The evaluation of the perceived effect of internal controls on post trade services in selected financial markets infrastructures

Abstract

Internal controls are processes designed and effected by those charged with governance, management, and other personnel to provide reasonable assurance to achieve of entities’ objectives concerning the reliability of the financial reporting, effectiveness and efficiency of operations and compliance with applicable laws and regulations. This Internal control comprises the plan of the enterprise and all of the coordinating methods and measures adopted within a business to safeguard its assets, check the accuracy and reliability of its accounting data, promote operational efficiency, and encourage adherence to prescribed managerial policies. The post trade processes are those processes performed after the execution of a trade by the trading counterparties or the announcement of a corporate action event by an issuer and that these processes play a significant role in the financial sector. AFME (2015) further added that post trade services are an indispensable part of the end-to-end transaction and value chain – enabling as they do the discharge of obligations entered into at trading level and the processing of corporate actions initiated by issuers for the benefit of investors. This study aimed to evaluate the perceived effect of the internal controls systems on post trade services in selected financial markets infrastructures. The results of the study play a significant role in assisting managers and businesses as a whole to achieve its goals; hence the need for this study as it has never been performed for the financial markets’ infrastructure within a South African context. The data is reliable (α=.921), consistent, and not skewed. The results show that the respondents are strongly in agreement that an effective control system exists, the risk assessment is conducted properly, and that a proper control environment exists. Regarding the internal communication and monitoring activities, the respondents marginally agree that these processes are satisfactory. The study then concludes that the latter two processes be improved via assessing and training. The other processes on which the respondents agree, are to be maintained. The study also makes recommendations based on the findings of the study, and the limitations are acknowledged.