DENOMINATIONAL FINANCIAL POLICY COMPLIANCE AND INTERNAL CONTROL MANAGEMENT EFFECTIVE PRACTICES AMONG ADVENTIST SCHOOLS IN THAILAND: RECOMMENDATIONS AND SUGGESTIONS By CATHERINE CHULKASATE An Independent Study Project Submitted in Partial Fulfillment of the Requirements For the Degree of Master of Business Administration (Accounting Emphasis) Faculty of Business Administration Asia-Pacific International University May 2022
i Title of Study Denominational Financial Policy Compliance and Internal Control Management Effective Practices among Adventist Schools in Thailand: Recommendations and Suggestions By Catherine Chulkasate APPROVAL BY ADVISOR: ---------------------------------------- Dr. Wayne Hamra May 9, 2022 Date Approved
ii DEDICATION To my dear parents, whose loving prayers surrounded me until I become what I am today. To my dear brother, who extended generous understanding and support through the process. To my dearest children, who are my inspiration. To my dear family and special friends, who are my ever ready life support. And, to my very special friend, my best cheerleader. I am so blessed!
iii Research Title: Denominational Financial Policy Compliance and Internal Control Management Effective Practices among Adventist Schools in Thailand: Recommendations and Suggestions Author: Catherine Chulkasate Research Advisor: Dr. Wayne Hamra Program: MBA Academic Year: 2021-2022 ABSTRACT This research study explored practical recommendations and suggestions for the denominational financial policy compliance issues and internal control management concerns identified in Adventist schools in Thailand. This study intended to extend the study by Hamra and Samorn (2020) about GCAS audit reports of four Adventist schools in Thailand, which identified ongoing policy noncompliance problems and internal control weaknesses. There were two groups of interview participants in this study. The first group was the internal stakeholders, including school principals, business managers, and finance office staff consisting of 21 participants. The second group was external stakeholders, including school board members, TAM leaders, and GCAS auditors consisting of 11 participants. An analysis of the interviews with external stakeholders regarding policy compliance deficiencies and interviews with internal stakeholders of the internal control weaknesses for four Adventist school in Thailand found that most recurring problems concerned governance, management, and employee wages and benefits issues. However, with support and oversight
iv from the school board and management team, each school showed better understanding and improvements in policy compliance. Most policy violations could be resolved so that the schools came into compliance with denominational regulations if follow-up responses to these reports were faithfully made by their Audit Committees, school officers, and School Board members. However, the internal control weaknesses in the four Adventist school in Thailand seemed more about misunderstanding the importance of corrections for the benefit of the school in spite of limited human and financial resources, and in some cases, language barriers between English and Thai. These internal control weaknesses are not policy violations. But if these systems are strengthened with periodic checks, they will serve as fences to prevent and reduce the temptation for fraud, and help to ensure that innocent mistakes may be quickly identified and corrected. Furthermore, strengthening these internal control issues will avoid putting the organization at risk and assist the officers in making timely decisions. Even if fraud cannot be completely eliminated, the knowledge that internal controls are in place can significantly decrease fraud risk. The conceptual framework demonstrated the importance of strong internal control systems in schools to support and provide an effective guide to comply with denominational policies. This study shows how the school boards and the school management can work together, which resulted in improvements in the 2021 GCAS audit reports for Schools B and D. There is a need for continued support to develop an understanding of the importance of compliance with denominational policies and strengthening internal control management. Keywords: Policy Compliance, Internal Control, Audit Committee, Financial Statement Review Committee, School Board, Conflict of Interest.
v ACKNOWLEDGEMENTS First, I would like to thank my Good and Kind God, my source of inspiration, motivation, strength, courage, wisdom, and knowledge to complete this independent study. I wish to express my appreciation to Ekamai International School for the opportunity to take the MBA Program and for kindly allowing me to work and study. I also wish to express my sincere appreciation my independent study advisor, Dr. Wayne Hamra for inspiration, guidance, and patience from day one. I want to thank Thailand Adventist Mission and the four Adventist schools for their generous help and support extended. I also would like to express my gratitude to all the interview participants for sharing their insights for this study. And lastly, I sincerely thank my dear parents, Somchote Chulkasate and Wanphen Chulkasate, who always instilled in me the value of education since my childhood years. Thank you for your unconditional love, prayers, encouragement, and support to continue my education. My dear brother, Vin Chulkasate, thank you for your understanding, love, and support. My two dearest children, Chawakorn Chulkasate and Chawin Chulkasate, you are always my inspiration. My dear family and special friends, I lovingly thank you for your ever ready support throughout the process. My very special friend, thank you for your daily kind encouragement and prayers. It really means a lot to me. Thank you, thank you, thank you everyone. I would not have completed this MBA without all of you. I praise God! Catherine Chulkasate
vi TABLE OF CONTENTS ABSTRACT...................................................................................................................................iii ACKNOWLEDGEMENTS............................................................................................................ v List of Tables ................................................................................................................................. iv List of Figures................................................................................................................................. v Chapter 1 Introduction .................................................................................................................... 1 a. Background Information ......................................................................................................... 1 b. Statement of the Research Problem ........................................................................................ 6 c. Rationale and Purpose of the Research ................................................................................... 7 d. Objectives of the Research...................................................................................................... 8 e. Scope and Delimitations of the Research................................................................................ 8 f. Research Question(s) ............................................................................................................... 9 g. Benefits to be Derived from the Research ............................................................................ 10 h. Operational Definitions of Terms ......................................................................................... 11 Chapter 2 Literature Review......................................................................................................... 13 a. Introduction ........................................................................................................................... 13 The General Conference of Seventh-day Adventists ............................................................ 13 SDA Education Department .................................................................................................. 13 SDA World Divisions............................................................................................................ 15
vii Southern Asia-Pacific Division (SSD) .................................................................................. 16 Southeast Asia Union Mission (SAUM) ............................................................................... 17 Educational Institution Audits............................................................................................... 18 Audit Reports......................................................................................................................... 21 Organizational Problems with Internal Control..................................................................... 22 b. Concepts and related theories................................................................................................ 25 c. Related research works or publications................................................................................. 28 Fraud Theories....................................................................................................................... 28 d. Restatement of research objectives and questions ................................................................ 29 e. Research model or conceptual framework ............................................................................ 30 Chapter 3 Methodology ................................................................................................................ 32 Introduction ............................................................................................................................... 32 b. Research design..................................................................................................................... 34 c. Population and participants ................................................................................................... 34 Table 4. Brief Profile of Selected Seventh-day Adventist Schools in Thailand........................... 35 d. Data collection method(s) and procedures............................................................................ 37 e. Research instrument or measures, including validity and reliability .................................... 39 f. Data analysis techniques........................................................................................................ 40
