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Enhancing Internal Control Mechanisms in Local Government Organizations: A Crucial Step towards Mitigating Corruption and Ensuring Economic Development

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  • Paraskevi Boufounou

    (Department of Economics, Faculty of Economics and Political Sciences, National and Kapodistrian University of Athens, 1 Sophocleous Str., 10559 Athens, Greece)

  • Nikolaos Eriotis

    (Department of Business Administration, Faculty of Economics and Political Sciences, National and Kapodistrian University of Athens, 1 Sophocleous Str., 10559 Athens, Greece)

  • Theodoros Kounadeas

    (Department of Business Administration, Faculty of Economics and Political Sciences, National and Kapodistrian University of Athens, 1 Sophocleous Str., 10559 Athens, Greece)

  • Panagiotis Argyropoulos

    (Department of Business Administration, Faculty of Economics and Political Sciences, National and Kapodistrian University of Athens, 1 Sophocleous Str., 10559 Athens, Greece)

  • John Poulopoulos

    (Department of Economics, Faculty of Economics and Political Sciences, National and Kapodistrian University of Athens, 1 Sophocleous Str., 10559 Athens, Greece)

Abstract

Corruption poses a significant challenge to economic development and governance worldwide, with its detrimental effects permeating various levels of society. In the context of Greece, where corruption has been a longstanding issue, the role of internal audit mechanisms within local government organizations (LGOs) emerges as paramount. This paper presents a comprehensive analysis of the internal control landscape within LGO revenue departments, focusing on factors influencing its effectiveness and proposing strategies for improvement. Drawing upon survey data and regression analyses, this study highlights the crucial role of robust internal control mechanisms in combating corruption and fostering economic development. The findings underscore the importance of competent personnel, legislative compliance, interdepartmental collaboration, and technology utilization in enhancing internal control practices. Despite existing legislation, gaps in internal control implementation persist, including understaffing, inadequate procedures, and limited access to information. This study emphasizes the transformative potential of effective internal audit measures in mitigating corruption at the local level, thereby contributing to broader economic growth and societal well-being. Recommendations for strengthening the internal control structures within LGOs include the formal establishment of internal audit functions, adherence to professional standards, and the promotion of information system utilization. By addressing the corruption and inefficiencies within LGOs, this research underscores the pivotal role of institutional effectiveness in promoting transparency, accountability, and sustainable economic progress.

Suggested Citation

  • Paraskevi Boufounou & Nikolaos Eriotis & Theodoros Kounadeas & Panagiotis Argyropoulos & John Poulopoulos, 2024. "Enhancing Internal Control Mechanisms in Local Government Organizations: A Crucial Step towards Mitigating Corruption and Ensuring Economic Development," Economies, MDPI, vol. 12(4), pages 1-21, March.
    • Handle: RePEc:gam:jecomi:v:12:y:2024:i:4:p:78-:d:1365886
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    References listed on IDEAS

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    3. Lawrence J. Abbott & Brian Daugherty & Susan Parker & Gary F. Peters, 2016. "Internal Audit Quality and Financial Reporting Quality: The Joint Importance of Independence and Competence," Journal of Accounting Research, Wiley Blackwell, vol. 54(1), pages 3-40, March.
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