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The internal control has been carried out in order to provide sufficient assurance for accomplishment of

organization aims, assessing: operational procedure, efficacy of conditions etc., relevance to binding laws and

other legal acts and regulations Control is the supervision over execution of plans and necessary amendments

to them, in order to promote sustainability and to reach the goals. The internal control at a high school is

similar to the one in an enterprise. This is a process that is linked with high school development and processes

planning, budget, processes implementation and control, data collection, analysis, evaluation and reporting

etc. regarding its aims and sustainability (Kapper, 2003).Effective structure of the internal control is a balance between expenses of control procedures and risks

involved (Berzkalns & Boulton, 2000). C. Newman (Newman & Clarke, 1997) holds a view that the role of

control at higher educational institutions is increasing. Control is a way how a faculty, administration, and

students can receive a feedback. The author of the paper in her study about the role of internal control system

during the study process of higher educational institutions relies on the COSO model developed by The

Committee of Sponsoring Organizations of the Treadway Commission. This model has been widely used in

practice. The internal control system has been developed by the correlative elements: environment of control,

activities of control or procedures, risk assessment, information and communication, monitoring and

improvement (COSO, 2006).

Henri J.F. (Henri, 2006), evaluating this model notes that the COSO model gives possibility to identify

and evaluate acquirements from the control activities. It has been modelled by the mission, strategic aims, plans,

structure of organization, politics, systems, procedures and instructions, standards, and evaluation of criteria etc.

It has been influenced by factors that either facilitate or retard performance of the control procedures.

The element of internal control risk management, within the framework of the COSO model, includes

identification of risks, assessment and prevention. Studying high schools as organisations that are in

continuous interaction with external environment, the issues connected with risk management have become

topical in an absolutely new aspect now.

Risk management is one of the main management responsibility fields that have to be carried out by the

executive management of an organisation and its employees, including high schools. Although many

executive managers associate risk management only with particular processes, currently there is a transition to

new understanding of risk management paradigm, i.e., all level managers and employees are involved in risk

management. Effective risk management covers the whole organisation and is designed to identify potential

events that may have influence in the future and to obtain qualitative information for decision-making andthus to improve quality of a strategic decision (Verdina, Katien, Liela, 2010).

The comprehensive risk management is a structured, integrated and continuous process at all levels of

organisation to identify, to assess and to report on opportunities and threats that influence achieving goals of

an organisation, as well as to make a decision about them (Barton et al, 2002). Each organisation can

individually choose methodology for applying a risk management process. It is important that all persons and

person groups involved in an organisation process are completely aware of the chosen methodology and the

risk management process covers all basic goals.

Research methodology

Quantitative and qualitative scientific research methods that correspond to the tasks of the research field

have been used in carrying out this analysis. The monographic descriptive and logically constructive methods

have been used in order to summarize the results of the preceding studies carried out by researchers and the

analysis of the world practice, furthermore the methods of analysis and synthesis were used in order to

synthesize interconnections and formulate regularities. The qualitative analysis of the main internal regulating

documents of the higher educational institute is carried out in order to explore the impact of internal control

environment elements on the study process. Based on the COSO model, original questionnaires were

elaborated and students opinion survey was conducted at 6 higher educational institutions of the Baltic States.

The sociological research data processing programme SPSS was used for data analysis, using both the

descriptive and the analytical data processing methods.

Results

It is important to carry out risk management at a high school not only at an overall level, but also at the

level of the study process or implementation of curriculum.

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In order to assess influence of all elements of the internal control system on the overall management

process of a high school and also on the basic process studies, and efficiency of internal control, potential

risks and their influence on the curriculum implementation process were studied based on the methodology of

the World Bank.

Administrative staff , including programme directors, heads of study departments and involved

employees (in total 23) filled in a questionnaire at six high schools of the Baltic States, int.al, 4 Latvian

higher educational institutions: BA School of Business and Finance (BA), Latvia University of Agriculture(LLU), Ventspils University College (VA), School of Business Administration Turiba,( BAT), one

Lithuanian higher educational institution Vilnius kolegia (VK) and one Estonian higher educational

institution Mainor Business School (MBS).