viii g. Ethical considerations ........................................................................................................... 41 h. Conclusion............................................................................................................................. 41 Chapter 4 Results of Study ........................................................................................................... 42 a. Description of sampled groups or situations......................................................................... 42 b. Order of presentation in line with research objectives and data analysis.............................. 44 Policy Compliance Issues...................................................................................................... 44 Internal Control Issues........................................................................................................... 57 Chapter 5 Discussion .................................................................................................................... 79 a. Brief presentation as per objectives of study......................................................................... 79 External Stakeholders Challenges......................................................................................... 79 Internal Stakeholder Challenges............................................................................................ 82 b. Discussion of results based on proposed research model ..................................................... 84 Chapter 6 Recommendations........................................................................................................ 87 a. Summary and Conclusion of the Study................................................................................. 87 b. Limitations of the Study........................................................................................................ 88 c. Recommendations ................................................................................................................. 90 d. Directions for Future Research ............................................................................................. 97 References..................................................................................................................................... 99
ix Appendices.................................................................................................................................. 104 Appendix 1: Categories of Schools in the Seventh-day Adventist Educational System ........ 104 Appendix 2: The 17 Principles of Effective Internal Controls................................................ 105 Appendix 3: Informed Consent E-mail for Participants.......................................................... 107 Appendix 4: Cover Letter and Interview Questions................................................................ 108 Appendix 5: Table Summary for Information Collected from the Interview: ........................ 115
iv List of Tables Table 1 Denominational Working Policy Compliance Concerns………………………………...4 Table 2 Denominational Financial Policy Compliance Deficiencies in Adventist Schools……...4 Table 3 Internal Control Deficiencies in Adventist Schools ………………………………….....5 Table 4 Brief Profile of Selected Seventh-day Adventist Schools in Thailand…………………35 Table 5 External Stakeholder Participants Years of Service……………………………………42 Table 6 External Stakeholder Participant Awareness and Read through GCAS Reports………43 Table 7 Internal Stakeholder Participants Years of Service………………………………….....43 Table 8 Internal Stakeholder Participants Awareness and Action……………………………...44 Table 9 Policy Compliance Issues………………………………………………………….…...44 Table 10 Denominational Policy Noncompliance Common Issues Interviewed……………..…45 Table 11 Internal Control Deficiency…………………………………………………………....57 Table 12 Common Accounting and Administration Internal Control Weakness……………..…59
v List of Figures Figure 1: Seventh-day Adventist World Education Statistics.…………………………….......14 Figure 2: World Division Map………………………………………………………………...15 Figure 3: Southern Asia-Pacific Division (SSD) Map……………….………………………..16 Figure 4: Southeast Asia Union Mission (SAUM) Map……………………………………....17 Figure 5: Internal Control Framework for SDA Schools……………………………………...30 Figure 6: Locations of the 11 Adventist Schools in Thailand…………………………………33
1 Denominational Financial Policy Compliance and Internal Control Management Effective Practices among Adventist Schools in Thailand: Recommendations and Suggestions Chapter 1 Introduction a. Background Information The Seventh-day Adventist (SDA) Church is a Protestant Christian denomination. The Seventh-day Adventist Church observes Saturday, the seventh day of the week, as the Sabbath day. The practice of Saturday worship gave the denomination the name of the Seventh-day Adventist Church in 1863. The Seventh-day Adventist Church is one of the fastest growing and most widespread worldwide churches (Trim, 2012). As of September 30, 2020, the Seventh-day Adventist Church had more than 21,000,000 members worldwide in more than 200 countries (Seventh-day Adventist Church, 2020). The Seventh-day Adventist Church has a small presence in Thailand. Its work is overseen by the Thailand Adventist Mission (TAM) headquarters office located at 12 Soi Pridibanomyong 37, Klongtan Nua, Wattana, Bangkok. The Adventist denomination also operates two hospitals in Thailand called Bangkok Adventist Hospital and Mission Hospital Phuket, and one university called Asia-Pacific International University. (Adventist Yearbook, 2020). General Conference Auditing Service (GCAS) The church as a religious body has an important organizational responsibility to carry out its mission as a non-profit-entity through entities such as churches, schools, hospitals, and
2 charities. However, financial accountability is an important issue that led to the development an internal auditing service to meet the needs of the Seventh-day Adventist Church. Therefore, the General Conference Auditing Service (GCAS) was established to provide independent audit services to Seventh-day Adventist organizations worldwide. GCAS employs more than 200 highly-trained auditors to conduct periodic financial statement and policy compliance audits (GCAS, n.d.) for Adventist organizations. According to the General Conference Working Policy SA 0525 (GCAS, n.d.), GCAS serves as the Seventh-day Adventist Church’s preferred provider of assurance and related services. The client base includes all denominational organizations such as General Conference institutions, world divisions and their institutions, unions/union of churches and their institutions, local conferences/ missions/regions/field stations and their educational institutions at the secondary level or higher, and ADRA country offices and projects not audited by external auditors (GCAS, n.d.). Adventist denominational guidelines strongly encourage secondary schools to be audited yearly. Of the 11 Adventist schools supervised by the Thailand Adventist Mission, only four are currently audited by GCAS. Its audits provide assurance in regards to financial and non-financial information, compliance with denominational policies, internal control management, and other requirements (GCAS, n.d.). GCAS reports whether or not Adventist institutions apply Generally Accepted Accounting Principles (GAAP) and their level of compliance with denominational financial policies (GCAS, n.d.). The GCAS team that audits Adventist schools in Thailand are assigned by its regional headquarters in a higher organizational unit called the Southern Asia-Pacific Division (SSD). About 3-4 staff members audit the financial records of these four Adventist schools in Thailand.
3 The GCAS team schedules annual audit visits to each school that take about two weeks. The GCAS auditors take samples from the school’s financial records and test them to measure their degree of alignment with the institution’s policies and procedures. The GCAS audit report is presented to the school administrators, and includes the following components: 1. an opinion on the school’s financial statements 2. a policy compliance report 3. a management letter that assesses its internal control systems The administrators then use this report as a guide to adjust and improve existing policy compliance, internal control management, procedures, and decision making so that they may strengthen and improve their operations. This study is based on the denominational financial policy compliance reports and the internal control management letters issued to the audited Adventist schools in Thailand for the 2016 to 2018 school years. Each school year extends into the next calendar year, so the 2016 school year is from 2016-2017, and so on. The reason that only four out of eleven (11) Adventist schools are audited by GCAS is mainly because of the cost for the GCAS audit service, and because schools that are audited must also purchase/subscribe to the SunPlus accounting software package, which GCAS uses for its audits. According to the GCAS audit annual reports (Adventist News Network, 2020), there has been an increase of non-compliance with core policies over the past few years. The most frequent violations of church policies that are mentioned by GCAS auditors are shown in Table 1.
