EVOLUTION OF THE INTERNAL CONTROL SYSTEM: FROM INTERNAL AUDIT TO CONTROL OVER SUSTAINABILITY REPORTING

The concept of internal control is not new, today the internal control system is an important mechanism that allows organizations to achieve their objectives, increase productivity and maintain reputation. The article is aimed at deepening the existing studies of the stages of formation and development of the internal control system, as well as determining the modern prerequisites for its further development. The article studies the evolution of the development of the internal control system, highlights eleven important stages of the internal control system evolution. Each stage of development is characterized by an increase in the role of the internal control system in improving the efficiency of the organization's activities and financial reliability. The article systematizes approaches to the concept of internal control and understanding of the internal control system starting from the end of the nineteenth century to the present day and characterizes. Attention is drawn to different interpretations of the internal control system in different periods of its development. The article provides characteristics of all internal control frameworks which was created by COSO. It is concluded that the internal control system has come a long way from its origin in the simplest form to a complex mechanism that today allows organizations to achieve their goals, increase efficiency and effectiveness of activities, ensure compliance with laws and regulations, increase the reliability of reports and disclosure of information, help stakeholders assess the sustainability of the organization. Today, there is a further development of mandatory non-financial reporting for a wider range of organizations, an inevitable increase in the number of recommendations, standards and rules for disclosure of information on sustainable development, as well as an increase in the direct role of organizations in ensuring the sustainable development goals. Therefore, even though internal control over sustainability reporting (ICSR) may be a new concept of the internal control system, modern processes and controls will require significant changes. The article provides an opportunity to fill in the gaps in the research that was made by Ukrainian scientists on the history of the internal control system development.