a reinsurance for the fulfillment of the objectives, oriented primarily towards the prevention and neutralization of risks. The control activities are carried out at all levels of the organization and at each of the management stages, starting from the preparation of a risk map as expressed in the previous point: knowing the risks, the controls are established for to avoid or minimize them, which can be grouped into three categories, according to the objective of the entity with which they are related: Operations; The reliability of financial information; Compliance with laws and regulations. In many cases, control activities designed for one goal often help others as well:the operational ones can contribute to those related to the reliability of financial information, these to regulatory compliance, and so on. In turn, in each category there are different types of control: Preventive / Corrective; Manual / Automated or computerized; Managers or directors. At all levels of the organization, there are control responsibilities, and it is necessary for the agents to know individually which are those that concern them, and for this they must clearly specify such functions. The range that follows shows the comprehensive breadth of control activities, but is not all of them: Analysis by management; Monitoring and review by those responsible for the various functions or activities;Verification of transactions regarding their accuracy, completeness, and pertinent authorization: approvals, reviews, collations, recalculations, consistency analysis, pre-numbering; Property physical controls: audits, reconciliations, counts; Security devices to restrict access to assets and records; Segregation of functions; Application of performance indicators. It is necessary to emphasize the importance of having good controls of information technologies, since they play a fundamental role in management, highlighting in this regard the data processing center, the acquisition, implementation and maintenance of software, access security to systems, development projects and application maintenance.In turn, technological advances require a qualified and anticipatory professional response from the control.
Information and communication
Just as it is necessary for all agents to know their role in the organization (functions, responsibilities), it is essential that they have the periodic and timely information that they must manage to guide their actions in line with others, towards the best achievement of objectives. Relevant information must be captured, processed and transmitted in such a way that it reaches all sectors in a timely manner, allowing individual responsibilities to be assumed. The operational, financial and compliance information forms a system to enable the management, execution and control of operations. It is made up not only of data generated internally but also by those from external activities and conditions, necessary for decision-making.Information systems make it possible to identify, collect, process and disclose data related to internal and external events or activities, and often function as supervisory tools through routines provided for this purpose. However, it is important to maintain an information scheme in accordance with institutional needs which, in a context of constant changes, evolve rapidly. Therefore, they must be adapted, distinguishing between alert indicators and daily reports in support of strategic initiatives and activities, through the evolution from exclusively financial systems to others integrated with operations for better monitoring and control of them. Since the information system influences the management's ability to make management and control decisions,its quality is of great importance and refers, among others, to aspects of content, timeliness, timeliness, accuracy and accessibility. Communication is inherent to information systems. Individuals must be aware of issues relating to their management and control responsibilities in time. Each function must be clearly specified, understanding in this regard the aspects related to the responsibility of individuals within the internal control system. Likewise, the staff must know how their activities are related to the work of others, what the expected behaviors are, and how they must communicate the relevant information they generate. Reports must be transferred appropriately through effective communication. This is, in the broadest sense,including a multidirectional circulation of information: ascending, descending and transversal. The existence of open lines of communication and a clear willingness to listen on the part of managers are vital. In addition to good internal communication, it is important to have effective external communication that favors the flow of all the necessary information, and in both cases it is important to have effective means, among which as important as policy manuals, reports, institutional dissemination, formal and informal channels, the attitude assumed by the management in dealing with their subordinates results. An entity with a history built on integrity and a strong culture of control will not have communication difficulties. Action speaks louder than words.descending and transverse. The existence of open lines of communication and a clear willingness to listen on the part of managers are vital. In addition to good internal communication, it is important to have effective external communication that favors the flow of all the necessary information, and in both cases it is important to have effective means, among which as important as policy manuals, reports, institutional dissemination, formal and informal channels, the attitude assumed by the management in dealing with their subordinates results. An entity with a history built on integrity and a strong culture of control will not have communication difficulties. Action speaks louder than words.descending and transverse. The existence of open lines of communication and a clear willingness to listen on the part of managers are vital. In addition to good internal communication, it is important to have effective external communication that favors the flow of all the necessary information, and in both cases it is important to have effective means, among which as important as policy manuals, reports, institutional dissemination, formal and informal channels, the attitude assumed by the management in dealing with their subordinates results. An entity with a history built on integrity and a strong culture of control will not have communication difficulties. Action speaks louder than words.The existence of open lines of communication and a clear willingness to listen on the part of managers are vital. In addition to good internal communication, it is important to have effective external communication that favors the flow of all the necessary information, and in both cases it is important to have effective means, among which as important as policy manuals, reports, institutional dissemination, formal and informal channels, the attitude assumed by the management in dealing with their subordinates results. An entity with a history built on integrity and a strong culture of control will not have communication difficulties. Action speaks louder than words.The existence of open lines of communication and a clear willingness to listen on the part of managers are vital. In addition to good internal communication, it is important to have effective external communication that favors the flow of all the necessary information, and in both cases it is important to have effective means, among which as important as policy manuals, reports, institutional dissemination, formal and informal channels, the attitude assumed by the management in dealing with their subordinates results. An entity with a history built on integrity and a strong culture of control will not have communication difficulties. Action speaks louder than words.In both cases, it is important to have effective means, among which, as important as policy manuals, reports, institutional dissemination, formal and informal channels, is the attitude assumed by the management in dealing with its subordinates. An entity with a history built on integrity and a strong culture of control will not have communication difficulties. Action speaks louder than words.In both cases, it is important to have effective means, among which, as important as policy manuals, reports, institutional dissemination, formal and informal channels, is the attitude assumed by the management in dealing with its subordinates. An entity with a history built on integrity and a strong culture of control will not have communication difficulties. Action speaks louder than words.