4 Table 1 Denominational Working Policy Compliance Concerns Source: Adventist News Network, 2020 The 2019 GCAS annual report showed a total of 2,353 worldwide clients, of which 30% were educational institutions. It mentioned that 80% of church organizations had violated at least one core policies found in the General Conference Working Policy handbook. In addition, the 2018 and 2017 GCAS annual reports showed that 79% and 83% of church organizations, respectively, were non-compliant with at least one core financial policy (GCAS, n.d.). In this study, the researcher reviewed data from the GCAS audit reports from 2016 to 2018 for 4 Adventist schools in Thailand in regards to compliance with denominational financial policies and internal control management. Hamra and Namkote (2020) showed two main category issues of policy compliance deficiencies for these schools as shown in Table 2. Table 2 Denominational Financial Policy Compliance Deficiencies in Adventist Schools No. Governance and Management Issues % of Schools 1 Audit Committee Appointments (G) 75% 2 Compensation Review Committee Appointment (G) 50% 3 Financial Statement Regular Review (G) 100% 4 Unsigned Conflicts of Interest (G) 75% 5 Inadequate Building/Equipment Insurance (M) 75% Employee Wages and Benefits Issues 6 Employee Paid Too Much/Too Little 50% 7 Excessive Tuition Assistance 75% 8 Excessive Medical Assistance 50% 9 Unorthodox Vacation Policy 50% Source: Hamra and Namkote, 2020 No. Frequency Violations Mentioned Percentage of Organization 1 Financial Statements 34% 2 Audit Committees 32% 3 Insurance Coverage 31% 4 Prevention of Conflict of Interest 31% 5 Service Records not Updated 14% 6 Operating Deficits 11%
5 And for the 2016-2018 school years, GCAS reported two main categories of internal control management deficiencies for the four Adventist schools in Thailand as shown in Table 3. Table 3 Internal Control Deficiencies (Accounting and Administrative) in Adventist Schools No. Accounting Control Issues Percentage of Schools 1 Bank Reconciliation Not Reviewed 75% 2 Departmental Income/Expense Over-reported 75% 3 Erroneous Calculation of Cash Position 75% 4 Inadequate Allowance for Doubtful Accounts 100% 5 Journal Vouchers Not Reviewed 100% 6 Reconciliation Reports Not Reviewed 100% 7 Receivable and/or Payable Misstated 100% 8 Severance Allowance Lacking, Not Reviewed 75% Administrative Control Issues 9 Authorization Problems 75% 10 Equipment General/Subsidiary Discrepancies 100% 11 Inadequate Internal Control of Cash 75% 12 Incompatible Duties/No Segregation of Duties 75% 13 More Frequent (Daily) Cash Deposits 75% 14 Miscellaneous Problems with Bank Accounts 75% 15 Physical/Recorded Inventory Values Difference 100% 16 Policies: Asset Purchase/Disposal, Capitalization 75% Source: Hamra and Namkote, 2020 According to Hamra and Namkote (2020), relatively few studies of internal control management in Adventist schools seem to have been conducted. This may be because the management letters from auditors to the school administration are considered sensitive information, and so requesting permission to use these files and study this topic is not easy.
6 b. Statement of the Research Problem The research problem is divided into two categories of issues which are the following: 1. Denominational financial policy compliance deficiencies in Adventist schools Governance and Management Issues 1) Audit Committee Appointments (G) 2) Compensation Review Committee Appointment (G) 3) Financial Statement Regular Review (G) 4) Unsigned Conflicts of Interest (G) 5) Inadequate Building/Equipment Insurance (M) Employee Wages and Benefits Issues 6) Employee Paid Too Much/Too Little 7) Excessive Tuition Assistance 8) Excessive Medical Assistance 9) Unorthodox Vacation Policy 2. Internal control deficiencies (accounting and administrative) in Adventist schools Accounting Control Issues 1) Bank Reconciliation Not Reviewed 2) Departmental Income/Expense Over-reported 3) Erroneous Calculation of Cash Position 4) Inadequate Allowance for Doubtful Accounts 5) Journal Vouchers Not Reviewed 6) Reconciliation Reports Not Reviewed 7) Receivable and/or Payable Misstated 8) Severance Allowance Lacking, Not Reviewed Administrative Control Issues 9) Authorization Problems 10) Equipment General/Subsidiary Discrepancies
7 11) Inadequate Internal Control of Cash 12) Incompatible Duties/No Segregation of Duties 13) More Frequent (Daily) Cash Deposits 14) Miscellaneous Problems with Bank Accounts 15) Physical/Recorded Inventory Values Difference 16) Policies: Asset Purchase/Disposal, Capitalization The 16 internal control deficiencies were mentioned in the GCAS audit reports of four Adventist schools in Thailand during the 2016 to 2018 school years. These consist of their recurring violations of the core denominational financial policies of governance and management issues and employee wages and benefits issues, and weak control of both accounting and administrative functions in these schools. c. Rationale and Purpose of the Research The purpose of this study is to ask stakeholders for recommendations and suggestions to resolve the ongoing financial policy compliance and internal control problems identified in these four Adventist schools’ GCAS audit reports for the years 2016 to 2018. The schools’ internal stakeholders include school principals, business managers, and finance office staff. The external stakeholders are School Board members, TAM leaders, and auditors. The study may lead to a better understanding of these problems, and uncover solutions that can increase denominational financial policy compliance and improve internal control management in these and other schools that face similar challenges.
