Using Internal Controls Systems for Small and Medium Enterprise Sustainability in a Developing Nation

Abstract

Internal control systems are an essential component of every organisation, as they are known for their impact on prevention and risk mitigation. However, limited studies examine the nexus between internal control systems and small and medium enterprises (SMEs). Although SMEs play a crucial role in enabling the country’s financial stability, SME owners and managers in developing countries are perceived to lack knowledge of internal control systems. This conceptual paper aims to bring a broader understanding of SME leaders and managers on knowledge of implementation of quality internal controls systems towards SMEs’ survival and impact on the country’s economy. This paper analyses the relevant literature on internal controls’ implementation, the knowledge of SME leaders and owners on quality implementation of internal control systems, SMEs’ survival and impact on the economy of the country. An existing and persisting perception that internal control systems can only be implemented by large organisations is a major concern. Based on the literature, this study discovered that SMEs could also implement effective and efficient internal control systems and improve their performance. Adequate knowledge by SME leaders and management could improve SMEs’ implementation of internal control systems. The literature from the study revealed that improved implementation of internal control systems would subsequently enhance the country’s economy.

Keywords

• internal controls
• smes
• developing nation
• south africa