Based on the study conducted by Cabasag et al.
(2018) in which they evaluated the effectiveness of
overall internal control practices of selected insurance companies in San Antonio, Makati city. They also
tried to determine respondent’s view on the possible problems encountered by the department and
proposed solutions. The respondents of their research were composed of one representative from each
of the four (4) insurance companies. It was revealed in the result of their study stated that most of the
insurance companies strongly agreed that internal control practices are implemented in their company
and that the most important component which insurance companies of Makati focuses is information
and communication. Moreover, their findings shows that the respondents strongly understood the
importance of internal control practices through minimization of potential risk and problems in the
management since different issues regarding the operational processes arise and start to affect the
whole entity through as businesses become more advanced and developed.
According to the study of Chantioco et al. (2021) where in their study focused on identifying the internal
cash control practices that MSMEs in Baguio City use, to identify what are the effective internal cash
control practices that will be invaluable to these small businesses in terms of Authorization,
Independent verification, Segregation of duties, Supervision and access control. They also pinpoint what
are the problems encountered by the businesses with regards to these internal control practices.. Their
was study conducted in Baguio City and their questionnaire were distributed to 370 managers. Their
study concludes that MSMEs have proper internal cash control practices within the business wherein
transactions are being authorized by assigned persons to limit problems that may be encountered within
the business.
As cited in the study of Azarcon et al. (2018) that evaluates the cash control practices of Barangays in
San Jose, Del Monte, Bulacan, determine if there are significant differences on the employees’ valuation
on the cash control practices when grouped according to their profile. It shows in their study that sex
and educational attainment has significant effect on their valuation. Age, civil status, and number of
years in service has no significant effect on all indicators. The overall evaluation of problems
encountered is not significantly affected when respondents are grouped according to their profile. It was
also included in their findings that the respondents agreed that Bank reconciliations should perform by
an employee or official who does not have custody or access to cash, only selected employees have
access to the vault or safe, only one person handles all petty cash transactions, and there should be
different employees who receive payment within each committee.
According to the of () where in their research aimed to determine the effectiveness of the internal
control practices of law firms and to determine the significant difference in the respondents’
assessments on the level of effectiveness of internal control system of law firms when grouped
according to profile. The respondents of their study consisted of 180 employees under finance
department of law firms in Taguig City. Their study showed that The respondents’ assessments were
“not significant” because their perceptions were in agreement when aspects were grouped according to
number of years employed, status of respondents, highest educational attainment, and number of
seminars attended for the last 3 years. He also reiterated that when duties cannot be sufficiently
segregated due to small size of the firm, it is necessary that a detailed supervisory review of the
activities should be implemented to reduce risks.
As stated in the study of Zhu et al. (2021) which investigate the impact of the pandemic business
performance of SMEs in China, as well as to assess whether the internal control could have an influence
in coping up with the impact of the pandemic. Moreover, they also mentioned that internal control is
directly related to firm’s operation and risk resistance. The role of internal control can be evidently seen
in terms of its ability to mitigate information asymmetry between the management and stakeholders,
improve operation efficiency, reduce loss and resume to normal operation.
Internal control and operational sustainability of cooperatives
As cited in the article by Mayer et al. (2012) Establishing and implementing an appropriate internal
control involves conducting an assessment and a cost-benefit analysis to ensure both that it will work to
prevent errors or misappropriations and that the costs of putting it in place are not greater than the
benefits It also helps entities achieve important objectives and sustain and improve performance. Thus,
According to Everson, et al., (2013). an effective and efficient development internal control systems
could adapt to changing business and operating environments, mitigate risks to acceptable levels, and
support sound decision making and governance of the organization
Mayer, B., Nolan, P., & Wolfe, S. (2012). Accounting Best Practices. Retrieved from
https://www.grocer.coop/articles/accounting-best-practices-internal-control
Everson, K., Beston, C., Jourdan, C., Soske, S., C., H., Posklensky, J.; Perraglia, S. (2013). Internal Control -
Integrated Framework: Executive Summary.
Based on the study of Abel (2020) he claimed that the benefits of implementing internal control are
increased efficiency of operations and management of risks. Moreover, management might also be
supported by application of standardized procedures, rules, and regulations, securing entity’s current
assets, providing reliable financial reporting, ensuring compliance with laws and regulations, elimination
of income or resource losses, goal-oriented and accurate decision making, identification and prevention
of fraud.
According to Lakis and Giriunas (2012), effective internal control could provide a potential to achieving
goals and tasks by risk control and the ability to perceive and eliminate threats. Internal control is a
source of security in the ever-changing business environment. Therefore, it should be well implemented,
monitored and constantly updated in an organization.
Lakis, V. and Giriūnas, L. (2012). The Concept Of Internal Control System: Theoretical Aspect. Ekonomika,
[online]91(2), pp.142-149. Retrieved from
http://www.zurnalai.vu.lt/ekonomika/article/viewFile/890/412[Accessed6Apr.2017
Mayer, B., Nolan, P., & Wolfe, S. (2012). Accounting Best Practices. Retrieved from
https://www.grocer.coop/articles/accounting-best-practices-internal-control
Everson, K., Beston, C., Jourdan, C., Soske, S., C., H., Posklensky, J.; Perraglia, S. (2013). Internal Control -
Integrated Framework: Executive Summary.
