The Role of Internal Control in the Operation of Hotels

Abstract: Purpose: The purpose of this thesis is to examine the role of internal control implementation that plays in the enterprises’ operation. We evaluate it from the Head of Finance (as Director of Finance in the enterprises) perspective and see whether adequate internal control implementation is important for the enterprises’ operation. Methodology: This thesis is based on a qualitative and deductive approach. Our empirical materials have been collected by semi structured interviews. Theoretical background: The thesis theoretical perspective describes COSO framework as a guideline of internal control implementation. It explains about the needs of internal control and how it is regulated in the enterprises. Further, the hotel industry in general is described as an introduction to the case study in hotel sector. Empirical findings: The empirical investigations were made based on semi structured interviews with the Head of Finance of five reputable hotels in Sweden and Indonesia with different business scale: international and local hotels. Besides, two interviews with external auditors from Audit Firm in Sweden and Indonesia had been made to get objective views. Analysis: This part describes and analyzes the findings on the internal control implementation, with the help of five internal control components from COSO Integrated Framework and Sarbanes-Oxley Act. The gaps between theories that are used as a base for this research and the facts are also examined in this chapter. Conclusion: The result of this study shows that with implementing internal control system based on COSO Framework helps on ensuring efficiency and effectiveness of operation. Based on the completed case studies, a well implemented internal control system is truly a tool to safeguarding assets, prevention of possible fraud and losses and a guideline for the enterprises to keep followed the good standards to produce accurate and reliable financial reports. In addition, it also increases the reliability of financial reports for the stakeholders of the enterprises.