Supervision
Management is responsible for the existence of a suitable and efficient internal control structure, as well as its periodic review and update to maintain it at an adequate level. It is necessary to evaluate the control activities of the systems over time, since every organization has areas where they are under development, need to be strengthened or their replacement is directly imposed because they lost their effectiveness or were inapplicable. The causes can be found in internal and external changes to management that, as circumstances vary, generate new risks to be faced. The objective is to ensure that internal control works properly, through two supervision modalities: continuous activities or specific evaluations.The former are those incorporated into normal and recurring activities that, running in real time and rooted in management, generate dynamic responses to supervening circumstances. Regarding specific evaluations, the following considerations apply: a) Their scope and frequency are determined by the nature and importance of the changes and risks they entail, the competence and experience of those who apply the controls, and the results of supervision continued. b) They are executed by those responsible for the management areas (self-evaluation), the internal audit (included in the planning or specially requested by management), and the external auditors. c) They constitute in themselves a whole process within which, although the approaches and techniques vary,Appropriate discipline and unavoidable principles prevail. The task of the evaluator is to find out the real operation of the system: that the controls exist and are formalized, that they are applied daily as a routine incorporated into the habits, and that they are suitable for the purposes pursued. d) They respond to a certain methodology, with techniques and tools to measure effectiveness directly or through comparison with other proven good control systems. e) The level of documentation of the controls varies according to the size and complexity of the entity. There are informal controls that, although not documented, are applied correctly and are effective, although an adequate level of documentation usually increases the efficiency of the evaluation,and it is more useful by promoting understanding of the system by employees. The nature and level of documentation require greater rigor when it is necessary to demonstrate the strength of the system to third parties. f) An action plan must be drawn up that includes: The scope of the evaluation; Existing ongoing monitoring activities; The task of internal and external auditors.
• Areas or issues of higher risk; Evaluation program; Evaluators, methodology and control tools; Presentation of conclusions and supporting documentation; Follow-up so that the pertinent corrections are adopted. The deficiencies or weaknesses of the internal control system detected through the different supervision procedures must be reported so that the corresponding adjustment measures are adopted. Depending on the impact of the deficiencies, the recipients of the information may be both the people responsible for the function or activity involved and the higher authorities.
Interpreting Cepeda (1996), internal control is understood as the process that the administration executes in order to evaluate specific operations with reasonable security in three main categories: Operational effectiveness and efficiency, reliability of financial information and compliance with policies, laws and standards. Internal control has five components that can be implemented in all companies according to administrative, operational and size characteristics; The components are: a control environment, a risk assessment, control activities (policies and procedures), information and communication, and finally monitoring or supervision.The implementation of internal control implies that each of its components are applied to each essential category of the company, becoming a permanently integrated and dynamic process, as a preliminary step, each entity must establish the objectives, policies and strategies related to each other in order to guarantee organizational development and compliance with corporate goals; Although the internal control system must be intrinsic to the entity's management and seeks to make it more flexible and competitive in the market, certain inherent limitations occur that prevent the system as such from being 100% reliable and where a small percentage of uncertainty,For this reason, an adequate study of internal and external risks is necessary in order for the control to provide reasonable security for the category to which it was designed, these risks can be attributed to human failures such as making wrong decisions, simple mistakes or conspiracies of several people, that is why it is very important to hire personnel with great professional capacity, integrity and ethical values as well as the correct assignment of well-defined responsibilities where they interrelate with each other so that they do not break the chain of control by strengthening its application environment, each person is a link that guarantees to a certain extent the efficiency and effectiveness of the chain,It should be noted that the main responsibility for the application of internal control in the organization must always be at the head of the administration or senior management in order for there to be a real commitment at all levels of the company, being the function of the internal audit department. or whoever takes his place, the appropriate evaluation or independent supervision of the system in order to guarantee updating, efficiency and existence over time, these evaluations can be continuous or punctual without having a predetermined or fixed frequency, it is also convenient to maintain correct documentation in order to analyze the scope of the evaluation, authorization levels, performance indicators and impacts of the deficiencies found,These analyzes must detect at an opportune moment how internal or external changes in the business context may affect the development or application of policies based on the achievement of the objectives for their correct evaluation. The understanding of internal control can thus help any company to obtain significant achievements in its performance with efficiency, effectiveness and economy, indispensable indicators for analysis, decision making and achievement of goals.Indispensable indicators for analysis, decision-making and achievement of goals.Indispensable indicators for analysis, decision-making and achievement of goals.
Analyzing Andrade (1990), control is the punctual and continuous process that aims to check if the programming and management has been carried out in accordance with what was planned and achieved the programmed objectives. Control is punctual, when it is eventually applied to certain areas, functions, activities or people. Control is continuous when applied permanently. Includes prior, concurrent and subsequent control. The control is effective when it does not hinder the administrative and operational functions and also when the suggestions and recommendations of the responsible bodies are taken into account and when the necessary corrective measures are applied to optimize business management. holds the following theory: Effective control consists of evaluating a set of financial, economic and social propositions,in order to determine if the goals, objectives, policies, strategies, budgets, programs and investment projects emanating from the management are being fulfilled according to plan. Effective control is the verification process aimed at determining whether or not the plans are being followed, whether or not progress is being made towards the achievement of the proposed objectives and the action process, if necessary, to correct any deviation. Effectively internal control is the organization plan and the set of methods and procedures that serve to help the members of the government of the companies in the best performance of their functions.Investment programs and projects emanating from the management are being carried out according to plan. Effective control is the verification process aimed at determining whether or not the plans are being followed, whether or not progress is being made towards the achievement of the proposed objectives and the action process, if necessary, to correct any deviation. Effectively internal control is the organization plan and the set of methods and procedures that serve to help the members of the government of the companies in the best performance of their functions.Investment programs and projects emanating from the management are being carried out according to plan. Effective control is the verification process aimed at determining whether or not the plans are being followed, whether or not progress is being made towards the achievement of the proposed objectives and the action process, if necessary, to correct any deviation. Effectively internal control is the organization plan and the set of methods and procedures that serve to help the members of the government of the companies in the best performance of their functions.to correct any deviations. Effectively internal control is the organization plan and the set of methods and procedures that serve to help the members of the government of the companies in the best performance of their functions.to correct any deviations. Effectively internal control is the organization plan and the set of methods and procedures that serve to help the members of the government of the companies in the best performance of their functions.
