The perception of bank managers from a
municipality in the State of Pará on the internal
control in the management of socio-environmental
risk
Josué de Lima Carvalho
Master's student in Accounting at UFSC.
Federal Rural University of the Amazon, UFRA, Brazil.
josuecarvalho911@gmail.com
http://lattes.cnpq.br/8214132585708396
https://orcid.org/0000-0003-0946-9078
Valdeci Ferreira da Silva Neto
Specialist in Accounting Auditing and Controllership from
Uniasselvi (2022).
Federal Rural University of the Amazon, UFRA, Brazil.
valdecif.neto@gmail.com
http://lattes.cnpq.br/2253127363581404
https://orcid.org/0000-0001-6366-9009
Ticiane Lima dos Santos
PhD in Business Administration from UNAMA (2018).
Federal Rural University of the Amazon, UFRA, Brazil.
ticiane.ufra@gmail.com
http://lattes.cnpq.br/1579287644263493
https://orcid.org/0000-0001-9238-4651
Alexandre Gleyson Araújo da Silva
Master in Accounting from UFRJ (2018).
Federal Rural University of the Amazon, UFRA, Brazil.
alexandre12.ufra@gmail.com
http://lattes.cnpq.br/6161618845181444
https://orcid.org/0000-0002-5955-621X
Availability: https://doi.org/10.5965/2764747111212022001
Submission date: July 23, 2022.
Approval date: October 25, 2022.
Issue: Vol. 11, No. 21, Dec. 2022
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The perception of banking managers from a municipality in the State of Pará on the
internal control in the management of socio-environmental risk
Abstract
Objective(s): This study aims to analyze the perception of managers from financial
institutions in the municipality of Tomé-Açu, in the State of Pará, regarding the interaction
between internal control and social and environmental risk as a variable in the credit grant
analysis process via descriptive research, with qualitative and quantitative approach. Method:
Semi-structured questionnaires were applied to bank branch managers located in the
municipality of Tomé-Açu, with close- and open-ended questions to collect data that were then
tabulated and analyzed using the software SPSS, Excel, and IRAMUTEQ. Results: We
concluded that internal control acts as a tool to help the managers of the institutions with risk
analysis process, evidencing the social and environmental risk, influencing cultural changes in
the organization and evaluation of the social and environmental responsibility policies. The
positive perception of managers on the benefits of adopting good internal control in the
management of social and environmental risks, acting as an institutional filter, stands out, so
that existing risks can be minimized and controlled with the consistent use of internal control
procedures. Contributions: We suggest for future surveys to be conducted with a larger
number of respondents, with the possibility of extending to borrowers and all internal
employees of the financial institution.
Keywords: Internal Control. Social and Environmental Risk. Financial Institutions.
A percepção de gestores bancários em um município da Amazônia Paraense sobre o
controle interno na gestão do risco socioambiental
Resumo
Objetivo(s): Este estudo objetiva analisar a percepção dos gestores das instituições financeiras
no município de Tomé-Açu, no Estado do Pará, sobre a interação existente entre o controle
interno e o risco socioambiental como uma variável no processo de análise de concessão de
crédito. Método: Trata-se de uma pesquisa descritiva, com abordagem qualitativa e
quantitativa. Foram aplicados aos gestores das agências bancárias localizadas no município de
Tomé-Açu questionários semiestruturados contendo perguntas fechadas e abertas. Os dados
coletados foram tabulados e analisados com a utilização dos softwares SPSS, Excel e
IRAMUTEQ. Resultados: Concluiu-se que o controle interno atua como ferramenta de auxílio
aos gestores das instituições quanto ao processo de análise de riscos, com destaque para o risco
socioambiental, induzindo a mudanças culturais na organização e na avaliação das políticas de
responsabilidade socioambiental. Destaca-se a positiva percepção dos gestores sobre os
benefícios de um bom controle interno na gestão de riscos socioambientais atuando como filtro
institucional, de modo que os riscos existentes podem ser minimizados e controlados com a
utilização consistente dos procedimentos de controle interno. Contribuições: Sugere-se que
pesquisas futuras sejam realizadas com quantitativo maior de respondentes, com possibilidade
de estenderem-se aos tomadores de crédito e a todos os colaboradores internos da instituição
financeira.
Palavras-chave: Controle Interno. Risco Socioambiental. Instituições Financeiras.