8 d. Objectives of the Research The objectives of this research study are to explore practical solutions for the policy compliance problems and internal control management concerns identified in Adventist schools in Thailand as follows: 1. To search for practical solutions that will improve the level of consistent compliance with core denominational financial policies in Adventist schools in Thailand. 2. To explore practical ways to create a more effective internal control environment in these schools and strengthen its implementation. This study was intended to enhance the research of Hamra and Samorn (2020) about the GCAS audit reports of the four Adventist schools in Thailand, which identified ongoing policy noncompliance problems and internal control weaknesses. e. Scope and Delimitations of the Research The research study examines only four out of the eleven (11) schools in Thailand. The limitation of this study are the concerns, problems, and possible solutions for these schools may or may not be applicable for other Adventist schools in Thailand or in other surrounding countries. The four Adventist schools in Thailand that were studied face some challenges in policy compliance issues that can be improved by the school board and school management team. But some seem to need more study because the setting (location) and practices (culture and beliefs) in Thailand are not aligned with a few denominational policies mentioned in the GCAS audit reports. These policies were made in Western settings, and a centralized standard may not be entirely applicable for a specific country, location, or setting as in Thailand. It is best that higher
9 organizations and the school management are given responsibility in their areas to comply with core denominational policies. These policies may also provide guidelines that apply to unusual local country conditions with appropriate approval. However, in case policy exceptions may not be approved, it will be challenging for the schools to survive and retain their best employees. This brings up the need for flexibility in the application of policies supporting institutional work. f. Research Question(s) Based on the GCAS reports and the previous study of Hamra and Namkote (2020), two research questions will focus on looking for recommendations and suggestions for School Boards, TAM officers, school administrators, auditors, finance officers, and other stakeholders. This feedback may help to increase compliance regarding the identified issues of common ongoing concerns of denominational financial policy compliance and improve internal control management in Adventist schools in Thailand. 1. What practical solutions and suggested actions are recommended by stakeholders to increase compliance with denominational financial policies at Adventist schools in Thailand? Hamra and Namkote (2020) found that common policy compliance deficiencies reported by GCAS auditors from 2016-2018 in the four Adventist schools in Thailand were as follows: Audit Committee Appointments Financial Statement Regular Review Unsigned Conflicts of Interest Inadequate Building/Equipment Insurance The schools’ internal stakeholders include school principals, business managers, and finance office staff. The external stakeholders are School Board members, TAM leaders, and
10 auditors whose opinions will be sought to seek potential practical solutions and actions to increase compliance with denominational financial policies for Adventist schools. 2. What practical solutions and suggested actions are recommended by stakeholders to strengthen internal control management at Adventist schools in Thailand? Common internal control management weaknesses in both accounting and administrative functional areas that were mentioned in the 2016-2018 GCAS reports for the four Adventist schools in Thailand were as follows: Journal Vouchers Not Reviewed Reconciliation Reports Not Reviewed Inadequate Internal Control of Cash Physical/Recorded Inventory Values Difference g. Benefits to be Derived from the Research One potential benefit from this study is to identify practical ways to increase these school’s level of compliance with denominational financial policies. Recommendations and suggestions will be solicited from denominational leaders, school administrators, auditors, and finance office staff regarding how this may be done. Another possible benefit is that best internal control practices in schools may be identified and shared with colleagues in other Adventist schools which in turn will develop and strengthen the efficiency and effectiveness of their operations. Without claiming that the study’s results are applicable to every population, hopefully the lessons learned from this study may help with the financial management not only of these four schools, but in other schools and organizations managed by TAM. Perhaps, they could also be shared with Adventist
11 organizations that face similar problems in surrounding countries as well. The results of the study may aid other Adventist schools in understanding the importance of policy compliance and internal control procedures to prevent and deter fraud from occurring in their institutions. h. Operational Definitions of Terms Policy Compliance is to follow a rule, policy, standard, requirement, or law. Policy compliance outlines the goals that an organization wants to accomplish to ensure that employees understand and act in accordance with its policies, laws, and procedures (Garcia, 2019). An example of financial policy compliance is when a financial report is prepared accordance to the standard accounting principles. Internal Control is a mechanism, rule, or procedure applied by a firm to ensure the reliability of its financial and accounting information, or to prevent fraud. Internal control helps increase working effectiveness by improving the accuracy and timeliness of financial reports (Kenton, 2021). To the contrary, an internal control deficiency or weakness is a failure to implement or perform internal control. There are four types of internal control weaknesses: Technical internal control weakness, Operational internal control weakness, Administrative internal control weakness, and Architectural internal control weakness (Sorenson, 2021). There are three relevant committees as follows: An Audit Committee is one of the major subcommittees of a company’s board of directors that is in charge of overseeing the financial reports, monitoring accounting policies, regulatory compliance, and disclosures. The committee members must be made up of independent outside directors, including a minimum of one person who qualifies as a financial expert, in order to produce honest and accurate reports (Tuovila, 2020).
12 The main objective of the Financial Statement Review Committee is to monitor the quality of the monthly financial statements and reports that are prepared by the finance office. The purpose is to closely monitor the organization’s financial performance and to ensure that its resources are being used effectively, efficiently, and in harmony with its policies and accounting, auditing, and financial standards (MIA, 2021). The School Board is responsible for the following: maintain governance standards, manage the school administration, encourage ongoing education, review policies, evaluate policy implementation, review budget and finance, and evaluate instruction and education (Perry, 2019). The School Board members is a group of people who have been elected, which includes school administration and some parents. A Conflict of Interest may occur when an administrator or board member is in a position to influence a decision from which they or a family member might directly or indirectly receive an improper financial benefit or advantage (Felo, 2001). To help mitigate such concerns, all administrators and school board members are required to sign an annual Conflict of Interest Statement.
