Enhancing Internal Control Procedures for Sustainable Small-Scale Businesses in Ekiti State
Keywords:
Internal Control System; control activities; environment; information and communication system; risk assessmentAbstract
This study investigates the influence of internal control procedures on the sustainability of small-scale businesses in Ekiti State. Specifically, it examines the impact of the control environment, control activities, risk assessment, information and communication, and monitoring on the longevity of small-scale enterprises in the region. The research adopts a survey-style descriptive research approach, with the population comprising all registered small companies in Ekiti State. According to the Ekiti State Micro, Small and Medium Enterprise Development Agency (DEMSMA), there are 44,065 registered small enterprises in the state. A sample size of 396 respondents is determined using Yamane's (1964) model. The study findings indicate that the sustainability of small-scale enterprises in Ekiti State is positively influenced by the control environment, risk assessment, and monitoring, whereas control activities and information and communication have insignificant effects. The coefficients and probability values for the significant variables are as follows: control environment (0.579, p=0.003 < 0.05), risk assessment (0.443, p=0.001 < 0.05), and monitoring (0.492, p=0.000 < 0.05). Conversely, control activities (0.050, p=0.525 > 0.05) and information and communication (0.070, p=0.374 > 0.05) have insignificant effects. Based on the analysis, it can be concluded that there is a statistically significant correlation between the sustainability of small-scale firms in Ekiti State, Nigeria, and internal control systems.
References
Adagye, I. D. (2015). Effective internal control system in the Nasarawa state tertiary educational institutions for efficiency: a case of Nasarawa state polytechnic, Lafia. International Journal of Educational and Pedagogical Sciences, 9(11), 3902-3907.
Adegbola, T., Nwanji, T. I., Ajayi, F., Felix, O. M., & Awonusi, F. (2018). Internal control system and its influence on bank performance: A study of selected deposit money banks in Nigeria. International Journal of Economics, Commerce and Management, 6(11), 101- 112.
Adetula, D. T., Balogun, S., Uwajeh, P., & Owolabi, F. (2016). Internal control system in Nigerian tertiary institutions. Regional Development to Global Economic Growth, 1(2), 4505-4508.
Adeyeye, T., Ojikutu, R., Adelowotan, M., & Oyebisi, T. O. (2020). An appraisal of small-scale businesses as a catalyst for economic growth in Ekiti State, Nigeria. The Journal of Developing Areas, 54(2), 205-221.
Afolabi, A. M., Ogunleye, O. M., & Olukoya, O. T. (2020). Determinants of small and medium scale enterprises' failure in Nigeria: A theoretical exposition. International Journal of Research in Business Studies and Management, 7(5), 96-105.
Afolabi, O. A., Ogunleye, S. O., & Olukoya, O. M. (2020). Internal control system and financial performance of deposit money banks in Osun State, Nigeria. Journal of Management and Sustainability, 10(1), 1-15.
Agbenyo, W., Jiang, Y. & Cobblah, K. (2018). Assessment of government internal control systems on financial reporting quality in Ghana: a case study of Ghana revenue authority. Business and Economics Journal, 7(3), 1-9.
Ahmed, A. A., Nifa, A. D., Peter A. & Pwagusadi J. (2017). Effect of internal control activity on financial accountability and transparency in local government areas of Borno State, Nigeria. European Journal of Business and Management, 9(30), 1-8.
Ahmed, A. I., Mohammed, M. K. & Sagir, D. (2020). Assessment of the effectiveness of internal control systems of Adamawa state ministries, departments and agencies in Adamawa State, Nigeria. Asian Journal of Economics, Business and Accounting, 18(1), 57-71.
Akosile, A. I., & Akinselure, O. P. (2016). Effect of internal control on financial management of universities in Nigeria: a study of some selected universities in South west, Nigeria. International Journal of Economics, Commerce and Management, 4(7), 552-572.
Aramide, S. F. & Bashir, M. M. (2015). The effectiveness of internal control system and financial accountability at local government level in Nigeria. International Journal of Research in Business Management, 3(8), 1–6.
