Internal control reports and financial reporting problems

The issue of internal control has recently been of considerable interest to the accounting profession, and has generated significant controversy. Empirical evidence relevant to the debate about internal control reporting is provided by examining the proportions of companies with 2 types of financial reporting problems which had prior internal control reports. Results indicate that smaller companies with a financial reporting problem were much less likely to have had a management report on internal control that the population of small companies in the National Automated Accounting Research Systems database.