3
La percepción de los gerentes bancarios de un municipio del Estado de Pará sobre el
control interno en la gestión del riesgo socioambiental
Resumen
Objetivo(s): Este estudio tiene como objetivo analizar la percepción de los gestores de
instituciones financieras del municipio de Tomé-Açu, en el Estado de Pará, sobre la interacción
entre el control interno y el riesgo socioambiental como variable en el proceso de análisis de
concesión de crédito. Método: Se trata de una investigación descriptiva, con enfoque
cualitativo y cuantitativo. Se aplicaron cuestionarios semiestructurados que contenían
preguntas cerradas y abiertas a gerentes de sucursales bancarias ubicadas en el municipio de
Tomé-Açu. Los datos recolectados fueron tabulados y analizados con los programas SPSS,
Excel e IRAMUTEQ. Resultados: Se concluyó que el control interno actúa como una
herramienta para ayudar a los administradores de la institución en el proceso de análisis de
riesgos, con énfasis en el riesgo socioambiental, induciendo cambios culturales en la
organización y en la evaluación de políticas de responsabilidad socioambiental. Destacamos la
percepción positiva de los gestores sobre los beneficios de un buen control interno en la gestión
de riesgos socioambientales, actuando como filtro institucional, de modo que los riesgos
existentes puedan ser minimizados y controlados con el uso consistente de procedimientos de
control interno. Aportes: Se sugiere que futuras encuestas se realicen con un mayor número
de encuestados, con posibilidad de extenderse a prestatarios y todos los empleados internos de
la entidad financiera.
Palabras clave: Control Interno. Riesgo Social y Ambiental. Instituciones Financieras.
Introduction
Our study analyzes the perception of financial institutions managers in the municipality
of Tomé-Açu, in the state of Pará, regarding the interaction between internal control and socio-
environmental risk as a variable in the process of credit grant analysis, with the relationship
between financial institutions and internal control as tools for supervising economic-
administrative activities and risk analysis during the procedures for granting bank credit. The
discussion on socio-environmental risks has been increasingly addressed in congresses,
seminars, and other meetings involving society, government, and companies.
The results may be used as a source of information on the role of internal control in the
administrative scope of the entities, since the aim is to contribute to the analysis and
development of activities promoted in partnership with other sectors, as well as other types of
tools – such as internal audit and environmental management system — enabling us to raise
the principles and values of sustainability that are adopted by financial institutions.
Internal control procedures assist in the analysis of financial activities and contribute to
obtaining relevant and quality information, allowing managers to make better decisions. This
study aims to verify the perception of internal control as a supporting tool for financial
institutions to analyze socio-environmental risks in the granting of credit for financial and
administrative activities that interfere with society and the environment. In this context, the
following problem arises: what is the perception of managers from financial institutions in
Tomé-Açu about internal control in the management of socio-environmental risk for granting
credit? This work is divided into five main sessions: the introduction problematizes and
justifies the proposed construction, followed by the foundation, based on related studies.
Subsequently, the methodology explains the methods adopted, the results present the main
4
findings, and the final considerations present the conclusive reflections.
Theoretical framework
Financial Institutions
In Brazil, the Empire implemented the European banking model. Initially, the basic
activities of a commercial bank, or simply a bank, consisted of deposit and loan operations
(discounts) since other services practically did not exist. The banks have, ever since,
maintained in their commitment the noble characteristic of safeguarding other people’s
fortunes, among other financial activities (Fortuna, 2017).
In 1945, with the Decree-Law No. 7.293, the Superintendence of Currency and Credit
(Superintendência da Moeda e do Crédito – SUMOC) was created to replace the inadequate
inspection criteria that began in 1920 with the General Inspector of Banks (Inspetoria Geral
dos Bancos). SUMOC’s immediate goal was to exercise control over the money market.
Numerous banks closed their activities, many others have disappeared, by mergers and
incorporations, adjusting and solidifying the National Financial System (Sistema Financeiro
Nacional – SFN).
The SFN is composed of public and private institutions and its maximum regulatory
body is the National Monetary Council (Conselho Monetário Nacional – CMN). The SFN
seeks to establish the relationship between agents in need of investment resources and those
who can generate savings and, consequently, are able to finance the growth of the economy
(Assaf Neto, 2017).
On April 25, 2014, the CMN, with the Resolution No. 4,327/2014, determined
guidelines for financial institutions and other institutions authorized to operate by the Central
Bank of Brazil (Banco Central do Brasil – BCB) to establish and implement the Socio-
environmental Responsibility Policy (Política de Responsabilidade Socioambiental – PRSA).
The financial institutions regulated by BCB should observe following principles:
Art. 1 . . . I - relevance: the degree of exposure to socio-environmental risk of the
institution’s activities and operations; and
II - proportionality: the compatibility of the SERP with the nature of the institution
and with the complexity of its activities and its financial services and products.
(Brasil, 2014; our translation).
In 1995, the Green Protocol was signed, which, according to the Ministry of the
Environment (MMA), is a letter of principles for sustainable development signed by official
banks – such as Banco do Brasil (BB), Banco do Nordeste do Brasil (BNB), Banco da
Amazônia (Basa), Banco Nacional de Desenvolvimento Econômico e Social (BNDES), Caixa
Econômica Federal (CEF), and BCB – in which they propose to undertake policies and
practices that are in harmony with the objective development that does not compromise the
needs of future generations (Brasil, 2009).