13 Chapter 2 Literature Review a. Introduction The General Conference of Seventh-day Adventists The Seventh-day Adventist Church world headquarters is the General Conference (GC) located in Silver Spring, Maryland, in the United States. The General Conference of Seventh-day Adventists internationally manage and coordinate with subsidiary organizational units such as divisions, union conferences, and local conferences which carry out the principles and policies of the Adventist church denomination. (Adventist Education, 2021). Under the GC, there are different departments and services that provide the worldwide needs of the denomination. The global goal of Adventists represents as an international family of Christians to help people everywhere to understand the Bible, as well as find freedom, healing, and hope in Jesus Christ (Adventist Education, 2021). SDA Education Department In 1870s is when the Adventist Church began a denominational school system. The Church is greatly involved in education and operates a worldwide educational system of schools, colleges, and universities (Seventh-day Adventist Church Education Department, 2019). The Church prioritized has established Education Departments at all levels of its administrative structures. The main responsibility of the Education Department is to make sure that students at all levels of education are educated to use their God-given abilities to develop virtuous characters that will prepare them for any life situations. In addition, the Adventist educational principle of faith and learning is to be integrated into the lives of all the students in its schools, colleges, and universities institutions worldwide. The Education Department is also
14 responsible for the supervision, coordination, promotion, and quality control of the global Seventh-day Adventist educational system (Adventist Education, 2021). The Education Department believes that great schools with well-rounded Christian education are a great way to share the love of Jesus and prepare students for lives of service. The Education Department oversees the 9,489 worldwide Adventist schools, colleges, and universities, with 111,360 teachers and 2,044,709 students in 115 countries. The Adventist school system is one of the largest Christian educational systems in the world (Adventist Education, 2021). According to the Adventist Education World Report in 2019, there are four levels of schools: Kindergarten/Pre-school (Primary Education), Secondary Education, Worker-training Education, and Tertiary Education, as shown in Figure 1. Figure 1. Seventh-day Adventist World Education Statistics Source: Seventh-day Adventist Church Education Department (2019)
15 SDA World Divisions Under the General Conference of Seventh-day Adventist, the Education Department works with 13 world division Education Department directors. The staff provides service to boards, administrators, and faculty of Adventist colleges and university worldwide. The staff also provide support through the world divisions to educational leaders at the union/ conferences/ mission levels and to teachers in Adventist schools to assure that the Adventist philosophy of education and principles of faith-and-learning are integrated into each educational institution system (Adventist Education, 2021). The World Division Map is as shown in Figure 2. Figure 2. World Division Map Source: Adventist Yearbook (2020)
16 Southern Asia-Pacific Division (SSD) The Southern Asia-Pacific Division (SSD) consists of 14 Asian countries including Bangladesh, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Pakistan, Philippines, Singapore, Sri Lanka, Thailand, Timor-Leste, and Vietnam. This region has a population of more than 950 million, and the Adventist Church in this division has church members of more than 1.1 million, making it the fifth largest division worldwide in terms of membership (Seventh-day Adventist Church, 2021). The Adventist church in the region operates 875 primary schools, 92 secondary schools, and 13 colleges and universities with 9,431 teachers and 143,632 students (Seventh-day Adventist Church Education Department, 2019). The Southern Asia-Pacific Division (SSD) countries consist of four union conferences, four union missions, one union, two missions as shown in Figure 3. The SSD headquarters office is located in Silang, Cavite, Philippines. Figure 3. Southern Asia-Pacific Division (SSD) Map Source: Adventist Yearbook (2020)
17 Southeast Asia Union Mission (SAUM) Under the SSD, the SAUM consists of seven countries as shown in Figure 4. The countries include Brunei Darussalam, Cambodia, Lao People’s Democratic Republic, Malaysia, Singapore, Thailand, and Vietnam. There are eight fields under SAUM as follows: Cambodia Adventist Mission, Laos Attached Region, Peninsula Adventist Mission, Sabah Adventist Mission, Sarawak Adventist Mission, Singapore Adventist Conference, Thailand Adventist Mission, and Vietnam Adventist Mission (Adventist Yearbook, 2020). Figure 4. Southeast Asia Union Mission (SAUM) Map Source: Adventist Yearbook (2020)
18 The Adventist church in this region operates 56 schools, including one university, with 989 teachers and 11,729 students (Seventh-day Adventist Church Education Department, 2019). According to the Adventist Yearbook 2020, the region has a population of more than 224 million, and the Adventist Church has 97,585 church members in 391 churches. The main office of the SAUM is located in Muak Lek, Saraburi, Thailand (Seventh-day Adventist Church Southeast Asia Union Mission, 2021). Educational Institution Audits An audit in an education institution includes checking its income and expense accounts, along with its assets and liabilities. This is done to see if the income statements and statements of financial position present a true and fair report of its financial operating results. Normally, the steps and procedures for auditing are the same for audits of educational institutions (Accounting Management, 2012). An audit in an education institution also involves checking its financial records and statements for accuracy and completeness. However, audits do not completely guarantee errorfree records (Meaning and Definitions of Audit, n.d.). There are three types of financial audits: a. audits of financial statements b. compliance audits c. operational audits. In the first category, the auditors determine if the financial statements are prepared according to GAAP. In a compliance audit, auditors confirm if the organization activities conform to rules, regulations, policies, or procedures. And lastly, operational audits evaluate the
19 effectiveness and efficiency of a specific department of an organization (Whittington & Pany, 2004). The General Conference Auditing Service organizes audits of Adventist schools that encompass features of all three types of audits. It is an organizationally independent audit function that complies with generally accepted auditing standards. GCAS auditors review a school’s Income Statement, Balance Sheet, and Cash Flow Statement, reporting on whether these financial statements have been prepared in accordance with Generally Accepted Accounting Principles. It carries out compliance tests of denominational policies, trust operations, and other additional requirements to see if church entities are operating in accordance with denominational policies. It also examines financial management control procedures and practices to assess their effectiveness and efficiency. GCAS practices a financial audit procedure that is centered on professional principles and includes six stages that assure quality delivery of every assignment (GCAS, n.d.). Through a Christian Service commitment, the six stages of audit procedure are an expression of the values of Integrity, Respect, Professionalism, and Efficiency. And as faithful stewards of God’s resources, they endeavor to provide clients with the highest quality service at the lowest possible cost. The financial audit process is to Agree, Obtain, Assess, Perform, Conclude, and lastly to Report. An audit team officially visits the institution either in person or online to begin their procedures through informal discussions and observation. The audit evaluates the institution’s financial statements and also ensures that the institution has a clear policy and measures for monitoring internal quality. The auditor checks the institution's bank accounts, transactions, passbooks, receivables, and payables to see if they are periodically updated, reconciled, and
20 reported to the administration for further decision making. For example, if there are inactive student accounts not moving for a few years, they will recommend that the school administration update and write off these accounts so that twill be updated. They will check to see if the list student tuition fees are periodically updated and reconciled. The auditor checks the institution’s income and expenditures to determine if its financial statements are accurate and fairly present its true financial position (Audit of Educational Institutions, 2021). There are procedures and processes for recording and reviewing responsibilities for an auditor of an educational institution. The auditors will need a copy of minutes’ record books to review and confirm that the decision of the management has been met. The auditors also will review the copy of the approved budget and financial statements to check the difference in the records in the income and expense accounts. Then the auditor will evaluate the strength and weaknesses of the internal control management (Accounting Management, 2012). Next the auditor will check the receipt records of tuition fees from students. He will also check to see if the cash received has been deposited regularly or not. The auditors will check and verify additional fees charged to the students such as examination fees, laboratory fees, extra subject fees, general fees, discounts, fines, and etc. Any tuition fees received in advance should be accurately adjusted, adjustments or allowances should be properly authorized by the administration. The bad debts accounts should be written off after receiving management approval. Any grant, assistance, donation, or funds received for a specific purpose must be applied accordingly (Accounting Management, 2012). Then the auditor will match the sum of salaries paid with the salary records, and if there is any increase given to an employee, it needs to have been approved by the administration. The
21 employees’ provident fund will be tested and should be invested according to policy (Accounting Management, 2012). All asset and liability accounts should be correctly presented in the balance sheet. The internal control of inventory and purchases of furniture, equipment, stationery, library items, sports equipment, books, vehicles, events, etc. should be carefully recorded and managed (Accounting Management, 2012). After the audit process has been completed, an audit report will be prepared for the management. An audit report is an independent professional presentation of the institution’s financial status and assessment of its financial position. The yearly GCAS audit results are provided to the school audit subcommittee and the school board after the closing of the school year-end audit. The audit subcommittee will receive an audit communication annual letter of the financial statements, which includes the comments about the internal control deficiencies. Audit Reports There are four types of audit reports: an unqualified opinion, qualified opinion, adverse opinion, and disclaimer of opinion. An unqualified opinion or clean opinion issued is an audit report that the financial records provided are free of any misrepresentations and have been maintained in accordance with Generally Accepted Accounting Principles (GAAP). This is the best type of audit report (Henderson, 2019). In addition, an unqualified auditor's opinion provides financial statement users with assurance that the financial records are both accurate and complete. The audit report allows stakeholders to have up-to-date information for decisions making based on the organization’s true financial situation (Tuovila, 2020).