According to COSO (1997), internal control systems function at different levels of effectiveness. In the same way, a given system can work differently at different times. According to the COSO report, when a control system meets the standard then it can be considered an “effective” system. Internal control can be considered effective if: i) the entity's operational objectives are being achieved; ii) They have adequate information to the point of achieving the entity's operational objectives; iii) If the financial, economic and patrimonial information of the entity is prepared reliably; and, iv) If the applicable laws and regulations are complied with. While control is a process, its effectiveness is a state or condition of the process at a given moment,the same that by exceeding the established standards facilitates the financial management of the company. The determination of whether a control system is effective or not and its influence on good corporate governance, constitutes a subjective stance that results from the analysis of whether the five components are present and functioning effectively: control environment, risk assessment, control activities, information and communication and supervision. Their effective operation provides a reasonable degree of assurance that one or more of the categories of stated objectives will be met. Therefore, these components are also criteria for determining whether internal control is effective.The determination of whether a control system is effective or not and its influence on good corporate governance, constitutes a subjective stance that results from the analysis of whether the five components are present and functioning effectively: control environment, risk assessment, control activities, information and communication and supervision. Their effective operation provides a reasonable degree of assurance that one or more of the categories of stated objectives will be met. Therefore, these components are also criteria for determining whether internal control is effective.The determination of whether a control system is effective or not and its influence on good corporate governance, constitutes a subjective stance that results from the analysis of whether the five components are present and functioning effectively: control environment, risk assessment, control activities, information and communication and supervision. Their effective operation provides a reasonable degree of assurance that one or more of the categories of stated objectives will be met. Therefore, these components are also criteria for determining whether internal control is effective.information and communication and supervision. Their effective operation provides a reasonable degree of assurance that one or more of the categories of stated objectives will be met. Therefore, these components are also criteria for determining whether internal control is effective.information and communication and supervision. Their effective operation provides a reasonable degree of assurance that one or more of the categories of stated objectives will be met. Therefore, these components are also criteria for determining whether internal control is effective.
According to Rodríguez (1997), the importance of having a good internal control system in companies has increased in recent years, due to the practicality of measuring efficiency and productivity at the time of implementation; especially if it focuses on the basic activities that they carry out, since they depend on it to stay in the market. It is good to highlight that the company that applies internal controls in its operations will lead to know the real situation of the same, that is why, the importance of having a planning that is capable of verifying that the controls are fulfilled to give you a better vision on its management. Consequently, internal control includes the organization plan in all the coordinated procedures in a coherent way with the business needs,to protect and safeguard its assets, verify its accuracy and reliability of accounting data, as well as bring efficiency, productivity and custody in operations to stimulate adherence to the requirements ordered by management. From the above, it follows that all the departments that make up a company are important, but there are dependencies that will always be in constant changes, in order to refine their functionality within the organization. This being the case, it is clear that such changes can be achieved by implementing and adapting internal controls, which are capable of safeguarding and preserving the assets of a department or company. Internal control is the basis on which the reliability of the company's systems rests,the degree of strength will determine whether there is reasonable assurance of the operations reflected in the financial statements. A significant weakness in internal control, or an unreliable internal control system, represents a negative aspect within the accounting system. In the perspective that we adopt here, we can affirm that a department that does not apply adequate internal controls, may run the risk of having deviations in its operations, and of course the decisions taken will not be the most appropriate for its management and could even lead to the same to an operational crisis, therefore, a series of consequences must be assumed that harm the results of its activities. After reviewing and analyzing some concepts regarding control,It can be said that these controls allow us to define the systematic way in which companies have seen the need to implement administrative controls in each and every one of their daily operations. These controls must be established in order to reduce the risk of losses and, in their defects, foresee them. Whatever the application of the control that you want to implement for the organizational improvement of the companies, there is the possibility of unexpected situations arising. For this it is necessary to apply a preventive control, being these the ones in charge of executing the controls before the start of a process or administrative management. Additionally, there are detection controls which are executed during or after a process,The effectiveness of this type of control will depend mainly on the time interval between the execution of the process and the execution of the control. To evaluate the efficiency of any series of control procedures, it is necessary to define the objectives to be met. Together with this, Poch (1992) expresses "the applied control of management has as its goal the improvement of the results linked to the objectives." This deduces the importance of controls and in this sense, (Leonard, 1990), ensures "the controls are actually a verification task to be sure that everything is in order." It is good to highlight that if the controls are applied in an orderly and organized way, then there will be a positive interrelation between them, which would come to constitute an extremely effective control system.It should be noted that the control system tends to give security to the functions that comply with the planned expectations. It also points out the flaws that may exist in order to take measures and thus their repetition. Once the system is operating, forecasting is required on a test basis to see if the intended controls are operating as planned. For this reason, internal control cannot function parallel to the system, since these are closely related, that is, they function as a whole, to achieve the objective established by the organization.a forecast is required on a test basis to see if the intended controls are operating as planned. For this reason, internal control cannot function parallel to the system, since these are closely related, that is, they function as a whole, to achieve the objective established by the organization.a forecast is required on a test basis to see if the intended controls are operating as planned. For this reason, internal control cannot function parallel to the system, since these are closely related, that is, they function as a whole, to achieve the objective established by the organization.
Interpreting Cepeda (1996), internal control is a whole system of financial controls used by companies, and is also established by the direction or management so that businesses can carry out their administrative processes in a sequential and orderly manner, in order to protect your assets, safeguard them and ensure as far as possible, the accuracy and veracity of your accounting records; in turn serving as a frame of reference or pattern of behavior so that operations and activities in the different departments of the organization flow more easily. Taking into account that internal control will serve as a basis or instrument for administrative and financial control, and that it also covers the organization plan,of procedures and annotations directed with the sole purpose of safeguarding assets and accounting reliability. Internal control is: «The organization plan, of all the methods and coordinated measures adopted to the business, to protect and safeguard its assets, verify the accuracy and reliability of the accounting data and its operations, promote efficiency and productivity in the operations and encourage adherence to the practices ordered for each company.promote efficiency and productivity in operations and encourage adherence to orderly practices for each company.promote efficiency and productivity in operations and encourage adherence to orderly practices for each company.
