Metaphysics of Internal Control

Abstract

One issue that continues to plague researchers in the development of a comprehensive business ontology, concerns the specification of normative business event (sometimes referred to as tasks) models for business processes. The PCAOB’s Auditing Statement 5 indicate two types of review for business event models. First, are the models designed appropriately, and second are they operating as designed. These two types of reviews are the basis for evaluating an organization’s system of internal controls. Thus, a quality internal control system will result not only in an adequate design of the business event models, but will also ensure the proper execution of the business events. The evaluation of internal controls is a separate process then their design and operation, and requires that sufficient information is available to evaluate their design and functioning of the internal control models. Despite this relatively straightforward conceptual foundation for a system of internal controls, to date there are still only descriptions of sufficient results as opposed to necessary conditions for a quality internal control system. These sufficient results are not strictly of internal controls, but instead concern the impact of internal controls on the quality of financial statements created from the corporate information system. This results in the evaluation of internal controls as a subjective review which may not be consistent from one reviewer to the next. The purpose of this paper is to integrate representations of internal controls into the REA Ontology. This includes a set of internal control axioms which are then mapped to integers using Gӧdel numbering.

Keywords: Internal Controls, Gӧdel Numbers, Ontologies, Inferences