Aristanti, W. (2015). The influence of internal control system on the financial accountability of elementary schools in Bandung, Indonesia. Research Journal of Finance and Accounting, 8(24), 89-96.
Babatunde, S. A. (2018). Stakeholders’ perception on the effectiveness of internal control system on financial accountability in the Nigerian public sector. International Journal of Business and Management Invention, 2(1), 16-33.
Bayyoud, A. A., & Sayyad, F. A. (2015). The role of internal control systems in enhancing the survival and performance of banks. Journal of Finance, Accounting and Management, 6(2), 11-26.
Benson M. M. (2018). Effect of internal control systems on financial performance of public institutions of higher learning in Nairobi City County, Kenya. Thesis submitted to Kenyatta University. 1-74.
Brahmadev, P. & Leepsa, N. M. (2017). Agency theory: review of theory and evidence on problems and perspectives. Indian Journal of Corporate Governance, 10(1) 74-95.
Campbell, J., & Hartcher, S. (2016). Effective internal controls for the small business. Retrieved from https://www.business.gov.au/guides/internal-controls-for-small-business
Chen, Y. (2016). Small business is the main force of the social economy development. International Journal of Innovation, Management and Technology, 7(4), 129-132.
Committee of Sponsoring Organizations of the Treadway Commission (COSO). (2013). Internal control - Integrated framework. Retrieved from https://www.coso.org/Documents/990025P_ExecutiveSummary_final_may20_e.pdf.
Cornelius, K. L., Caroline A. O. & Edwin T. (2016). Effect of internal control systems on financial management in Baringo county government, Kenya. Journal of Economics Finance and Accounting, 3(1), 1-16.
Dickson, N. (2016). The effect of internal controls on financial performance of public water companies in Kenya. A thesis submitted to KCA university. 1-54.
Ejoh, O. I., & Ejom, E. E. (2016). Internal control systems and organizational performance: A review. International Journal of Management Sciences, 7(5), 211-221.
Eniola, A. A., & Akinselure, O. P. (2016). Internal control system and bank performance in Nigeria: A case study of selected banks in Ogun State. Journal of Finance and Investment Analysis, 5(4), 1-12.
Eniola, O. J., & Akinselure, O. P. (2016). Effect of internal control on financial performance of firms in Nigeria: a study of selected manufacturing firms. IOSR Journal of Business and Management, 18(10), 80-85.
Faith, M. M. (2014). The effect of internal controls on revenue collection by county governments in Kenya. Unpublished Master’s thesis. 1-94.
Fakunmoju, S. B., Fasola, O. F., Fashagba, Y. A., & Akinbiyi, A. I. (2020). Influence of internal control systems on the sustainability of small-scale businesses in Nigeria. Journal of Economics, Management and Trade, 26(11), 1-11.
Gordon, O. O. & Kalenzi, A. (2019). Internal control and quality service delivery in a public health sector: A case study of a Local Government in Uganda. African Journal of Business Management, 13(16), 557-563.
Hamidu S. (2020). Impact of effective internal control system on financial accountability in tertiary institutions in Bauchi State- Nigeria. Journal of Management Science and Entrepreneurship, 20(7), 148-157.
Ibrahim. A. H. M. (2017). Some issues in the institutional theory: a critical analysis. International Journal of Scientific & Technology Research, 6(9), 150-156.
Ishaku, A. A., Kakanda, M. M. & Danladi, S. (2020). Assessment of the effectiveness of internal control systems of Adamawa state ministries, departments and agencies in Adamawa State, Nigeria. Asian Journal of Economics, Business and Accounting 18(1), 57-71.
Jean-Claude T. (2011). Institutional theories and public institutions: new agendas and appropriateness. Peters B. G. and J. Pierre. The Handbook of Public Administration, Sage, 101-185.