According to Cepeda (1996), once the meaning of internal control has been established and made clear, from a financial point of view it is: «A function of management that aims to safeguard and preserve the assets of the company, avoid undue disbursements of funds and offer the assurance that obligations will not be incurred without authorization. Likewise, the concept of internal control issued by (Redondo, 1993) is: «a study and an adequate evaluation of the existing internal control must be carried out, as a basis for determining the extent of the tests to which the audit procedures will be limited. ». Taking into account the different concepts of internal control, they can be divided into two large groups: Administrative and Accounting. As for the administrative, it is the organizational plan,and all the methods that facilitate the planning and control of the company (plans and budgets). With regard to the accounting officer, it can be said that it includes methods and procedures related to the authorization of transactions, such is the case of financial and accounting records. Within this perspective (Catácora, 1996), she points out that: «an internal control system is established under the premise of the cost / benefit concept. The main postulate when establishing internal control designs control guidelines whose benefit exceeds the cost to implement them ». It is well-known to state that the internal control's mission is to help in the achievement of the general objectives set by the company, and this in turn to the specific goals set that will undoubtedly improve the management of the organization,in order to optimize administrative management. However, on this point, it is important to point out that, for an internal control to perform its task, it must be: timely, clear, simple, agile, flexible, adaptable, effective, objective and realistic. All this taking into account that the classification of the same can be preventive or detection so that it is original. Internal accounting control represents the support on which the reliability of an accounting system rests. An internal control system is important because it is not limited only to the reliability in the presentation of the figures that are reflected in the financial statements, but also evaluates the level of operational efficiency in accounting and administrative processes. Internal control in an entity is aimed at preventing or detecting errors and irregularities,the differences between these two is the intentionality of the fact; the term error refers to unintentional omissions, and the term irregular refers to intentional errors. The truth is that internal controls must provide reasonable confidence that the financial statements have been prepared under a control scheme that reduces the probability of having substantial errors in them. With respect to irregularities, the internal control system must be prepared to discover or avoid any irregularity related to falsification, fraud or collusion, and although the amounts may not be significant or relevant with respect to the financial statements, it is important that These are discovered in a timely manner, because they have implications for the proper conduct of the business.
According to Cepeda (1996), the purpose of internal control is: «To promote the operation, to use said control in the way of driving towards the effective and efficient organization». This can be interpreted as the fulfillment of the company's objectives, which can be disturbed by errors and omissions, appearing in each of the company's daily activities, being affected by the fulfillment of the objectives established by management. The focus of this concept is to protect the assets against the situation that is considered in danger of loss, that is, if this situation often occurs, try to eliminate or reduce them as much as possible,Its idea is to try to promote efficiency in the management of operations that the performance carried out by the organization's established policies and finally to ensure that the established internal control results, keep management informed of operational and financial management and that This information is reliable and arrives at the most opportune moment, in order to allow management to make appropriate decisions to the real situation that the company is going through. The deficiencies or weaknesses of the internal control system detected through the different supervision procedures must be reported so that the corresponding adjustment measures are adopted. According to the impact of the deficiencies,The recipients of the information can be both the persons responsible for the function or activity involved and the higher authorities. The highest authority of the body must seek to elicit, disseminate, internalize and monitor the observance of accepted ethical values, which constitute a solid moral foundation for its management and operation. Such values should frame the conduct of officials and employees, guiding their integrity and personal commitment. In conclusion, we can say that the importance that internal control is acquiring in recent times, due to numerous problems caused by its inefficiency, has made it necessary for the members of the boards of directors to assume effectively,responsibilities that until now had been left in the hands of the companies' own organizations. That is why it is necessary for the administration to be clear about what internal control consists of so that it can act at the time of its implementation.
2.4.2. Financial management theories
Interpreting Gitman (1986), financial management comprises the concretion of financial policies, through the application of financial strategies, tactics, processes, procedures, techniques and practices for the effective management of financial resources. A financial policy is not a legal document. It is an agreement based on the principles or guidelines of a key activity area of an organization. A policy expresses how the organization is doing about its work and how it runs it. Good policies express a fair and sensible way of dealing with issues. Whenever possible, no organization should change its policies often. The intention is to guide the work of an organization for a reasonable time.Once the policy becomes organizational practice and has been approved by the Board or by the institutional governance structure, it is uniting the entire organization.
For the El Pacífico Research Institute (2004), financial management is to administer and provide financial services for compliance with institutional management, provide financial information for decision-making, monitor and control the collection of self-management income. The management includes planning, organization, direction and control. Planning is applied to clarify, expand and determine the objectives and courses of action to be taken; for forecasting; establish conditions and assumptions; select and indicate the areas for achieving the objectives; establish a plan of achievement; establish achievement policies, procedures, standards and methods; anticipate possible future problems; modify plans in light of control results.The organization is applied to distribute the work among the group and to establish and recognize the necessary relationships and authority; subdivide work into operational tasks; arrange group operational tasks in operational positions; gather operational positions between related and administrable units; define the requirements of the job; select and place the human element in a suitable position; delegate due authority to each member of management; provide facilities and other resources to staff; review the organization in light of the control results. The execution is carried out with the practical, active and dynamic participation of all those involved in the decision or the managerial act; lead and challenge others to do the best they can;guides subordinates to comply with operating rules; highlight creativity to discover new or better ways to manage and perform work; praise and repress with justice; rewarding work well done with recognition and payment; review performance in light of control results. The control of activities, this phase is applied to compare the results with the plans in general; evaluate results against business planning and execution standards; devise effective means for measuring operations; make the measuring elements known; transfer detailed data to show comparisons and variations; suggest corrective actions, if necessary; inform the responsible members of the interpretations;adjust the plan in light of the control results. In managerial practice, these stages of the process are intertwined and interrelated; the execution of a function does not stop entirely before the next one starts. The sequence must be tailored to the specific objective or the particular project. Typically a manager is committed to many goals and can meet each one at different stages of the process.
Rodríguez (1997) agrees with Weston (1990), when he indicates that financial management includes the formulation of internal norms and policies for the decentralized administration of financial resources; preparation, in coordination with the Planning Management Process, of the institutional budget proforma; the execution of the institutional budget; provide financial services; monitor and control the collection of self-management income; determine requirements and their scope for contracting outsourced services, verify compliance with outsourced contracts, and receive products made through this modality, within the scope of its competence.
Interpreting Ross (2000) and Flores (2004-b), financial management has to do with obtaining resources, but also with their good management. The key is how tasks are defined and distributed, how administrative links between units are defined, and what practices are established. Means must be created to monitor the strengths and weaknesses of the structures and processes. At the same time, it is necessary to take into account the cultural and historical limitations that influence national administrations.
