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How do small businesses ensure internal control?

How do small businesses ensure internal control?

How do small businesses ensure internal control?

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Chiranjibi Chapagain Mar. 09, 2018

The objectives of audit do not distinguish small and large entities. Hence, the auditor needs to obtain the same degree of assurance to all entities in order to give an unqualified opinion on their financial statements.

But, it's worth noting that many controls which would be relevant to large entities are not practical in the small business e.g. in small business accounting work may be performed by only a few persons.

As a result, these persons may have both operating and custodial responsibilities, and segregation of functions may be missing or severally limited.

And these inadequate segregation of duties may, in some cases, be offset by owner/manager supervisory controls which may exist because of direct personal knowledge of the business and involvement in the business transactions.

In circumstances where segregation of duties is limited or evidence of supervisory controls is lacking, the evidence required to support the auditor's’ opinion on the financial information may have to be obtained largely through the performance of substantive procedure.

How do small businesses ensure internal control?

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