Internal Control: Is it a Benefit or Fad to Small Companies? A Literature Dependency Perspective

Abstract

The COSO internal control integrated framework addresses the operating effectiveness and efficiency, reliability of financial reporting, compliance with applicable laws and regulations, and the safeguarding of assets. Organizations and their internal control needs vary significantly by industry, size, purpose, management philosophy, diversity and complexity of operations, local culture and operating environment, and legal regulatory requirements. Small companies are highly susceptible to mistakes spawning from the poor planning, organization, and control of procedures in their operations. Hence, management personnel are faced with the challenges of devising measures to promote operational efficiency and ascertain that all of the financial reporting goals are met. Although small companies are faced with challenges to implement internal control systems because of various limitations such as costs, few employees and other constraints, it is worthwhile to note that effective internal controls can still be possible.