The adoption of criteria focused on environmental concern in Brazilian banks allows a
significant advance in terms of social and environmental responsibility, and since these banks
finance economic activities of the current system, Rabelo and Lima (2009, p. 8) believe that
“consequently they become co-responsible for the impacts that these activities may bring to the
environment due to unsustainable exploitation of natural resources” (our translation).
In October 2002, the Equator Principles was launched – promoted by the International
Finance Corporation (IFC) (the World Bank’s financial branch) and the Dutch bank ABN
Amro — during a meeting of executives which was being held in the City of London to discuss
investments experiences in project involving social and environmental issues in emerging
markets, where there are few strict environmental protection legislation (Brasil, 2009).
5
The principles are a series of guidelines on the socio-environmental responsibility
measures financial institutions and borrowers must abide by. The latter should also adopt an
Environmental Management System (EMS), fostering improvements in the relationship
between society and the environment.
Internal Control
The Committee on Auditing Procedures of the American Institute of Certified Public
Accountants (AICPA) presented a definition for the subject:
Internal control comprises the organization plan and the coordinated set of methods
and measures adopted by the company to protect its assets, verify the accuracy and
reliability of its accounting data, promote operational efficiency, and encourage the
adherence to the policy outlined by management. (Attie, 2011, p. 188; our translation)
In 1958, AICPA sought to subdivide internal control into administrative controls and
accounting controls; while the former seeks to ensure that the shares reach their objectives at
the lowest cost and in the best way, the accounting controls aim to give certainty to the numbers
recorded and disclosed in the financial statements (Castro, 2015).
The definition of internal control in an organization can be characterized, according to
Almeida (2017, p. 53; our translation), as “the set of procedures, methods, or routines with the
objectives of protecting assets, producing reliable accounting data and assisting management
in the orderly conduct of the company’s business.”
Attie (2011, p. 188; our translation) notes that in “countries with education focused on
capitalist environments and effective investments, the sense of control is more flourishing and
alive,” thus highlighting an environment related to accounting and finance.
Risk Management of Financial Institutions
The risk analysis for credit granting enables the monitoring of economic activities and
their effects on society. For Rabelo and Lima (2009, p. 8; our translation), “the use of credit as
a tool to enable the sustainability of resources is one of these necessary and minimal
adjustments to live with environmental risks.”
For Lima (2016, p. 3; our translation) risk analysis “is the process by which the various
exposures, in the most different types of risks, are diagnosed, calculated and analyzed,
generating controls for financial decisions in the conditions of exposed risks,” and this process
has undergone both technological advances and in the theory of finance, seeking improvements
in risk analysis techniques.
On February 23, 2017, with Resolution No. 4,557/2017, the CMN determined
guidelines for risk and capital management structures, which must be implemented by financial
institutions and other institutions authorized to operate by BCB (Brasil, 2017). The head
provision of Art. 2, § 1, of the resolution states that the managing structures must be:
I - compatible with the business model, the nature of the operations and the
complexity of the institution’s products, services, activities, and processes;
II - proportional to the size and relevance of exposure to risks, according to criteria
defined by the institution;
III - adequate to the risk profile and systemic importance of the institution; and
IV - able to assess the risks arising from macroeconomic and markets conditions in
which the institution operates (Brasil, 2017; our translation).
An efficient risk management is essential for the competitiveness of banks and the
establishment of their strategies; while also fulfilling the objectives, mission, and values of the
company (Assaf Neto, 2017). Risk management is important to: identify the company’s
6
exposure to risk and its most fragile aspects; minimize financial losses; and protect the
company’s capital. Some risks are constantly verified by financial institutions (Assaf Neto,
2017; Lima, 2016; Rogante, 2009), such as: risk of change in interest rates; credit risk; market
risk; operational risk; exchange risk; sovereign risk; liquidity risk; legal risk; compliance risk;
and socio-environmental risk.
According to the Brazilian Association of Banks (Associação Brasileira de Bancos –
ABBC), socio-environmental risks can be defined according to the possibility of losses to
financial institutions due to socio-environmental damage, which are classified as: pollution,
damage to human health, safety, impacts on communities, and threats to biodiversity
(Associação Brasileira de Bancos, 2019).
Dzioubanov (2015) presents a reflection on social responsibility and environmental
management of organizations, noting that the socio-environmental issue is a present concern
and concluding that the granting of credit is dependent on socio-environmental risk.
Nogueira, Conceição, and Imbroisi (2015) study the importance of the lender in
influencing the environmental behavior of the borrower, the authors conclude that there is
evidence of the slow but growing incorporation of the environmental behavior of the bank loan
borrowers in the analysis of the lending agent.
Thus, it is perceived that several factors influence the risk analysis by financial
institutions, in particular the analysis of socio-environmental risk, which has undergone
improvement in its regulations in the banking sector. Thus, Castro (2015) highlights the
importance of financial institutions to adopt an internal control with a preventive focus.
