Selected internal controls in Maltese fuel / service stations : an analysis

Abstract

A sound internal control system helps entities achieve their organisational objectives effectively and efficiently. However, there are limitations as to what internal controls can achieve and thus management must not rely exclusively on the presence of internal controls within an entity. Purpose: The purpose of this dissertation is to identify and subsequently evaluate the internal controls present in local fuel and service stations. The objectives of this study are to assess the control environment of Maltese fuel stations and identify the strengths and weaknesses within this environment. Recommendations to overcome the mentioned weaknesses will also be suggested. Design: The objectives of this study were achieved by conducting a preliminary interview with an experienced auditor within this industry so as to identify the internal controls to focus on. A series of semi-structured interviews were held with representatives from fuel stations in Malta. The entities interviewed were divided into three categories according to their size and structure. Findings: All fuel stations interviewed have some internal controls in place. The strength of the control environment varied according to the size of the entity but the presence of some controls varied irrespective of the size or structure of the entity. Conclusions: Despite the various internal control procedures in place, some weaknesses remain unaddressed. SME companies have lack of segregation of duties in place due to their size. Conversely, group companies having a fuel station as part of their enterprises, have effective segregation of duties in place. Value: Several recommendations were made in order to mitigate the identified risks. Keeping abreast of changes within the industry and updating internal control procedures where necessary is vital in this business.