22 Second, a qualified audit opinion is issued when financial records have not been maintained in accordance with GAAP, and so the financial statements do not conform to the standard accounting principles, but no specific misrepresentations were identified (Henderson, 2019). Next, an adverse audit opinion is issued when the financial records have not been maintained in accordance with GAAP, and clear misrepresentations were identified. These errors may be an indication of fraud. Therefore, financial information with significant flaws does not present an accurate representation of the institution’s financial status (Henderson, 2019). And lastly, a disclaimer of opinion is issued when an auditor cannot complete an accurate report based on the absence of appropriate financial records. This means that an opinion on the financial status cannot be determined. This is the worst type of audit report (Henderson, 2019). Organizational Problems with Internal Control In an alliance of accounting professional organizations, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) was established in 1985 to help combat corporate fraud. The COSO describes internal control as a procedure that seeks to deliver reasonable assurance for the objective accomplishment in categories as follows: a) Reliability of financial reports; b) Compliance with applicable laws and regulations; and c) Effectiveness and efficiency of operations (COSO, 2013). Therefore, it is important that the institution is compliant to the policy and regulations which assures the effectiveness of an internal control management. A successful internal control management is necessary for good decision making, cost effective, assurance for financial statements according to policy and procedures, promote operational efficiency, and to prevent
23 risk of error or fraud. Also an efficient internal control also assures that management is responsible for their decisions in the organization. In contrast, a weak internal control management permits unauthorized transactions, deficiency in policy compliance, and an increase tendency for error or fraud. Hence, it is more effective management control when policy compliance and internal control are used together in an organization (Reciprocity, 2021). According to Report on the Nations in 2020, the Association of Certified Fraud Examiners (ACFE) estimates that organizations lose 5% of total revenues to fraud annually. In addition, ACFE mentioned that work-related fraud committed by employees against the organizations that hire them is among the highest forms of financial fraud. Neither the number of employees in the business nor the segregation of employee duties seem to be important factors in reducing losses due to fraud. An internal control system is an effective way for any size of business to reduce risks from fraud and keep operational objectives on track (Association of Certified Fraud Examiners, 2020). The five components of an internal control system from The Committee Sponsoring Organizations (COSO) provides the framework which includes as follow (Reciprocity, 2021): 1. Establish a control environment, for example the management and supervisors encourage a positive attitude toward adopting internal controls. 2. Conduct risk assessments, for example identify areas risk for fraud and have regular audits for accounting record and policy compliance. 3. Implement control activities, for example to establish a system for segregations of duties, especially for bookkeeping and handling cash (the one person responsible for Bank deposits should not be the same person who handles cash flow and cash receipts)
24 4. Create effective communication and information system, for example employees have their specific job descriptions for various duties within the organization, employees receive training when there are changes in processes and polices, financial statements and other accounting records are provided on a timely basis. 5. Monitor control systems which help strengthen internal controls and determines which internal controls are working, for example perform unscheduled spot checks for inventory and bank reconciliations, conduct annual employee evaluations, schedule yearly audit, monitor customer feedback. In addition, a system of internal controls for a small business ensures accountability in all areas of the business, which can make a big difference in the business flow for success and growth (Garcia, 2019). An internal control deficiency happens when a control is designed or implemented in such a way that it is unable to prevent, detect, or correct misstatements in the financial statements in a timely schedule. An internal control deficiency can lead to fraud, misappropriation, or stealing of the school’s property. Several organizations may overlook an internal control weakness until facing a problem with employee misuse or theft of school assets. For that reason, the failure to comply with denominational policies and internal control deficiencies needs to be emphasized so that the administration may take appropriate action so that they are corrected (Hamra and Namkote, 2020).
25 b. Concepts and related theories Oseifuah and Gyekye (2013), and Jahmani et al. (2014) defined internal controls as tools established to inspire employees to accomplish desired goals. Corns (1971) stated, “Controls protect weak people from temptation, strong people from opportunity, and innocent people from suspicion” (p. viii). In addition, Sun (2016) states that weak internal controls can lead to errors in financial records, which may result in poor management business decisions. Verovska (2014) reasoned that the goal of effective internal controls is to improve financial stability, produce a competitive advantage, and increase confidence in the minds of stakeholders. Furthermore, Dimitrijevic et al. (2015) describes internal control as not a single event, but as sequences of actions that assess an organization’s results in contrast to its goals. Also, Ngwenya and Munyanyi (2015) defined internal controls as the accumulation of processes and policies that are formed and applied to improve effectiveness, encourage accuracy in accounting procedures, and maintain rules and regulations. Similarly, International Standards of Auditing (2017) uphold that an internal control system refers to all policies and procedures implemented by the management to accomplish the organization’s goals in safeguarding assets; detecting and preventing errors and fraud; and maintaining accurate and timely financial information. Organizations must constantly review their internal controls and make necessary adjustments to reduce the risk of fraud. Marais and Ostwalt (2016) stated that weak internal controls led to commission of more than 60% of fraud cases. Furthermore, Morales et al. (2014) emphasized the importance that detailed internal controls play in making good management decisions.