Methodology
The methodology of a study defines, in summary, how the research will be carried out,
evidencing the fundamental pieces for the construction of knowledge that can respond to the
problem of the research. Therefore, it is essential to discuss objectives, approach, procedures,
and which methods were use, as described below.
This study was developed to describe the results obtained; according to Silva and
Menezes (2000, p. 21: our translation): “descriptive research aims to describe the
characteristics of a given population or phenomenon or the establishment of relationships
between variables.” We seek, therefore, to list the characteristics and contributions that arise
from internal control procedures in relation to risk management – specifically, socio-
environmental risk – setting as object of study the perception of financial institutions managers
located in the municipality of Tomé-Açu.
The research was consolidated between April and October 2019, focused on the
application of a semi-structured questionnaires using the Likert Scale in a survey styled
descriptive study with self-administered questionnaire, composed of open- and closed-ended
questions. The questions were oriented according to the theoretical references previously raised
and based on research focused on the same theme, involving the discussion about socio-
environmental risks, since it is with this information that we intended to achieve the expected
results. Andrade (2010, p. 137; our translation) notes that “Data collection is a very important
stage of field research, but it should not be confused with the research itself.”
Data collection was conducted in six banking institutions operating in the municipality
of Tomé-Açu (State of Pará), specifically with branch managers, thus not being contemplated
business or administrative/financial managers. The first response was received on May 5, 2019,
and the last on October 14, 2019.
A total of six branch managers answered the questionnaire, one for each institution
interviewed; they were personally approached with a presentation form that explained the
objectives of the research.
7
Microsoft Excel and Statistical Package for the Social Sciences (SPSS) Software was
used to analyze, as accurately as possible, the data collected according to the answers provided
by each participant, thus allowing for the comparison of the information. We sought to perform
descriptive analysis of the relative percentage frequencies, which were then graphically
arranged, verifying and validating the statements of the questionnaire applied.
Regarding the qualitative approach, we opted for the use of IRAMUTEQ, free and
open-source software, developed by Pierre Ratinaud and Pascal Marchand, which allows
analyzing the word cloud – a graphic representation of text segments that are frequently quoted
by respondents and that interconnect – of the textual corpus (Silva, 2018).
Discussion of results
Descriptive Statistics of the Proposed Statements
Figures 1 to 14 show statistically the level of agreement between the managers
regarding each proposed statement, presenting information regarding the perception of
managers in relation to the purposes of internal control in the institution, such as the perception
of socio-environmental risk and socio-environmental responsibility policies, seeking to meet
the objectives of this research.
Figure 1
Result of the application of the questionnaire, statement 1.I - Is knowledgeable on the
objectives and role of internal control within organizations
Note. Prepared by the authors.
Figure 1 show that all respondents understand the importance of internal control as a
way of adhering to the internal policies of their financial institutions by means of operational
routines, administrative processes, or accounting controls.
Oliveira and Soares (2018, p. 12; our translation) demonstrated that the interviewees in
their research “were unanimous in informing that the principles of internal control were
observed in the implementation of internal control in the financial institution,” in addition to
highlighting the investment in procedures that meet national and international standards,
assisting in the assessment and management of risks.
Figure 2
Result of the application of the questionnaire, statement 1.II – Internal control procedures
facilitate the identification of socio-environmental risks
00% 00% 00%
25%
75%
00%
20%
40%
60%
80%
100%
1 Discordo
Totalmente
2 Discordo
Parcialmente
3 Indiferente 4 Concordo
Parcialmente
5 Concordo
Totalmente
1 Completely 2 Partially 3 Indifferent 4 Partially 5 Completely
disagree disagree Agree Agree
8
Note. Prepared by the authors.
The data show that 87.5% of the interviewees completely agree that internal control
facilitates the identification of socio-environmental risks. Regarding the internal control
procedures, Oliveira and Soares (2018, p. 13: our translation) found that “they are developed
together with the various management areas of services, products, and processes of the
Organization, whose adherence tests are applied with the required periodicity.”
Figure 3
Result of the application of the questionnaire, statement 1.III – Internal control contributed
to the reduction of socio-environmental risks
Note. Prepared by the authors.
Notably, 87.5% of the respondents completely agree that internal control contributed to
the reduction of social and environmental risks, but 12.5% draw attention by partially agreeing
with this statement.
The research by Oliveira and Soares (2018, p. 19; our translation) identified that “The
main risks presented are based on control procedures that reduce them to acceptable levels,”
thus, we can infer, according to the managers’ perception, that internal control contributes
significantly to risk management, especially in relation to socio-environmental risks, enabling
banking institutions to achieve their objectives and goals outlined in the organization’s strategy.
Figure 4
Result of the application of the questionnaire, statement 1.IV – The internal control system
facilitates the analysis of information between sectors of the organization
Note. Prepared by the authors.
