Effects of Internal Control Systems on Small and Medium-Sized Enterprises in Ondo State, Nigeria
Abstract
This study examines how organizational structure or internal control mechanisms affect the effectiveness and efficiency of small and medium-sized businesses (SMEs) in Nigeria's Ondo State. SMEs are essential to economic growth, but because of inadequate internal controls and poorly defined organizational structures, many of them struggle with operational inefficiencies, financial mismanagement, and sustainability issues. Targeting SMEs in a variety of Ondo State sectors, the study used a descriptive survey approach guided by contingency theory. Regression analysis, ANOVA, and descriptive statistics were used to examine 331 valid replies in total. The results show that the financial performance of SMEs is significantly improved by the efficacy of internal control systems, which also improves resource utilization, fraud prevention, and accountability. It was also discovered that organizational structure plays a major impact in decision-making and operational efficiency, with governance frameworks, clear role descriptions, and communication routes enhancing productivity and responsiveness. Additionally, the long-term viability of SMEs was found to be strongly positively correlated with the combined effect of strong internal controls and cohesive organizational structures, which allowed for enhanced competitiveness and flexibility in response to environmental changes. According to the study's findings, SMEs' resilience and growth depend on their internal control systems being in line with appropriate organizational structures. It advises SME owners to codify operational structures, implement proactive internal control measures, and use technology to improve efficiency and governance. Policymakers and development organizations should help SMEs by providing resources, regulatory frameworks, and training to institutionalize efficient control and structure procedures. This study adds to the body of literature by offering empirical data from the local area regarding the relationship between organizational structure, internal controls, and SME performance in a developing economy.
Keywords
Internal Control, Organisational Structure, Efficiency, Effectiveness
Citations
IRE Journals:
Ogunseye Tomilola E, Iwarere Temitope H. "Effects of Internal Control Systems on Small and Medium-Sized Enterprises in Ondo State, Nigeria" Iconic Research And Engineering Journals Volume 9 Issue 6 2025 Page 2263-2289 https://doi.org/10.64388/IREV9I6-1713207
IEEE:
Ogunseye Tomilola E, Iwarere Temitope H.
"Effects of Internal Control Systems on Small and Medium-Sized Enterprises in Ondo State, Nigeria" Iconic Research And Engineering Journals, 9(6) https://doi.org/10.64388/IREV9I6-1713207
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