Evaluating the effectiveness of internal control systems in Small and Medium Enterprises in Windhoek, Namibia
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Date
2022
Authors
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Journal ISSN
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Publisher
University of Namibia
Abstract
This study was prompted by the desire to evaluate the effectiveness of internal control
systems in Small and Medium Enterprises (SMEs) in Windhoek, Namibia. The research
focused on determining the existence and level of implementation of internal controls in
SMEs in Windhoek, examining if Windhoek SMEs are experiencing problems that could
result from implementing ineffective systems of internal controls and identifying the barriers
that may prevent Windhoek entrepreneurs from implementing adequate systems of internal
control. The target population consisted of 61 Windhoek based and registered SMEs that
submitted their company profiles to the Namibia Civil Aviation Authority (NCAA) for
procurement purposes. Fifty (50) SMEs were randomly selected for the sample which was
calculated using the Krejcie and Morgan formula. Primary data were collected using a set of
questionnaires while secondary data were sourced from various journals, textbooks, and other
publications. The study applied conventional descriptive statistics for data analysis. The
findings revealed that respondents' businesses are lacking some principles of COSO's five
key components of internal control, therefore, the effectiveness of internal control systems
could not be established in their companies. It was further established that respondents
ranging from 28.9 - 76.3 percent are going through problems resulting in embezzlement or
loss of assets due to theft and unintentional errors, while their resources are used ineffectively
resulting in shortages of funds and failure of companies to meet operational, reporting and
compliance goals. Issues related to lack of resources, malpractices and lack of knowledge
were among the barriers that were found to prevent Windhoek entrepreneurs from
implementing effective internal control systems. It is recommended that efforts need to be
made to develop entrepreneurs' knowledge on the importance of implementing effective
internal control systems for the sustainability of their businesses while contributing more to
employment creation and to the country's economic development
Description
A thesis submitted in partial fulfilment of the requirements for the Degree of Master of Science in Accounting and Finance
Keywords
Small and Medium Enterprises (SMEs), Windhoek, Namibia, Internal control systems, Windhoek entrepreneurs, Namibia Civil Aviation Authority (NCAA), University of Namibia