13%
88%
00%
20%
40%
60%
80%
100%
1 Discordo
Totalmente 2 Discordo
Parcialmente 3 Indiferente 4 Concordo
Parcialmente 5 Concordo
Totalmente
13%
88%
00%
20%
40%
60%
80%
100%
1 Discordo
Totalmente 2 Discordo
Parcialmente 3 Indiferente 4 Concordo
Parcialmente 5 Concordo
Totalmente
50% 50%
00%
20%
40%
60%
80%
100%
1 Discordo
Totalmente 2 Discordo
Parcialmente 3 Indiferente 4 Concordo
Parcialmente 5 Concordo
Totalmente
1 Completely 2 Partially 3 Indifferent 4 Partially 5 Completely
disagree disagree Agree Agree
1 Completely 2 Partially 3 Indifferent 4 Partially 5 Completely
disagree disagree Agree Agree
1 Completely 2 Partially 3 Indifferent 4 Partially 5 Completely
disagree disagree Agree Agree
9
Figure 4 shows that 50% of the interviewees completely agree with the statement, while
50% partially agree that the internal control system facilitates the analysis of information
between the sectors of the organization. We understand this as a positive scenario for
organizations to use the internal control system, enabling the exchange of information between
sectors so that decisions are made with agility. After conducting his research, Silva (2017, p.
114; our translation) shows that “to have compliance, a perfect harmony is necessary, between
the internal controls, aiming toward compliance in the processes allied to a perfect internal
monitoring by internal audit in order to mitigate the risks.”
Figure 5
Result of the application of the questionnaire, statement 1.V – The adoption of internal
control procedures caused financial institution investing in socio-environmental
responsibility policies
Note. Prepared by the authors.
The results showed that 75% of the respondents completely agree, while 12.5% partially
agree that the adoption of internal control procedures has led to investments in socio-
environmental responsibility policies by the financial institution, demonstrating that the
adoption of such procedures has encouraged financial institutions to invest in their socio-
environmental responsibility policies since internal control has contributed to risk management
and verification of the adopted policies.
On the other hand, 12.5% declared themselves indifferent to this statement, which
allows us to infer that the adoption of internal control procedures may or may not influence
financial institutions to invest in SERP.
Carlos and Morais (2017, p. 9; our translation) found that, in the banking sector entities
regarding the environmental aspects, “there are effective control actions regarding the use of
renewable resources, the aspects of pollution, energy, water, paper consumption, in addition to
the emission of waste and concern with climate change.”
Figure 6
Result of the application of the questionnaire, statement 1.VI – corporate governance, risk
management, and compliance in the internal control system allows information to be safely
transmitted to the supervisory bodies
Note. Prepared by the authors.
13% 13%
75%
00%
20%
40%
60%
80%
100%
1 Discordo
Totalmente 2 Discordo
Parcialmente 3 Indiferente 4 Concordo
Parcialmente 5 Concordo
Totalmente
13%
88%
00%
20%
40%
60%
80%
100%
1 Discordo
Totalmente 2 Discordo
Parcialmente 3 Indiferente 4 Concordo
Parcialmente 5 Concordo
Totalmente
1 Completely 2 Partially 3 Indifferent 4 Partially 5 Completely
disagree disagree Agree Agree
1 Completely 2 Partially 3 Indifferent 4 Partially 5 Completely
disagree disagree Agree Agree
10
Among respondents, 87.5% completely agree, while 12.5% partially agree that
corporate governance, risk management and compliance in the internal control system ensure
that the transmission of information to supervisory bodies occurs efficiently.
Oliveira and Soares (2018) identified that, when there are improvements in internal
control – regarding the adoption of rules and procedures for risk structures – along with
improvements in the interaction of corporate governance and the performance of the risk
committee, the management of events is also improved on, enabling the institution to create
mechanisms to mitigate risks.
Figure 7
Result of the application of the questionnaire, statement 1.VII – Internal control, regarding
socio-environmental risk, caused cultural changes in the bank branch I work at
Note. Prepared by the authors.
When asked about the ability of internal control to change the organizational culture of
the institution in which they work, regarding socio-environmental risk, 37.5% of the
interviewees completely agree and 50% partially agree, while 12.5% declare themselves
indifferent.
Silveira (2018, p. 52; our translation) identified that “all macro themes present in the
institution’s sustainability report are also present in the daily life and values of employees when
thinking about sustainability,” and based on these data it is inferable that the sustainable
practices adopted in internal control procedures influence organizational culture, directly or
indirectly.
Figure 8
Result of the application of the questionnaire, statement 1.VIII – The use of internal control
system influences improvements in the quality of information generated in performance
indicators and reports
Note. Prepared by the authors.
13%
50% 38%
00%
20%
40%
60%
80%
100%
1 Discordo
Totalmente 2 Discordo
Parcialmente 3 Indiferente 4 Concordo
Parcialmente 5 Concordo
Totalmente
1 Completely 2 Partially 3 Indifferent 4 Partially 5 Completely
disagree disagree Agree Agree
1 Completely 2 Partially 3 Indifferent 4 Partially 5 Completely
disagree disagree Agree Agree
11
Regarding the perception of managers on the positive influence the adoption of internal
control may have on the quality of information provided in performance indicators and reports,
62.5% completely agree, 25% partially agree and 12.5% declare themselves indifferent.
