Internal control weaknesses and profitability influence of audit companies

This article aims to analyze weaknesses of internal control variables that influence the profitability of companies audited in 2018 by an independent audit firm of the State of Bahia. The influences of variables, such as internal control weaknesses, net operating revenue (NOR), net operating margin (NOM), return on invested capital (ROIC), and return on equity (ROE) on the profitability of these companies were analyzed. The results showed statistical significance only of ROIC and NOM in influencing profitability. The main limitations of the study were the small sample size and the measurement of internal control weaknesses. The research is relevant to the academic environment because it correlates the economic and financial return of companies with internal aspects, focusing on controls. Profitability is commonly related to other financial variables, and as far as controls are concerned, researches are mostly aimed at error and fraud detection.