Internal control system in small businesses

Abstract or Summary

The purpose of this research is to evaluate the effectiveness of the financial part of the internal control system in an organisation. This research is conducted to examine the effectiveness of the financial system. This study adopted qualitative methods by using semi-structured interviews. The primary data collection was by face-to-face interviews. The number of participants was five people, including the manager, owner and two employees working in the organisation. Thematic analysis was used for the primary textual data. The main findings revealed that inventory is not classified according to its types, e.g. food and beverages. There is no separate account used for the financial transaction of food from beverages. The inventory is consumed randomly. In the restaurant no computer system is used, all the transactions are done manually. No allowances are made for urgent cases. There is an inability to detect fraud due to inaccurate manual recording. The organisation does not adopt any strategy of pricing, the process is made randomly. They do not have any future plans. They only have records that relate to sales, which are calculated at the end of each day. It is recommended that the inventory needs to be classified according to its types. The consumption of inventory should be made systematically. A computer system should be used to prevent errors and fraud. A skilled employee who can guide current employees regarding the operations of financial system in the organisation is needed.