For Van Horne (1995), financial management cannot be understood separately from administrative management and even less from economic management. This because the financial is practically the support that validates the logic in the business or business of the companies in their respective enclaves. Let us think that in order to achieve social objectives it will be necessary for them to guarantee financial stability. In the same way, decision-making concerning merely financial management in one way or another, directly or indirectly, in the short or long term, influences the general situations of these companies. Financial management is a process that involves the income and expenses attributable to the rational management of money, and consequently the (financial) profitability generated by it.This allows us to define the basic objective of financial management from two elements. That of generating resources or income (income generation) including those contributed by associates. And secondly, the efficiency and effectiveness (efforts and demands) in the control of financial resources to obtain acceptable and satisfactory levels of management. The first element includes aspects of the growth of companies that was elucidated after the financial crisis of the early 80s, and in a second stage with openness to unrelated third parties in the 90s. The discussions around this topic placed some boards of directors in controversy in front of the general managers of several of the organizations analyzed.This in the sense of what was the most appropriate way and in which markets should be captured and placed financial resources. With the second element, no discussions were raised regarding the efforts and demands in money management. This is indisputable and reinforced in this context by good administration management. There were conflicting views on the management of profitability levels and their impact on business purposes (correcting the imbalance in market power). The interest rates for money placements in associated entities and third parties versus the maximization of the profit in their placement; the relationship of the cost of credit versus the fulfillment of the business purpose.With the second element, no discussions were raised regarding the efforts and demands in money management. This is indisputable and reinforced in this context by good administration management. There were conflicting views on the management of profitability levels and their impact on business purposes (correcting the imbalance in market power). The interest rates for money placements in associated entities and third parties versus the maximization of the profit in their placement; the relationship of the cost of credit versus the fulfillment of the business purpose.With the second element, no discussions were raised regarding the efforts and demands in money management. This is indisputable and reinforced in this context by good administration management. There were conflicting views on the management of profitability levels and their impact on business purposes (correcting the imbalance in market power). The interest rates for money placements in associated entities and third parties versus the maximization of the profit in their placement; the relationship of the cost of credit versus the fulfillment of the business purpose.There were conflicting views on the management of profitability levels and their impact on business purposes (correcting the imbalance in market power). The interest rates for money placements in associated entities and third parties versus the maximization of the profit in their placement; the relationship of the cost of credit versus the fulfillment of the business purpose.There were conflicting views on the management of profitability levels and their impact on business purposes (correcting the imbalance in market power). The interest rates for money placements in associated entities and third parties versus the maximization of the profit in their placement; the relationship of the cost of credit versus the fulfillment of the business purpose.
Micro and small businesses (MYPES):
Law 28015, aims to promote competitiveness, formalization and development of micro and small businesses, to increase sustainable employment, productivity and profitability, its contribution to the Gross Domestic Product, the expansion of the domestic market and exports, and its contribution to tax collection.
Interpreting Abad (1989), Bahamonde (2000) and Rodríguez (1997), small and medium-sized companies are economic units constituted by a natural or legal person, under any form of organization or business management contemplated in current legislation, which has as an object to develop activities of extraction, transformation, production, commercialization of goods or provision of services. These companies can achieve efficiency and effectiveness if they have adequate financial direction and management for their sources of financing and investments.
Analyzing Flores (2004-b), small and medium-sized companies can be defined as entities that, operating in an organized manner, use their knowledge and resources to develop products or provide services that they supply to third parties, in most cases for profit or profit. These companies must have the following concurrent characteristics: The total number of workers: In the case of a micro-company, it ranges from one to ten workers; the small company comprises from 1 to fifty workers; Annual sales levels: This level will be up to a maximum of 150 UIT; small business from 150 to 850 ITU. Sales levels will be possible to reach and exceed,if there is an adequate financial direction and management to specify the income and expenses that each micro and small company must carry out.
According to Díaz and Jungbluth (1999), it is necessary for micro and small businesses to have mechanisms for facilitating and promoting access to markets: business associations, state purchases, marketing, export promotion and information on this type of business. Business; all of which can be positively directed with proper financial management and direction.
We agree with Flores (2004-a), the State must promote the technological modernization of the business fabric of these companies and the development of the technology services market as support elements of a national system of continuous innovation. The National Council of Science and Technology –CONCYTEC- should promote, articulate and operationalize technological research and innovation among Universities and Research Centers with this type of companies.
According to the Pacific Research Institute (2004) and Flores (2004-b), the state must promote the access of micro and small companies to the financial market and the capital market, promoting the expansion, solidity and decentralization of these markets.. The State promotes the strengthening of microfinance institutions supervised by the Superintendency of Banking and Insurance. The State, through the Development Finance Corporation –COFIDE- fully promotes and articulates the financing, diversifying, decentralizing and increasing the coverage of the offer of services of the financial and capital markets in benefits of these companies.
In accordance with Law 28015, the State encourages the formalization of these companies by simplifying the various registration, supervision, registration and subsequent verification procedures. The Municipality, in a period not exceeding seven (7) business days, grants in a single act the provisional operating license, subject to the zoning and compatibility of the corresponding use. In accordance with Law 28015, the tax regime of these companies will facilitate taxation in a way that allows a greater number of taxpayers to join the formality. For these purposes, the State must promote dissemination campaigns on the tax regime and SUNAT must adopt the technical, normative, operational and administrative measures necessary to strengthen and fulfill its role as an administrative entity.collecting and auditing the taxes of this type of companies. Through Law 28015, a special labor regime is created aimed at promoting the formalization and development of micro-enterprises. Small companies must apply the common labor regime.
Interpreting Gitman (1986) and Van Horne (1980), so that micro and small companies can achieve competitiveness, formalization and development; increase sustainable employment, its productivity and profitability, its contribution to the Gross Domestic Product, the expansion of the internal market and exports, and its contribution to tax collection; they have to have effective business management, otherwise they will always be in a vicious circle that does not allow them to grow or develop.
Analyzing Pérez (2000), the first duty of the manager or administrator of a micro and small business consists of creating, and then directing, a whole series of relationships between the company and its workers, suppliers, banks and clients. The first step in creating the desired relationships is to set goals, discussing those goals you want to set with those who should achieve them. In setting these goals it should be such that the outcome can be approached in measurable terms. Any modification to them must have the appropriate means. Finally, it is necessary to test them continuously since their intention at a certain moment may not be feasible to achieve it.
According to Bellido (1989) and Castin (1996), the organization of the typical micro and small company is usually established according to the circumstances. The owner is the main engine. Most of the things that need to be done or are done by himself or under his direct control. This is true in the first years of the company's life. It is to be expected that a person committed to this task does not have to apply proven organizational principles to his business, when necessary due to its expansion, and in this sense a point is reached that exceeds the possibilities of anyone to direct it. In any case, in every small and medium-sized company, there comes a time when the owner or manager has to delegate responsibility for decisions to someone else.It is at this point that he begins to put into practice what is called organization.