Joseph, J. O., Ikya, E. A. & Ucherwuhe, S. I. (2018). Effect of internal control on financial accountability in the Nigerian public sector. KASU Journal of Accounting Research and Practice, 7(1), 1-23.
Kumari, V., & Weerasooriya, R. (2019). The relationship between internal control system and performance of small and medium enterprises in the service sector in Sri Lanka. Journal of Entrepreneurship, Business and Economics, 7(1), 23-43.
Lennox, R. (2020). Strategies for the growth and survival of small and medium-sized enterprises in the United Kingdom. Journal of Small Business and Enterprise Development, 27(3), 424-442.
Mehra, R. (2010). Business sustainability: Building a sustainable business model. Journal of Global Business Management, 6(1), 85-92.
Mohammed, I. Y. (2017). Effects of microfinance on the growth of small-scale enterprises in Ekiti State, Nigeria. African Research Review, 11(2), 186-197.
Nwobodo, H., Adegbie, F. F. & Banmore, O. O. (2020). Effect of bank internal control system on non- financial performance of selected quoted deposit money bank in Nigeria. Journal of Management, Economics, and Industrial Organization, 4(2), 77-88.
Nwobodo, S., Adegbie, F. F., & Banmore, P. (2020). Internal control systems and corporate governance mechanisms in SMEs: Evidence from Nigeria. Journal of Small Business & Entrepreneurship, 1-21.
Nyakundi, D. O., Nyamita, M. O. & Tinega, T. M. (2017). Effect of internal control systems on financial performance of small and medium scale business enterprises in Kisumu City, Kenya. International Journal of Social Sciences and Entrepreneurship, 1(11), 719-734.
Nyakundi, O. B., Nyamita, S. M., & Tinega, F. A. (2017). Internal control effectiveness and productivity improvement in the Kenyan public sector. International Journal of Scientific Research and Innovative Technology, 4(11), 1-14.
Oduola, T., & Yakubu, O. (2017). Impact of entrepreneurship development programme on small and medium scale enterprises (SMEs) sustainability in Nigeria. European Journal of Business and Management, 9(26), 10-23.
Ogunmakin, A. A. (2020). Effect of internal control system on the accountability of public parastatals in Ekiti State. Journal of Accounting and Financial Management, 6(4), 12-23.
Phornlaphatrachakorn, N., & Nakalasindhu, W. (2020). Impact of internal control effectiveness on productivity improvement: A case study of a state enterprise in Thailand. Journal of Management Science, 16(1), 1-15.
Sanusi, F. A. & Mustapha M. B. (2015). The effectiveness of Internal Control System and Financial Accountability at Local Government Level in Nigeria. International Journal of Research in Business Management, 3(8), 1-6.
Solomon, Y. (2018). Internal control system and fraudulent practices in the Nigerian public sector; a survey of Nigerian National Petroleum Corporation (NNPC), Nigeria. International Journal of social Science, 2(3), 1-96.
Sovaniski, A. (2021). Risk management in internal control system. Journal of Management, 10(1), 35-46.
Tuan, L. T. (2020). The influence of internal control on business performance: Evidence from Vietnam's small and medium-sized enterprises. Journal of Economics and Development, 22(2), 22-35.
Umar, H., & Dikko, M. U. (2018). The effect of internal control on performance of Commercial banks in Nigeria. International Journal of Management Research & Review, 8(6), 13-32.
Victo N. (2015). Internal controls, financial accountability and service delivery in private health providers of Kampala district. A thesis submitted to Makerere University. 1-77.
Whittington, A. & Pany, O. (2017). The comprehensiveness of internal controls in addressing the achievement of objectives in the areas of financial reporting, operations and compliance with laws and regulations. Research Journal of Finance and Accounting, 5 (22), 197- 214.
Wycliff, B. (2018). Internal control system and education service delivery in Busia municipal council. A dissertation submitted to Kyambogo University. 1-86.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Adesodun Adebayo, Abidoun Ayeni-Agbaje, L.B. Taiwo, Ayinoluwa Fakiyesi
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
