The effects of internal control system on corporate governance: Application in companies within the scope of BIST Corporate Governance Index

Because of many reasons such as increasing speed of international capital movements, financial crises that lived all around the world and company scandals that happened in succession, various precaution needs occured all over the world, initially Europe in order to redeal the financial stability in world and reconstruct the confidence of public opinion to markets. With the developments lived, corporate governance and internal control system became the concepts that make their marks more. Corporate governance is a management philosophy that is based upon equity, transparency, accountability and responsibility principles. As for, internal control is a process that gives reasonable guarantee regarding many issues such as management's reaching its aims, protection of the management's assets, legislative harmonization, accuracy of the financial statements, avoiding errors, cheats and irregularities. An operationally efficient internal control system will surely give service to corporate governance applications. With this study, determining the place of internal control system in the success of corporate governance conception is aimed by investigating internal control systems of companies in the scope of BIST corporate governance index. For this purpose, a survey study is made to chairman of the executive board / board of director members, general director / assistant of general director, internal controller and audit committee members of the companies in the scope of BIST corporate governance index. At the date that the study is made, there were 49 companies in the scope of BIST corporate governance index and data that can be used in analysis was obtained from 38 companies. With the analyses made, the relation between five components of internal control and conformity scores of companies to corporate governance principles is tested.