Intertwining ideas, it can be indicated that the financial management of micro and small companies is carried out within the framework of planning, organization, integration of resources, direction and financial management, in this regard Koontz & O'Donnell (2004), indicates that planning includes the selection of objectives, strategies, policies, programs and procedures. Planning is therefore decision-making, because it includes choosing one among several alternatives. The organization includes the establishment of an organizational and functional structure, through the determination of the activities required to achieve the goals of the company and of each of its parts, the grouping of these activities, the assignment of such groups of activities to a boss,the delegation of authority to carry them out and the provision of the means for horizontal and vertical coordination of information and authority relationships within the organization's structure. Sometimes all of these factors are included in the term organizational structure, other times they are called administrative authority relationships. In any case, the totality of such activities and the relationships of authority are what constitute the function of organization. Integration is the provision of personnel to the positions provided by the organizational structure.other times they are called administrative authority relationships. In any case, the totality of such activities and the relationships of authority are what constitute the function of organization. Integration is the provision of personnel to the positions provided by the organizational structure.other times they are called administrative authority relationships. In any case, the totality of such activities and the relationships of authority are what constitute the function of organization. Integration is the provision of personnel to the positions provided by the organizational structure.
Therefore, it requires the definition of the workforce that will be necessary to achieve the objectives, and includes inventorying, evaluating and selecting the suitable candidates for such positions; compensating and training or otherwise developing both candidates and people who already occupy their positions in the organization to achieve the objectives and tasks effectively. Regarding direction and leadership, an author such as Johnson Gerry and Scholes, Kevan. (1999) says that although this function seems simple, the methods of management and leadership can be extremely complex. The bosses instill in their work a clear appreciation of the institutions' traditions, objectives and policies. Workers become familiar with the structure of the organization,with the interdepartmental relationships of activities and personalities, and with their duties and authority.
Once the workers have been oriented, the boss has a continuous responsibility to clarify their assignments, to guide them towards the improvement of the execution and performance of their tasks and to motivate them to work with zeal and confidence. There is a coincidence between the opinion of Koontz & O'Donnell (2004) when they refer to control as part of the effective management process, in this regard they indicate that control is the evaluation and correction of the activities of subordinates to ensure that what is done goes according to plan. In this way, it measures performance in relation to goals and projects, shows where there are negative deviations and, by setting in motion the necessary actions to correct such deviations, contributes to ensuring compliance with the plans.Although planning must precede control, plans are not self-fulfilling. The plan guides the boss so that at the appropriate time he applies the resources that will be necessary to achieve specific goals. The activities are then measured to determine if they conform to the planned action.
Interpreting Johnson and Scholes (1999), just as financial management is relevant to remain in the market and achieve competitiveness, so is effective control applied to the rational use of resources used by small and medium-sized companies. Control is the punctual and continuous process that aims to check whether the programming and management of small and medium-sized companies, carried out by management, has been carried out in accordance with what was planned and achieved the programmed objectives. Control is punctual, when it is eventually applied to certain areas, functions, activities or people. Control is continuous when applied permanently. Includes prior, concurrent and subsequent control. Control is effective,when it does not hinder the administrative and operational functions of the management of small and medium-sized companies and also when the suggestions and recommendations of the bodies responsible for it are taken into account and when the necessary corrective measures are applied to optimize business management.
Interpreting Koontz & O´Donnell (2004) Ross (1995), financial management is related to the fulfillment of the actions, policies, goals, objectives, mission and vision of the company; as established by modern business management. Effective management is the process undertaken by one or more people to coordinate the work activities of other people in order to achieve high quality results that a person could not achieve on their own. Competitiveness comes into play in this framework, which is defined as the extent to which a company, under free market conditions, is capable of producing goods and services that pass the market test, while maintaining or expanding real income from your employees and partners. Quality is also conceived in this framework,which is the totality of the features and characteristics of a product or service that refer to its ability to satisfy expressed or implicit needs. Effective management is the set of actions that allow you to obtain the maximum performance from the activities carried out by the company. Effective management, which means that the members of a company work together with greater productivity, that they enjoy their work, that they develop their skills and abilities and that they are good representatives of the company, presents a great challenge for its managers.is to make the members of a company work together with greater productivity, that they enjoy their work, that they develop their skills and abilities and that they are good representatives of the company, it presents a great challenge for the company's managers.is to make the members of a company work together with greater productivity, that they enjoy their work, that they develop their skills and abilities and that they are good representatives of the company, it presents a great challenge for the company's managers.
2.5. Research hypothesis.
2.5.1. Main hypothesis
The integrated internal control system effectively affects the improvement of the financial management of the MYPES that function as drugstore in Lima.
1.3.2. Secondary hypotheses.
1) The components of the integrated internal control system have a favorable influence on the financial decisions of the MYPES that function as drugstore in Lima.
2) The evaluation of the integrated internal control system facilitates the continuous improvement of the MYPES that function as drugstore in Lima.
2.6. Variables and indicators
2.6.1 Independent variable
X. Integrated internal control system
Indicators:
X1. Components of the integrated internal control system
X2. Evaluation of the integrated internal control system
2.6.2 Dependent variable.
Y. Financial management of the MYPES that function as drugstore in Lima.
Indicators:
Y1. Financial decisions
Y2. Continuous improvement
2.7. Definition of terms
2.7.1. Definition of internal control terms:
Control system.
Set of elements, principles, processes, procedures and control techniques linked to each other, in order to evaluate the management and contribute to its efficiency and effectiveness.
Internal control
Process carried out by the governing bodies and the rest of the personnel, designed with the aim of providing a reasonable degree of security regarding the achievement of objectives.
Control principles
Bases, foundations of the control system. They are organizational, administrative, legal, accounting, financial, IT, etc.
Control environment
Conditions or circumstances in which the control actions of a company are developed.
Scope of control
It is the space, activity, process, function or other aspect that the internal control covers.
Internal operational control
Its purpose is operational and is exercised by operational departments rather than financial and accounting, although they use the latter as a source of information.
Internal accounting control Its
purpose is to verify the correctness and reliability of the accounting.