In her research on social and environmental responsibility described in sustainability
reports, Franklin (2014, p. 55; our translation) states that such reports are the “Main tool for
promoting the social and environmental responsibility actions of the institution,” which allows
internal and external users to access the economic, social, and environmental performance
generated by the institution when they adopt a good internal control system. Performance
information management becomes increasingly efficient, improving the quality of the
information that are generated in reports and performance indicators and assisting in the
decision making of its users, in a timely manner.
Figure 9
Result of the application of the questionnaire, statement 1.IX – Knowledgeable on the
Institution’s Social and Environmental Responsibility Policy
Note. Prepared by the authors.
All managers stated that they were aware, even if partially, of the institution’s internal
policy of social and environmental responsibility. The results, however, may be limited
considering the importance of this knowledge for the development of the activities of an agency
manager.
In the study by Siemionko (2010, p. 40; our translation), when questioning the
interviewees if they knew the bank’s sustainability policy, “only 62% said they knew, 36.5%
said they did not know, and 1.6% are indifferent to the issue.” Since various branches of activity
are directly or indirectly related to some type of socio-environmental risk, it is essential for
employees to be aware of the SERP adopted by the institution.
Figure 10
Result of the application of the questionnaire, statement 1.X – It is important for the bank to
create actions and programs focused on the socio-environmental issue
25%
75%
00%
20%
40%
60%
80%
100%
1 Discordo
Totalmente 2 Discordo
Parcialmente 3 Indiferente 4 Concordo
Parcialmente 5 Concordo
Totalmente
1 Completely 2 Partially 3 Indifferent 4 Partially 5 Completely
disagree disagree Agree Agree
12
Note. Prepared by the authors.
All the interviewed managers agreed that it is important to adopt measures and
programs related to the socio-environmental issue. By adopting such measures, the institutions
improve the discussion on the socio-environmental issues in organizations, regardless of their
size or the field of activity.
In the research by Siemionko (2010), 98% of respondents declared as important the
creation of campaigns and programs focused on the socio-environmental issue. Thus, it can be
inferred that, regardless of the financial institution, managers highlight the importance of
creating actions aimed at social and environmental responsibility.
Figure 11
Result of the application of the questionnaire, statement 1.XI – It is relevant that the internal
public knows the socio-environmental balance sheet published annually by the bank
Note. Prepared by the authors.
Of the managers who answered, 75% completely agree, while 25% partially agree.
Thus, we can affirm that managers agree with the statement; when the team follows the actions
developed by the organization, it facilitates the understanding of the functions performed
regarding the analysis of socio-environmental risk.
Franklin (2014, p. 55; our translation) points out that, regarding the financial
institutions, the Sustainability Report is drawn “closer to their related audience, allowing many
employees to become aware of a variety of information that they would not have access to if
they did not have the opportunity to explore the document.”
Figure 12
Result of the application of the questionnaire, statement 1.XII – In order for credit to be
granted for financing (investment projects), do you agree that the client must be accountable
for their socio-environmental responsibility and sustainability practices
1 Completely 2 Partially 3 Indifferent 4 Partially 5 Completely
disagree disagree Agree Agree
25%
75%
00%
20%
40%
60%
80%
100%
1 Discordo
Totalmente 2 Discordo
Parcialmente 3 Indiferente 4 Concordo
Parcialmente 5 Concordo
Totalmente
1 Completely 2 Partially 3 Indifferent 4 Partially 5 Completely
disagree disagree Agree Agree
13
Note. Prepared by the authors.
Faced with the statement that questions whether clients should be accountable for their
practices of socio-environmental responsibility and sustainability in case of the analysis and
release of credit for financing, 75% of the respondents completely agree and 25% partially
agree. In her research, Siemionko (2010, p. 47; our translation) identified that 87.5% of
respondents “say that it is important and necessary to account for the practices of social and
environmental responsibility and sustainability by borrowers.” The data shows the importance
of the client accounting for their actions to the financial institution at the time of the credit
request, facilitating the analysis of risks.
Figure 13
Result of the application of the questionnaire, statement 1.XIII – If the bank began to analyze
the socio-environmental criteria for credit analysis for loans and the client presented
negative environmental and social aspects, the assigned risk should be higher
Note. Prepared by the authors.
As a result, 75% of the respondents completely agree, while 25% are indifferent to the
Bank assigning higher risk, using mechanisms for categorizing the field of activity, in case the
client presenting negative socio-environmental aspects.
In Silveira’s (2018) survey, respondents reported that, when applying a questionnaire
to the borrowers and identifying that the company has risky activities – such as companies that
use the supply of raw material from logging – they warn the borrowers about this type of
activity.
