What are the weaknesses of Internal Controls for SMEs?
The common weaknesses observed in an SMEs internal control include:
- Improper control policies and employee training
- Internal control reviews or approvals dependent on limited company resources
- Inadequate documentation and implementation of internal control review policies
- Increased potential for fraudulent activities due to involvement of family members in business operations
While setting up internal control departments may be costly for SME’s, superior systems lead to enhanced pre-approval processes and improved security from fraud. This boosts productivity at the firm.
SME’s should also conduct internal control reviews through an independent audit firm to monitor implementation and proper functioning.
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