Based on the data analysis and studying experts assessment of internal control system efficiency, the

author of the study concludes that at all high schools internal control systems are developed and operate at

similar efficiency level (see Table 1), i.e., at good or at very good level. For determining the efficiency level

of the internal control system, evaluation scale starting from very good up to unsatisfactory was used (very

good if it is more than 80%; good if it is 64%-80%; satisfactory, if it is 50-64%; weak, if it is 20-49%,

unsatisfactory, if it is less than 20% out of maximum possible score). By assessing the efficiency level of

particular elements of the internal control system, it is evident that risk management is carried out at high

schools at the lowest level, therefore it is necessary to study which the most potential risks are and how the

internal control system influences the study process.

Table 1. Assessment of internal control system efficiency of the high schools (%)

High

school/

Source: Elaborated by the author, based on the study

By studying different risk classifications, strategic, financial, process ensuring or operative and accident

risks can be defined as the main risk groups at a high school. Recently great attention has been paid to the

compliance risks, i.e. how functions, processes of organisation comply with legal acts, standards,

requirements. It is topical for high schools, as well. Therefore also compliance risk was analysed in the study.

Basing on the results of the questionnaire, the main and the most significant risks were identified in

each risk group, their feasibility (probability) and influence (significance) in achieving goals of a high school

and within the study process, as well as influence of efficiency of the developed internal control to decrease

risks was assessed.The study shows that each high school has a different internal and external environment, all five risk levels

are at the same level and the most significant risk groups are the strategic, financial and study process ensuring

risks. By analyzing the most significant strategic risks (see Table 2), it can be concluded that at high schools:

there is absence of risk management policy and strategy, irregular, fragmented approach to the risk management process is applied, there is absence of integrated, systematic, comprehensive risk management process that is lead and

coordinated by the executive management level and each employee perceives risk management as a

part of his/her responsibilities,

there is absence of the risk tolerance level, there is no systematic identification of external risks, there is no action plan for significant risks at a high school, risk identification process does not take place at the department level, including systematic risk

identification of curriculum implementation.

elements of

ICS

Control

environment

Control

activities

Risk

assessment

Information

communication

Management Total

(avg.)

BA 85 64 54 78 70 70

LLU 83 83 68 93 75 80

VA 93 93 65 90 70 82

BAT 87 95 78 92 63 83

VK 89 73 64 74 71 79

MBS 82 85 65 83 75 78

Total (avg.) 87 82 66 85 71 77

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Table 2. Level of strategic risks (%)

Strategic risks BA LLU VA BAT VK MBSAverage at

high schools

Absence of risk management policy and strategy 31 52 52 27 44 32 40

Absence of systematic identification of internal

risks of a high school 35 32 46 27 35 48 37

Absence of systematic identification of external risks 35 58 51 28 29 21 37

Absence of an action plan for significant risks ata high school 31 51 46 32 38 40 40

Irregular, fragmented approach to riskmanagement process is applied 51 52 51 51 42 48 49

Absence of integrated, systematic, comprehensive

risk management process that is managed andcoordinated by the senior executive managementlevel and each employee perceives the riskmanagement as a part of his/her responsibilities 36 56 46 46 44 32 43

Absence of the risk tolerance level 46 42 41 48 36 48 44Source: Elaborated by the author, based on the data analysis of the study

By assessing high level financial risks, it can be concluded that experts indicate as the main risks

curriculum inability to secure attraction of necessary funding (financial sources, the number of students etc.)

that directly influence financial stability of a high school and points out absence of effective financial

management within the implementation process of the curriculum (see Table 3).

Table 3. Level of Financial Risks (%)

Source: Elaborated by the author, based on the data analysis of the study

Studying risks within implementation of the study process, the analyses shows (see Table 4) that that the

following issues are not provided:

the enrolled students quality and quantity, qualitative and contextual study courses, qualitative academic personnel, including guest lecturers, internship, including internship abroad, the quality of students individual and research work.

