Internal control system in intermediary institutions and its analysis

Due to the increase and becoming complicated of the operations in the firms, the management of these firms need to make ongoing monitoring and control activities on these operations. This obligation leads to the institutions to build internal control system. Internal control system is a process effected by all personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: ?effectiveness and efficiency of operations?, ?reliability of financial reports? and ?compliance with applicable laws and regulations?. The intermediary institutions, which are one of the important actors of capital markets, must have an effective internal control system in order to achieve the secure, transparent and stable functioning of the capital market. Otherwise, the failure of these institutions not only damages themselves, but also lead to a crisis. Therefore; the subject of this study is the analysis of the internal control system in the intermediary institutions. This study covers four sections. In the first section, the intermediary intitutions in Turkey are explained, with a general focus of the Capital Markets Law and its regulations. In the second section, the internal control system is explained in detail, with the COSO Report, which is accepted by whole world. Thirdly, the risk and its types are told, and then the risks which brokerage firms are faced with while performing their activities. In the forth and last section, current internal control system is evaluated with the regulations formed by CMB and the suggestions are made to improve the success of these systems. At the end of this study, a guide is provided that would intermetiary isntitutions during the evaluation process of their internal control system according to the COSO report and the regulations with which they must comply.