26 Anti-fraud procedures vary according to the nature of possible fraudulent actions. The two most common types of fraud in small businesses, according to Kramer (2015), are billing and check altering. There are other types of fraud, which include asset misappropriation, corruption, improper expense reimbursements, cash skimming (theft of cash prior to being recorded), cash larceny (theft of cash after it has been recorded), financial statement fraud, fraudulent disbursements, and procurement fraud (Hrncir & Metts, 2012; Phairas, 2016; Prasad, 2013; Tschakert et al., 2016; Wells, 2004; Williams & Kollar, 2013). In addition, Stone (2016) reported that cash larceny, skimming, and payroll fraud were reported twice as often in small businesses. Bailey (2016), Hayes (2013), and Kramer (2015) explained some ways that fraud occurs. At times, dishonest employees use made-up vendors to receive payments for merchandise that has not been received, pay for it, and then return the merchandise. They may make personal purchases using firm funds, or bill an employer for higher amounts than the actual goods received or services rendered. Internal controls must be established that secure the purchasing and cash disbursement process. Bailey (2016) recommended that policies and procedures should be written, employees should be routinely required to provide written certification that they have no conflicts of interest, costs should be compared among vendors to find the best rates, and accountants should determine if related-party relationships exist. In addition, Bailey (2016) also recommended that managers be attentive if there have been unusually large quantities of scrap or use of products because of faulty materials. These approaches to internal control management should lessen the opportunities for procurement fraud.
27 Trompeter et al. (2013) identified the most common methods of financial statement fraud that occurred were improperly recording revenue (61%), overstatement of assets (51%), and understatement of liabilities and expenses (14%). Trompeter et al. (2013) also commented that these techniques were used in businesses which had few assets or little revenue. Along with ongoing fraud concerns, business owners need to see the importance of developing a model for evaluating internal controls. Many fraud prevention techniques have been devised, such as safeguarding assets, performing unscheduled reviews, and identifying employee impacts, which include extravagant lifestyles or family problems. Internal controls must be developed, implemented, and reviewed to better achieve organizational goals and decrease the risk of employee fraud (Lachney, 2020). Moreover, Elvin (2015) mentioned that the type of fraud committed typically depends on the nature of the industry involved, such as scientific, technical, or professional. Therefore, business managers and administrators should be attentive to the types of mistakes or fraud that might occur in Adventist schools, based on issues mentioned in the GCAS reports. That way internal controls can be created specifically for those areas of concern, such as regular reviews of bank reconciliations, inventory, and financial asset master and subsidiary accounts, detailed authorization protocols, and more frequent (daily) cash deposits. The research gap that the researcher will explore in this study will help with implementation of internal control strategies to prevent errors and fraud, and to increase financial policy compliance levels throughout Adventist schools in Thailand.
28 c. Related research works or publications Fraud Theories Internal controls are an important part in the protection of an organization’s assets, which ultimately affects its outcomes. Many fraud theories have been proposed in an attempt to better understand, identify, and minimize fraudulent activities such as the Fraud Triangle Theory, Fraud Diamond Theory, and Fraud Scale Theory (Lachney, 2020). In 1950, Cressey formulated the Fraud Triangle Theory, in which he hypothesized three factors must be existing for people to commit fraud, pressure (incentive), opportunity, and rationalization. Also, Trompeter et al. (2013) emphasized the fraud triangle represented the actions of the fraudster prior to committing the fraud, in which the perpetrator assessed the number of anti-fraud measures in place, and then determined whether could successfully accomplish and cover the fraudulent actions. Cressey’s research has served as a basis to further develop other fraud models, which aid in fraud prevention and detection. The Fraud Triangle Theory is the most common basis in accounting fraud investigations (Lachney, 2020). Next is the Fraud Diamond Theory, which includes the element of capability. The Fraud Pentagon is another transformation of the Fraud Triangle Theory (Playing Offence in a High-risk Environment, n.d). In this model, the five factors are pressure, opportunity, rationalization, competence or the authority for an employee to perform fraudulent acts, and arrogance or lack of conscience (Free, 2015; Playing Offence in a High-risk Environment, n.d; Yusof et al., 2015). Furthermore, Mackevičius and Girūnas (2013) developed the Fraud Scale Theory and included the factors of motives, conditions, possibilities, and realization. These authors explained that all of these factors are related to internal controls. Motive raises the incentive to commit fraud. Conditions explain the circumstances needed for fraud to happen, which include
29 activities, accounting, and internal controls of the organization. Moreover, Mackevičius and Girūnas (2013) added that the possibilities are also affected by one’s position in the company, access to assets and accounting records, and knowledge of internal controls. The final element, realization, includes personal characteristics, such as integrity. In addition, Trompeter et al. (2013) emphasized the importance of reducing or eliminating the opportunity for fraud by increasing internal controls, and emphasizing the organization’s ethical culture. Furthermore, Trompeter et al. (2013) adds that these factors significantly reduce the opportunity for employee fraud. By understanding the pressures and potential opportunities for dishonest acts in small businesses, business owners can initiate internal controls to reduce the potential for fraud. d. Restatement of research objectives and questions The objectives of this research study are to explore practical solutions for the policy compliance problems and internal control management concerns identified in Adventist schools in Thailand as follows: 1. What practical solutions and suggested actions are recommended by stakeholders to increase compliance with denominational financial policies at Adventist schools in Thailand? The most common Governance and Management deficiencies which are ongoing concerns for denominational financial policy compliance that were repeatedly mentioned by the GCAS auditors included audit committee appointments, regular financial statement reviews, unsigned conflict of interest declarations, and inadequate building/equipment insurance.
30 2. What practical solutions and suggested actions are recommended by stakeholders to strengthen internal control management at Adventist schools in Thailand? The most common ongoing Accounting and Administrative internal control management deficiencies that were repeatedly mentioned by the GCAS auditors included regular reviews of journal vouchers and reconciliation reports, equipment general/subsidiary discrepancies, and differences in physical/recorded inventory values. Based on the literature sources, suggestions may be found that help management to understand internal control better, and make necessary adjustments to reduce potential fraud or noncompliance. A weak internal control environment may create opportunities or pressures that may eventually lead to compliance deficiencies or dishonest acts. e. Research model or conceptual framework The research model represents the two main parts of internal control systems: the accounting controls and the administrative controls. The two parts are divided into sub-factors as shown in Figure 1. Figure 5. Internal Control Framework for SDA Schools (Adapted from Aguolu, 2004; Kenyon & Tilton, 2006) / Hamra and Namkote (2020)
31 In the accounting control part, the accounting staff responsibility is to have completeness in their assignments; the general and subsidiary ledger posted, reconciled, and agree; the accounting staff have internal audits or assigned rotations in reconciling work; monthly schedule for statement reconciliation; recording entry reviews; and reporting formats files. In the administrative control part, the administration responsibility is to assist in authorization or approval of expenditures; prepare yearly budgets; physical custody of assets; appropriate segregation of duties; organize training programs; and align with the institution’s working policies. By following the research model flow of the internal control systems of SDA schools in Thailand supported with the two main parts, this will help schools identify internal control problems quickly, they may prevent or make efforts to resolve them to avert small amounts of fraud, misuse, or error. Even if fraud cannot be completely eliminated, the knowledge that internal controls are in place can significantly decrease fraud risk. The conceptual framework demonstrates the importance of strong internal control systems in schools to support and provide an effective guide to compliance with denominational policies.