Figure 14
Result of the application of the questionnaire, statement 1.XIV – When lending money, the
bank is also sympathetic to the way it is used, assuming responsibility for the social and
environmental impacts of financial services, for current and future generations
25%
75%
00%
20%
40%
60%
80%
100%
1 Discordo
Totalmente 2 Discordo
Parcialmente 3 Indiferente 4 Concordo
Parcialmente 5 Concordo
Totalmente
1 Completely 2 Partially 3 Indifferent 4 Partially 5 Completely
disagree disagree Agree Agree
25%
75%
00%
20%
40%
60%
80%
100%
1 Discordo
Totalmente 2 Discordo
Parcialmente 3 Indiferente 4 Concordo
Parcialmente 5 Concordo
Totalmente
14
Note. Prepared by the authors.
The results show that 75% completely agree and 12.5% partially agree that, when
lending money, the bank is also sympathetic to the way it is used, that is, it takes responsibility
for the socio-environmental impacts financial services may have for the current and future
generations. Thus, the bank becomes sympathetic to the actions of the borrowers since it acts
as an intermediary of financial transactions when granting credit. In Siemionko’s research
(2010, p. 50), 80% of managers answered that they “perceive a concern of the institution when
being responsible for the way the borrowed money is used.”
Presentation and Analysis of the Qualitative Research Results
The IRAMUTEQ software was used to analyze the subjective responses collected from
the respondents in the application of question 2.I – “Comment on the relationship between
internal control and socio-environmental risks,” highlighting the graphical representation of
the frequency in which the main words are quoted from a word cloud (Figure 15).
Figure 15
Word cloud of managers’ perception of the relationship between internal control and social
and environmental risks
Note. Prepared by the authors.
In the word cloud, the emphasized terms used by respondents are plotted according to
how often they are mentioned. As shown in Figure 15, the main words highlighted in the textual
corpus are “control,” “internal,” “risk,” “socio-environmental,” “to be/being,” and “analysis.”
By observing these data, we can infer that the functions performed by internal control
and the analysis of socio-environmental risk have direct and indirect relationships in the
process of granting credit in financial institutions, as demonstrated by the GR01 respondent:
13% 13%
75%
00%
20%
40%
60%
80%
100%
1 Discordo
Totalmente 2 Discordo
Parcialmente 3 Indiferente 4 Concordo
Parcialmente 5 Concordo
Totalmente
1 Completely 2 Partially 3 Indifferent 4 Partially 5 Completely
disagree disagree Agree Agree
15
“They’re directly connected. Internal control is fundamental in mitigating social and
environmental risks.”
Table 1
Sample of respondents’ answers to question 2.I
2.I - Comment on the existing relationship between internal control and socio-environmental risks
Respondent
Submitted response
GR01
They’re directly connected. Internal control is fundamental in mitigating social and
environmental risks.
GR04
Internal control functions as an institutional filter, in which it can be identified whether socio-
environmental policies are in accordance with the analyses of the identified risks
GR05
I believe that there is a direct relationship between internal controls and socio-environmental
risks in the post-contract stage of granting credit, because the first contact with the client
(committed or not to social and environmental issues) occurs at the time of customer service.
GR08
The bank is increasingly concerned about the environment, conducting advertisements
monthly on the subject
Note. Prepared by the authors.
For respondent GR05, “there is a direct relationship between internal controls and
socio-environmental risks in the post-contract stage of granting credit, because the first contact
with the client (committed or not to social and environmental issues) occurs at the time of
customer service.” Silveira (2018, p. 59) verified in her study that “Everyone mentioned that
when they encountered the risk that may be subject to regularization, the request for this
analysis is forwarded to the responsible area located in a sector of the Bank located in the
Administrative Center.”
Thus, understanding the perception of managers regarding social and environmental
risks and internal control, internal control performs functions directly linked to risk after the
customer service process, and measures should be carried out to monitor and oversee the
client’s activities as part of the credit granting process.
After surveying and tabulating the answers regarding question 2.II – “Comment on how
the credit granting process occurs in this institution,” the word cloud was elaborated (Figure
16).
Figure 16
Word cloud of managers’ perception of the credit granting process
Note. Prepared by the authors.
16
Figure 16 shows that the words emphasized by the respondents were “analysis,”
“credit,” “to be/being,” and “customer.” It is evident that managers perceive the importance of
performing customer credit analysis to verify related risks.
Table 2
Sample of respondents’ answers to question 2.I
2.II - Comment on how the credit granting process occurs in this institution
Respondent
Submitted response
GR01
Analyses of key points are carried out: customer credit limit; ability to pay; socio-
environmental risk.
GR04
The process takes place upon receiving a proposal, in which the credit object and its
destination are evaluated, if it is for purposes involving the environment, projects by
agronomists technicians are required for measuring the necessary fundamental resources and
the impact that will be generated to the exploited environment
GR05
Mostly through the analysis of client credit, potential indebtedness. In the granting of
microcredit, social, fiscal, and environmental issues are also analyzed for the release of credit
to the client.