Internal verification
It is made up of specific procedures such as physical measures, income control and expense control, etc. The management is responsible for the implementation and maintenance of the internal verification systems that can be achieved through accounting procedures.
Control elements:
Organization
It is made up of the organic structure; the lines of authority, responsibility and coordination; the division of labor, assignment of responsibility and other aspects.
Definition of Objectives
They are the means of reference that the control uses to evaluate institutional management.
Processes and Procedures
Processes are the various stages that control comprises. Instead, the procedures are the techniques and practices that are applied to the institution, activities or functions that are evaluated.
Personnel Performance
Includes the recruitment, training, execution of activities, compensation for work and the results of their activities (efficiency or deficiency), as well as the morality and ethics that apply.
Permanent supervision.
It comprises the set of actions to observe, examine, inspect the activities of the personnel.
Control components
The COSO report (Committee of Sponsoring Organizations of the Treadway Commission) considers the following components: control environment, risk assessment, control activities, information and communication and supervision.
Control bodies
They are the agencies directly responsible for institutional control.
Control
units These are made up of the departments, sections and / or divisions that make up the control body.
Objectives of internal control
• Efficiency and effectiveness of operations.
• Reliability of financial information.
• Compliance with applicable laws and regulations.
Control standards
Plans are the bases against which controls must be established, it logically follows that the first step in the process would be to establish plans. However, since these vary in level of detail and complexity, and since administrators do not usually observe everything, special rules are established. Standards are, by definition, simple evaluation criteria. They are the points selected in a total planning program where evaluation measures are carried out, in such a way that they can guide administrators regarding how things are going without them having to observe each step in the execution of the plans.
Control process
These are the stages that control comprises. Each stage has its own methodology, its techniques, actions and procedures. It includes planning, organization, direction, coordination and integration, execution and reports.
Internal control policies
These are the measures, guidelines, and parameters that the personnel who carry out the control activities must follow.
Control strategies
It is the art of planning, organizing, directing and coordinating control activities in the medium and long term, in order to contribute to the optimization of management.
Control tactics
Art of planning, organizing, arranging, moving and using control procedures in the present and in the short term.
Control guidelines
Delineation of control activities.
Control methods
These are the processes and procedures that are followed in the control activities until positive or negative results are determined.
Control procedures
These are the techniques and practices that are applied in the control activities carried out by the control bodies.
Control
instruments They constitute control instruments, the organization charts, work schedules, worksheets, certificates, books, documents, etc.
Control tools
They are made up of the general and specific rules of the entity.
Control mechanisms
These are the ways to control; for example the evaluation of the strategic plan, the evaluation of the budget and the analysis and interpretation of the financial statements.
Control techniques These
are the practices and skills, domains or skills in the use of tools, mechanisms and instruments in institutional control activities.
Control actions
Effect of applying procedures, techniques and practices in a company. They are the procedures used in the entity's control activities.
Control risks
The identification and analysis of risks is a continuous interactive process and constitutes a fundamental component of an effective internal control system. Management must carefully examine existing risks at all levels and take appropriate action and manage them.
Control as a feedback system
The position of considering control only as the establishment of norms, evaluation measures and correction of deviations, has changed in recent times. Managers surely measure actual work, compare it against norms, and identify and analyze deviations. But then, to make the necessary corrections, they must implement and improve corrective action programs in order to achieve the desired objectives.
What can be achieved with internal control Internal
control can help an entity achieve its objectives, organization, administration, profitability and performance and prevent the loss of resources. It can help you obtain reliable financial information. It can also reinforce confidence that the entity complies with applicable laws and regulations, avoiding damaging effects on its reputation and other consequences. In short, it can help an entity get where it wants to go and avoid dangers and surprises along the way.
What can not be achieved with internal control
Expectations can be higher and unrealistic. Internal control does not guarantee the success of an entity. Even effective internal control can only "help" the achievement of objectives. It can provide information to management about the entity's progress, or lack of such progress, towards the achievement of those objectives. However, internal control cannot make an intrinsically deficient official become efficient and effective.
2.7.2. Definition of financial management terms
AGENT
Person who represents, acts and is accountable for another.
ANNUITY Predetermined
sum that a “beneficiary” is entitled to receive periodically, until his death, or for a certain number of years, as a result of an agreed plan.
FRAUD
Practice of simulation and artifice with the intention of deceiving or injuring another. It is illegal.
GUARANTEE
Promise made by one person to respond for the non-performance of another, in the payment of a debt or in the performance of an obligation.
CREDIT
Creditor - Person or entity that lends or grants credit to another person or entity and thereby acquires the right to collect interest and the repayment of the amount loaned.
Secured creditor - A person whose rights over another are protected by collateral or a mortgage or other security right.
FINANCE CHARGE
The cost of a loan.
CREDIT
It is the promise of payment in the future to be able to buy or borrow in the present.
ROTATING CREDIT
Commonly called a line of credit, it is a facility that can be used repeatedly, up to the established limit.
DEBTOR
Person who has a debt and the obligation to pay the creditor.
GUARANTEE
Person who agrees to pay if someone else does not.
CREDIT HISTORY
The continuing record of a debtor's debts and commitments and how well they have been paid or honored.
INTEREST
Charge that is charged to the borrower for using the money or capital of another person or entity. It is paid at agreed intervals and is commonly expressed as an annual percentage of unpaid principal.
MAIN
Amount of money that has been lent and on which interest is computed and they have to pay.
SURCHARGE
Amount that is frequently added to a payment contract in an installment sale, to cover selling and administrative expenses, interest, risks and sometimes other factors as well.
FINANCIAL REGULATIONS
Set of laws and regulations to protect consumers who use credit and investors, as well as to guarantee the solvency and soundness of a country's financial system.
CREDIT
CARD Plastic card issued by a creditor that allows individuals to borrow money and purchase goods or services according to a previously established credit agreement.
FIXED RATE
It is an interest rate applicable to the principal of a loan or credit agreement that is established from the beginning and does not change at any time during the term of the contract.
VARIABLE RATE
It is an interest rate applicable to the principal of a loan or contract that can be increased or decreased for the duration of the contract. Usually, the rate changes cannot exceed certain minimums or maximums agreed in the contract.
Certificate of Deposit (CD)
It is a fixed-term deposit account that is evidenced in a document issued as a receipt stating: the term, the interest rate and other conditions, including that it cannot be withdrawn before maturity agreed without penalty.