32 Chapter 3 Methodology Introduction The methodology of this research study was conducted through a systematic process of finding knowledge to benefit Adventist schools in Thailand and other organizations under TAM with similar ongoing concern problems. The recurring violation of denominational financial policies and weak internal control management in the Adventist schools in Thailand were identified in the GCAS audit reports in the years 2016, 2017, and 2018. The reoccurrence of on-going concerns in the four Adventist schools in Thailand that are audited by GCAS is the focus of this study. The objectives of this research study are to explore practical solutions for the policy compliance problems and internal control management concerns identified in Adventist schools in Thailand as follows: 1. What practical solutions and suggested actions are recommended by stakeholders to increase compliance with denominational financial policies at Adventist schools in Thailand? 2. What practical solutions and suggested actions are recommended by stakeholders to strengthen internal control management at Adventist schools in Thailand? The Adventist church in Thailand operates 11 primary and secondary schools, the locations of which are shown in Figure 6. Seven schools use the Thai language as the medium of teaching, while four use English and are considered international schools. These school employ 594 teachers and serve the educational needs of 5,267 students (S. Kiatyanyong, personal communication, October 30, 2021).
33 Figure 6 Locations of the 11 Adventist Schools in Thailand Source: The Best Thai Tour (n.d.)
34 b. Research design Qualitative research is used to understand how individuals experience the world. There are many qualitative research methods, which tend to be flexible and emphasize deeper meaning when interpreting data. It can be used to collect in-depth understanding into a problem or create new ideas for research. Qualitative research is the opposite of 1, which involves collecting and analyzing numerical data for statistical analysis (Bhandari, 2020). The researcher used in-depth interview questions about the issues to be discussed. Indepth interviews will be conducted face-to-face or online, and may last from 30-60 minutes. Each person must provide informed consent before the interview begins. In-depth interviews normally start with open-ended questions, then interviewers use further follow-up questions to investigate different topics. The interviewer should prepare an interview guide with appropriate questions for each issue. The interviews should be recorded and transcribed as soon as possible while the information is still fresh in mind (Bhatia, 2018). This qualitative study uses a descriptive design based on content analysis and in-depth interviews. In an effort to evaluate and study the data gathered during this research regarding the denominational financial policy compliance and internal control management among Adventist schools in Thailand, the research design was planned prior to commencing data collection. c. Population and participants The population and participants for the study consisted of internal and external stakeholders associated with the Adventist schools in Thailand that are audited by General Conference Auditing Service (GCAS). The schools are audited yearly, and after the audit an annual management letter from the GCAS auditors identifies and comments upon policy
35 compliance issues and internal control weaknesses. These observations and suggestions, regardless of whether a school receives an unqualified or qualified audit opinion, helps the schools improve their quality of financial management. Therefore, a purposive sample of participants was selected from these four schools audited by GCAS. In the sample, two schools were International schools, and two were Thai schools that use the Thai language as the medium of instruction. There are Adventist schools operated by Thai Adventist lay members, denominational entities other than TAM, and selfsupporting ministries were excluded from this study. In Table 4 is a brief profile of these schools (Hamra and Samorn, 2020). Table 4. Brief Profile of Selected Seventh-day Adventist Schools in Thailand School Enrolment Finance Office Employees Years of Operation Language of Instruction School A < 1,000 5 < 40 Thai School B < 1,200 8 < 70 English School C < 200 3 < 10 English School D < 400 4 < 80 Thai Source: Hamra and Namkote, 2020 A qualitative descriptive research design was developed which includes examination and content analysis of the GCAS internal audit reports to have an accurate representation of the current problems, and to support answers to be provided for the first research question about policy non-compliance issues and internal control weaknesses. It took about one month for the researcher to request and receive permission from each school board to analyze the four schools’ GCAS policy compliance and internal control reports for three fiscal years from 2016 to 2018.
36 Since audit reports are sensitive documents, it was decided that schools would not be identified by name. For two schools (Schools A and C), combined policy compliance and internal control letters were issued covering both the 2016 and 2017 school years; this indicated that annual audits during these two years were not conducted for these two schools. Because of a small population, it is more efficient to choose participants who are excellent sources of knowledge and experience. A smaller sample number provides the opportunity for the researcher to analyze definite real-life experiences about the level of knowledge of the Adventist schools concerning the effects of policy compliances and internal controls on their financial management and operations. For research interview sample selection, the intention was to choose principal participants from the following groups who can describe their understanding of policy compliance and internal control details, which permits a full experience and understanding to be discussed in the interview sessions. • Adventist school administration officers • Thailand Adventist Mission officers • School board members • Finance office staff • GCAS auditors of Adventist schools The participants will be grouped into two categories, which are the internal and external stakeholders, and a different set of questions will be asked to each group. The schools’ internal stakeholders include 8 school administration officers and 10 finance office staff. The external stakeholders include 4 TAM officers, 4 Board members (excluding the 4 TAM officers), and 2 GCAS auditors of Adventist schools in Thailand.
37 The settings and times for the interviews was agreed upon availability and convenience of both parties. The respondents were given the benefit of their choice of the site selection to provide for maximum accessibility and comfort. Each interview was conducted in a face-to face or online with an Adventist school administrator or finance department officer. Since the sample participants were from one country, Thailand, and the focus was specific to financial policy compliance and internal control management, the study research design was the most fitting for this study. The researcher conducted the first few interviews with three knowledgeable and experienced financial and academic administrators in order to evaluate the efficacy of the research interview questions structure. The first couple of interviews were helpful in improving, adjusting, and reordering the interview guide questions for both participant groups. Upon completion of these interviews, the researcher reviewed and revised the research interview questions as appropriate. Once the revision process was completed, the actual interview process began. d. Data collection method(s) and procedures The data collection methods and procedures requires preparation for the data collection phase. The preparation phase helps the interviewer gain appropriate skills and develop interview questions, and a reliable study research process (Yin, 2014). For the study’s primary data collection instrument, the research prepared open-ended interview questions for the different participant groups. An important part of the study exploration process was for the researcher to have appropriate interview skills to carry out a