Impact of internal control systems on financial performance of formal retail Small and medium enterprises in Bindura, Zimbabwe.
- Author
- Mafusire, Ashnus T.
- Title
- Impact of internal control systems on financial performance of formal retail Small and medium enterprises in Bindura, Zimbabwe.
- Abstract
- The purpose of this research was to investigate how ICS in formally registered SMEs impact their financial performance in Bindura, Zimbabwe. Researcher had three main objectives: to identify the internal controls implemented by retail SMEs, to examine the relationship between internal control practices and financial performance, and to identify challenges faced in establishing internal control systems. The researcher developed three null hypotheses for inferential statistics. Researcher implemented a descriptive research design and collected data from the entire population of 108 formally registered SMEs in Bindura through a survey questionnaire. The study focused on CA, RA, and MA as components of ICS, with net profit margin used to measure financial performance. Data was analyzed using Statistical Packages of Social Sciences version 20, and multiple linear regression analysis was performed. Results indicated a strong positive linear relationship among all proxies of internal control systems studied and financial performance, leading to rejection of all three null hypotheses. The researcher recommended that SMEs improve their commitment to internal control systems, and suggested that the government offer financial and other support programs to enable SMEs to invest in such systems. Additionally, SMEs can seek assistance from consultants and industry experts to design and implement effective internal control systems tailored to their specific business needs, and collaborate with other stakeholders in the industry to share experiences and best practices. Future studies could explore the role of technology in auditing SMEs, particularly how emerging technologies such as artificial intelligence and data analytics can improve the audit process for small businesses.
- Date
- June 2023
- Publisher
- BUSE
- Keywords
- Internal Control Systems
- Financial Performance
- Small to Medium Enterprises
- Supervisor
- N/A
- Item sets
- Department of Accountancy