Table 4. Risk level in ensuring study process (%)

Process ensuring risks BA LLU VA BAT VK MBSAverage at

high schools

Enrolled students are not ensured with the level ofreadiness for studies

the number of students

42

42

32

28

29

29

28

20

27

23

48

48

34

32

Qualitative contextual study process implementation

within study courses is not ensured 36 25 29 20 24 40 29

Appropriate teaching methods are not ensured withinthe study process implementation 25 19 31 24 22 32 26

Students experience qualitatively professional

internship abroad 25 24 30 18 36 32 28

Financial risks BA LLU VA BAT VK MBS Average

Financial stability of the high school is not ensured 36 64 62 20 38 40 43

The study programme cannot attract the necessaryfunding (financial sources, the number of students etc) 48 76 63 20 42 40 48

Effective financial management is not performedwithin the study programme 33 64 30 27 38 48 40

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Qualitative academic staff and guest lecturers are notensured within the study process implementation 33 46 46 24 14 32 33

Research 25 27 30 35 29 32 30

Qualitative personal work of students 30 32 28 35 23 48 33

Source: Elaborated by the author, based on the data analysis of the study

Conclusions and suggestions

Summarizing Baltic States high school experts assessments of internal control system efficiency and risk

management, the author of the study concludes that at high schools:

in general the established internal control systems ensure effective functioning, however riskassessment processes are at a lower level,

the integrated, continuous, systematic, structured risk management process that is lead andcoordinated by the executive management level and where each employee perceives risk

management as a part of his/her work responsibilities does not take place in the whole organisation,

identification of all types of risks and assessment management of their potential impact do not takeplace, i.e. not all types of risks are reviewed and their potential impact on the development of high

schools and implementation of the study process.From the above mentioned it can be concluded that the risk management process is implemented

fragmentary and the heads of departments carrying out their tasks and functions perform risk management

only when it is topical and each time focusing on certain types of risks. Exploring various risk classifications

and factors that have an effect on internal control, as one of the essential risk groups at higher educational

institutions is the risks connected with the study process implementation.

Though current problems about risk management caused by the external environment have been updated, it is

important to realize the risk management not only as a whole in an institution, but also during the curriculum

implementation.

In order to ensure the competiveness and to raise the quality of provided education, as well as to

improve the quality of strategic decisions, high schools are required to transfer to the new understanding of the

risk management paradigm and its application, i.e., involvement of all level executives and employees in the

risk management.Each high school can choose its own methodology for implementing the risk management process. The

most important is that every person and a person group involved in all processes of an organisation are

completely aware of and understand the chosen methodology and the risk management process covers all the

basic goals and processes.

References

1. Henri, J-F. (2006). Management control systems and strategy: a resource-based perspective. Accounting,Organizations, and Society. Vol. 31 No. 6, pp. 529-58.

2. Brzkalns I., Ian Boulton I.(2000). Iekjs kontroles sistmas rokasgrmata. Rga: pau uzdevumu ministra valstsreformu liets sekretarits, Rga, pp.7-8.

3.

Barton T.L., Shenkir W.G., Walker P.L. (2002) Making enterprise risk management pay off., FinancialTimes/PRENTICE Hall PTR Pearson Education., pp.14 -16.

4. Gleim I. N. CIA Review. (2004). Part I. Internal Audits Role in Governance, Risk, And Control. Eleventh Edition.Florida: Gleim Publications, Inc., pp.320.

5. Kappler, Ekkehard. (2003). Die Engmaschigkeit Betriebswirtschaftlichen Denkens. Universitatsentwicklung.Strategien. Erfahrungen. Reflexionen. Peter Lang, Frankfurt am Main, pp. 266-270.

6. Newman & Clarke. (1997). Failing Students in Higher Education, Edited by Moira Peelo and Terry Wareham, TheSociety for Reserch into Higher Education & Open University Press, pp. 95 96.

7. Verdina G., Katien N., Liela E. (2010). Impact of Internal Control System at Higher Educational Institution onProcess of Study Programme Implementation. lpp Economic development: processes and tendencies, VilniausKolegija, pp.242-257.

8. The Committee of Sponsoring Organizations of the Treadway Commission Internal Control - Integrated FrameworkExecutive Summary COSO, 1985-2006. [online]. [looked on 16 January, 2009].Available:http://www.coso.org/publications/executive_summary_integrated_framework.htm

http://www.coso.org/publications/executive_summary_integrated_framework.htmhttp://www.coso.org/publications/executive_summary_integrated_framework.htm

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