CHECKING OR CHECKING ACCOUNT
Deposit at a financial institution subject to withdrawals without notice, generally by writing checks. It is also known as a demand (or demand) deposit.
SAVINGS ACCOUNT
Deposit account in a financial institution among whose contractual conditions it is established that the institution has the power to require the depositor to give a notice up to 30 days in advance, before making a withdrawal. Custodian - Financial institution that accepts deposits from its clients.
DEBIT
CARD Plastic card issued by a financial institution that allows the cardholder, among other transactions, to withdraw funds from their accounts at ATMs and to pay for goods and services in businesses.
ACTION
Fractional ownership stake in the capital of a company, whose value can appreciate or depreciate.
BOND
Certificate of long-term debt issued by a company, the federal government, or a state or local government.
INVESTMENT PORTFOLIO (PORTFOLIO)
Set of securities that belong to a person. Depending on the investor's purposes, the portfolio can be for income, growth, aggressive growth, or speculation.
QUOTING
Pair of consistent prices of the bid (bid) and the offer (ask). The first indicates the highest price you are willing to pay for a security and the second the lowest price you are willing to sell that security at the same given moment.
DIVERSIFICATION
Distribution of investments between different types of securities, industries and localities, with the idea of reducing risk.
INVESTMENT
Placement of funds in securities to obtain income or make profits.
RISK
The probability of incurring a loss from unforeseen changes in the price or performance of an investment.
Chapter III:
Methodology
3.1 Type and level of investigation
3.1.1 Type of investigation
This research will be of the applied type, because it seeks the solution to the problem of financial management of the MYPES that function as drugstore in Lima.
3.1.2 Research level
The investigation will be of the descriptive level, because it will detail all the aspects of the integrated internal control system; It is also at the explanatory level, because it will explain how the internal control system affects the improvement of the financial management of the company.
3.2 Study method and design
3.2.1 Method
In this investigation you will use the following methods:
Descriptive. This method will describe all the aspects of the integrated internal control system and how to achieve improvement in financial management.
Inductive. To infer the information from the integrated internal control system in financial management; as well as the sample in the research population and draw the corresponding conclusions.
3.2.2 Design
Design is the plan or strategy that will be developed to obtain the information that the investigation requires. The design to be applied is Non-Experimental, Transectional or transversal, Descriptive, Correlational-causal.
Non-Experimental design is defined as research that is conducted without deliberately manipulating variables. In this design, phenomena are observed as they occur in their natural context, and then analyzed. The cross-sectional or cross-sectional research design to be applied consists of data collection. Its purpose is to describe the variables and analyze their incidence and interrelation at a given moment. The descriptive transactional design will aim to investigate the incidence and the values in which the variables of the investigation manifested. The correlative-causal Transectional research design will serve to relate two or more categories, concepts or variables at a given time. It will also be descriptions, but not categories, concepts, objects or individual variables,but of their relationships, purely correlational or causal relationships.
3.3 Population and research sample
3.3.1 Population
The population will be made up of the staff of six (06) drugstores in Lima; as well as by specialists in finance and internal control that make a total of 135.
3.3.2 Sample
To define the sample size, simple random sampling has been used and the statistical formula for populations less than 100,000 has been applied.
N It is the size of the sample that will be taken into account for the field work. It is the variable that you want to determine.
P and q represent the probability of the population being or not included in the sample. According to the doctrine, when this probability is not known by statistical studies, it is assumed that p and q have the value of 0.5 each.
Z Represents the standard deviation units that define a probability of error = 0.05 in the normal curve, which is equivalent to a 95% confidence interval in the sample estimate, therefore the value Z = 1.96
N The total of the population. In this case, 135 people considering those who have elements to answer for the research topics to be carried out.
EE Represents the standard error of the estimate, according to the doctrine, must be 0.09 or less. In this case 0.05 has been taken.
Substituting:
n = (0.5 x 0.5 x (1.96) 2 x 135) / (((0.05) 2 x 134) + (0.5 x 0.5 x (1.96) 2))
n = 100
3.4 Data collection technique and instruments
3.4.1 Techniques
Data collection techniques:
1) Surveys.- To obtain information on the integrated internal control system and financial management.
2) Documentary analysis. To analyze the standards, bibliographic information and other aspects related to the integrated internal control system and financial management.
Information analysis
techniques The following techniques will be applied:
• Documentary analysis
• Inquiry
• Tabulation of tables with quantities and percentages
• Understanding of graphs
Information
processing techniques The following data processing techniques will be applied:
• Sorting and classification
• Manual registration
• Computerized process with SPSS
3.4.2. Instruments
The instruments to be used, among others, are the following: questionnaire and document analysis guide.
The questionnaire will be used to carry out the survey.
The documentary analysis guide will be applied to organize and define the theories that were taken into account in the theoretical framework of the research.
3.4 Programming
3.5.1 Programming
3.4.2. Budget
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Thesis:
- Hernández Fernández, Maritere (2005) Thesis: "Financial decisions for the continuous improvement of companies".
- Aguabarrena García, Carlo Magno (2004) Thesis: "Competitive financial administration with effective financial decisions".
- Castillo Heredia, Gustavo (2005) Thesis: “Peru: Effective financial decisions for business development, within the framework of the social market economy”.
- Rojas Oblitas, Max Edinson (2005) Thesis: "Diversification of Financial Administration for optimal management".
- Mendoza Torres, Ana María (2005) Thesis: "Strategic financial management for the competitiveness of companies in the commerce sector".
- Ángeles Macedo, Floriana Viviana (2005) Thesis: "Financial analysis and its impact on the decisions of outsourcing companies".
- Rojas Guerrero, Ruth Odila (2005) Thesis: "Financial instruments in the optimal management of companies in the construction sector".
- Escobar Córdova, Gladys (2005) Thesis: "Financial administration in achieving the strategic plans of private educational entities".
- Zambrano Calle, Abraham José (2005) Thesis: “Financial management and the development of SMEs in the textile industrial activity of Metropolitan Lima-Period 2002-2003”.
- Begazo Villanueva, José Domingo (1996) Thesis: “The small clothing company in Villa El Salvador and its competitiveness”.
- Pedro Teodomiro Cruz Alberca (2009) Thesis: "Financial direction and management, tools for the effectiveness of micro and small companies in the commerce sector of Metropolitan Lima".
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