Evaluating the internal control system in SMEs and a study of the manufacturing industry in Kayseri

Abstract

In recent years, fraudulent financial reporting scandals have abused the stake holders’ confidence to company managements. The existence of welldesigned internal control system is very important in terms of the success of the business strategies and reliable financial reports. Reliability of financial reporting, effectiveness and efficiency of business operations, regulatory and other regulations compliance creates the objectives of internal control. In this context, the main objective of the study is to identify the problems and current situation regarding this issue by examining the approach of internal control systems of the SMEs especially which operating in the industrial field. According to the main findings which obtained in this connection, the majority of firms are aware of the benefits of internal control systems whether or not they have well-designed internal control system. Also, the significant relationships between SMEs’ current internal structure and attitudes of SMEs on internal control were found. Although internal control is a system which is designed and sustained by the participation of all managers and other personnel in an organisation, it is seen that responsibility about this subject is given only one department such as accounting-finance. On the other hand, according to the survey it is also observed that most of SME managers are used concepts of internal control and internal audit interchangeably despite being different from each other.