GR06
Risk, ability to pay, offered warranty, registration updated, restrictive and finally approval of
credit.
Note. Prepared by the authors.
When identifying the risks involving the client and the financial institution, the GR04
respondent reports that, when identifying a socio-environmental risk, “projects by agronomists
technicians are required for measuring the necessary fundamental resources and the impact that
will be generated to the exploited environment,” that is, it highlights the importance of a
qualified professional to verify the possibility of the occurrence of the risks, making it possible
to verify what measures can be taken to mitigate the risk in evidence.
The research by Siemionko (2010, pp. 44-45: our translation) showed that “41.2% of
respondents cannot perceive the consideration of environmental dimensions in the credit
analysis process,” creating an alert compared to economic and financial risks. Nonetheless, the
current data show that there has been progress regarding the perception of bank employees
about the importance of the socio-environmental dimension in credit analysis.
Respondent GR05 adds that “in the granting of microcredit, social, fiscal, and
environmental issues are also analyzed for the release of credit to the client,” that is, in order
to approve the credit to the client, first several factors must be analyzed, characterizing the
client who is seeking financial resources, factor that helps the financial institution make the
best decisions.
After conducting a survey and tabulating the answers related to question 2.III – “Name
which business fields are frequently analyzed by the institution,” the word cloud in Figure 17
was elaborated.
Figure 17
Word cloud on which fields of activities are analyzed by the institution
Note. Prepared by the authors.
trade
service
17
As shown in Figure 17, in relation to the field of business activity that are frequently
analyzed by the institution, according to the perception of managers, “commerce” and
“service” stood out.
Table 3
1 Sample of respondents’ answers to question 2.I
2.III - Cite the field of business frequently analyzed by the institution
Respondent
Submitted response
GR01
Forestry, Internet Provider, Retail Trade, and Non-Commercial Association.
GR03
Credit in the scope of family farming, rural individuals, and legal entities.
GR04
Those involving the environment, commercial, agro-industrial, service providers are analyzed.
GR05
Various retailers: foodstuffs, clothing, furniture; gas stations; companies specializing in
agricultural production: palm oil, black pepper, regional fruits.
Note. Prepared by the authors.
In addition to trade and service provision, the respondent GR01 highlights the “forestry”
field and the GR03 respondent highlights credit in the agricultural sector, both for individuals
and for legal entities. In a given financial institution, Silveira (2018, p. 58; our translation)
identified that questionnaires are applied “according to the classification of the segment:
agribusiness, construction, manufacturing, transportation. For companies not included in the
segments mentioned, simplified or generic models apply.”
Since credit risks related to socio-environmental risk are constant in sectors involving
rural activity, Silveira (2018, p. 54; our translation) stated that “financing in embargoed areas
and environmental preservation becomes a major risk.” Notably, there is a concern to verify
the risks that are linked to the credit granting process, which involves both the institutions and
the borrowers, regardless of where the institution is inserted, since it is a responsibility that
involves several risk factors.
Final considerations
This study was limited to analyzing the perception of managers from financial
institutions in the city of Tomé-Açu, in the State of Pará, regarding the interaction between
internal control and socio-environmental risk as a variable in the process of credit grant
analysis, via the application of a questionnaires during field research. Tabulation and data
analysis software, such as Microsoft Excel and SPSS, were used for the graphical expression
of quantitative data on the agreement of managers regarding the statements of the applied
questionnaire, making it possible to infer about the perception of managers and correlate the
results with previous studies.
We were able to observe that social and environmental responsibility is tied to all
sectors, regardless of the size or field of the company, involving its internal and external agents.
We noticed that managers perceive a close relationship between internal control and the socio-
environmental risk variable in the financial institutions of Tomé-Açu.
The managers presented an understanding that the adoption of internal control has been
an important procedure in assisting the management of social and environmental risks in the
institution, especially in activities that occur after customer service. We showed, with the
IRAMUTEQ software, that the main business activities that seek the financial institution to
obtain credit are related to trade and service provider. The respondents also highlighted other
activities, such as: gas stations, companies specialized in agricultural production of palm oil,
black pepper, and regional fruits.
18
Managers play a fundamental role in relation to the guidelines of internal control and
socio-environmental risk in financial institutions, and the answers obtained by the study show
that the respondents agree on the importance of their action in the monitoring of socio-
environmental policies.
This study contributes to the academic society and organizational sectors by showing
that internal control has been fundamental in the analysis and mitigation of socio-
environmental risks, especially in activities involving trade and service providers, acting as an
institutional filter, based on the premise that existing risks can be minimized and controlled
with the consistent use of internal control procedures.
We highlight the positive perception of managers regarding the benefits of adopting
efficient internal control in the management of social and environmental risks. We suggest for
future research to be conducted with a higher number of respondents, with the possibility of
extending the sample to borrowers and all internal employees of the financial institution.
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