Internal Control Deficiencies and Conservative and Opportunist Accounting Choices

Objective: To analyze the influence of internal control deficiencies on conservative and opportunistic accounting choices. Method: Objective description, documentary procedures and quantitative approach to the problem. The sample consisted of 63 to 77 companies with unbalanced data for each year from 2010 to 2015, which had an audit committee, as well as other information necessary for this analysis. The main analysis was carried out based on panel data regression using STATA software. Originality/relevance: It presents as relevant in the current study the measurement and analysis of internal control deficiencies, since little has been discussed in national surveys, mainly due to the difficulty of measurement. Results: The results showed that the company’s internal environment when it presented deficiencies did not impact on differentiated conservative accounting choices, but significantly influenced in the increase of the level of management to reduce the result. In addition, it was found that the control variables size of the company and profitability of the asset influenced in the reduction of the level of management in order to increase the result, which evidences the company's choice to reduce political costs. Theoretical and methodological contributions: As a contribution of the study, it is clear that in a weak internal control environment, even if the company has an audit committee, there may be an increase in the level of management earnings, which impairs the quality of accounting information.