FEASIBILITY OF IMPLEMENTING AN INTERNAL CONTROL SYSTEM BY SMALL BUSINESSES

Abstract

The research is devoted to substantiating the feasibility of developing and implementing an appropriate internal control system that integrates into the overall management system of a small business entity, since it is small business that is important for the economy, creating jobs and supporting innovation. The paper proves that small enterprises are exposed to significant risks due to imperfect management, which is exacerbated by the lack of effective internal control. The main research methods included analysing the theoretical basis for implementing internal control at enterprises of different ownership and size, comparing the experience of implementing internal control systems at similar enterprises to identify successful practices and potential benefits. The article highlights the main characteristics of the internal control system of an enterprise, which is critical for ensuring the sustainability and profitability of small enterprises in the long term and contributes to the improvement of financial discipline. The publication delineates the advantages of implementing internal control, which include enhancing economic security, safeguarding confidential information, mitigating economic risks, optimising accounting procedures, enhancing the reliability of financial statements, and the capacity to associate errors with subsequent analysis of the efficacy of the decisions made to rectify them in order to prevent new errors or to rectify them expeditiously based on the formed internal control database. The study focuses on the main challenges to the feasibility of internal control at small businesses, given the specifics of their activities. It reveals the main procedures of the internal control system, such as accounting, administration, prevention, identification and adjustment, the use of which will ensure the reliability of data and promote the security of relevant communication channels and information flows in the enterprise. The article presents the advantages of organising an internal control system for small businesses by introducing a separate department compared to outsourcing or co-sourcing of the control function, which characterises the practical value of the study.