Although South African small, medium and micro enterprises (SMMEs) play an imperative role in the stimulation of the national economy, previous research studies show that these business entities have severe sustainability problems as approximately 75% of them fail after being in operation for only 3 years. The latter dispensation is pinned on the belief that South African SMMEs make use of inadequate and ineffective internal control systems.
Since a system of internal control comprises five inter-related elements, while also taking into consideration that management is ultimately responsible for the internal control in their respective business entities, which is greatly influenced by their managerial conduct, this research study placed focus on determining the relationship which exist between the managerial conduct and the internal control activities evident in South African SMMEs.
This study was conducted in the Cape Metropole, South Africa by obtaining responses from 240 stakeholders of SMMEs: 120 members of management and 120 employees.
In order to achieve the latter, quantitative data were collected through a questionnaire and analysed accordingly through both descriptive statistics and inferential statistics.
From the results, a very weak negative statistically significant relationship was identified between the managerial conduct and the internal control activities evident in South African SMMEs.
Essentially, management and employees should revisit the internal control activities evident in their respective SMMEs through placing emphasis on those internal control activities which can be built on their control environment.
Since the early 1980s, small, medium and micro enterprises (SMMEs) have been regarded as the driving forces of many economies around the globe (Hill
In a South African context, SMMEs are believed to provide employment opportunities to at least 61% of the national workforce while also contributing up to 57% towards the national GDP (DTI
Despite the above however, this relationship has not been tested, which leads to the main objective of this study, namely to explore the relationship that exists between the managerial conduct and the implemented internal control activities evident in South African SMMEs. This could lead to insight as to how management in South African SMMEs could enhance their managerial conduct to, in turn, improve the internal control activities evident in their business entities.
An internal control system is a structured process that is implemented by management and designed to provide reasonable assurance regarding the attainment of relevant organisational objectives in the foreseeable future (COSO
The control environment serves as the foundation of an internal control system (D’Aquila
Therefore, based on the above, the managerial conduct was conceptualised within the ambit of this research study as follows: ‘The manner in which management behaves when discharging their applicable responsibilities; being directly influenced by their personal primary values and their personal ethical standards’.
Because of the subjective nature of the concept, management needs to adopt an appropriate managerial conduct as it directly impacts on,
With regard to managerial conduct in SMMEs, previous studies (McCartan-Quinn & Carson
One of the elements in an internal control system which will be influenced by managerial conduct is that of internal control activities. Internal control activities are those actions that are implemented by management, as based on policies and procedures, across all hierarchal levels in an organisation, which assists with the attainment of organisational objectives through the appropriate mitigation of risks (COSO
Bruwer and Van Den Berg (
This research study was empirical in nature and fell predominantly in the positivistic research paradigm as survey research was used to glean data from respondents (refer to
All targeted respondents had to be based in non-franchised SMMEs, based in the fast-moving consumer goods industry, while also operating in the Cape Metropole. The rationale behind this decision was first that both the industry and geographical location are regarded among the largest industries and contributing provinces in South Africa, respectively (Statistics South Africa
To determine whether a relationship exist between the managerial conduct and the internal control activities, Spearman rank correlation was performed – indicating both the strength of the correlation and the direction (positive or negative) thereof. To test the possible bias perceptions of management, a Mann-Whitney
All respondents were safeguarded from physical harm, all information provided by respondents were treated with confidentiality, all respondents were assured anonymity and all respondents voluntarily participated in the study. In addition, respondents could withdraw from the study, for any reason, at any time, without being discriminated against.
To place the results in context, a brief summary of the demographical and other relevant information of respondents are provided. Thereafter, the perceived correlation between managerial conduct and the internal control activities are provided.
Based on the results, 67.68% of sampled South African SMMEs were sole traders, 14.4% were partnerships, 11.62% were close corporations and 6.57% were private companies – 45% of these business entities were in operation for 5 years or less (
Respondents that were classified as members of management mostly (62.15%) indicated that they had less than 5 years’ managerial experience. The highest qualification of 48.74% of respondents was ‘Grade 12’ (successfully completed their secondary education), while only 32.77% of respondents had a tertiary qualification (qualification achieved at a university or equivalent). As members of management need to take the lead in their respective business entities, one would expect respondents to have a sound practical understanding of business and management sciences (measured in years of experience), and a sound theoretical understanding of the same sciences (measured in qualifications), the results are concerning. However, business intelligence should not be measured by formal qualifications (Schroeder
Interestingly, the majority of respondents have a secondary qualification or lower, which could be because of the economic environment of South Africa, particularly the high unemployment rate (Trading Economics
Respondents that were classified as employees were represented by 83.54% full-time employees and 16.46% part-time employees; with 81% of all respondents having less than 5 years’ experience as employees. The highest qualification of 45.57% of respondents was ‘Grade 12’, while 41.77% of respondents had only partial secondary education. The results are concerning as not only did 87.34% of employees have a highest qualification of Grade 12 or lower but overall, employees were only marginally less qualified (in terms of their highest qualifications) than members of management. It is highly probable that responding members of management did not want to employ staff more educated than they were; or responding members of management could not afford to employ staff that had a highest qualification greater than Grade 12, or because of the high unemployment rate in South Africa, responding employees could not secure a job at a larger (and more established) organisation in order to make a living – their only immediate option was to be employed by SMMEs.
Based on the questions (refer to
The literature supports that South African SMMEs make use of customised internal control activities, mostly being informal. In order to test this inference, respondents were asked to describe their internal control systems. Respondents indicated that the ‘detection of risks’, the ‘attainment of reporting objectives’ and the ‘attainment of compliance objectives’ were not integral parts of their current implemented internal control systems. In addition, they indicated than an array of internal control frameworks (e.g. COSO Internal Control Framework, CoCo Framework and COBIT Framework) was used as foundation to develop their currently implemented internal control systems – serving as additional evidence that these business entities made use of information internal control systems. Respondents were asked to provide insight on the internal control activities evident in their respective SMME. Results indicated that source documents were not extensively used (52.7%); limited proof of transactions existed (52.7%), authorisation activities were neither proper nor improper (49.7%), assets were predominantly safeguarded through means of preventive controls (56.9%), limited detective controls exists (44.1%), operational tasks were not segregated (54.1%), one person performed more than one operational task at a time (45.9%) and an average amount of independent checks were used for control purposes (59.8%). Clear tangent planes emerge as to why these inferences are imminent. The solvency, liquidity and profitability of these business entities made it difficult to implement a wide range of formal internal control activities. As 58.59% of these business entities employed between zero and five employees, it is not feasible to make use of too formal internal control activities. Hence, additional justification is provided as to why the managerial conduct was regarded as flexible.
Respondents were asked to describe the characteristics of their implemented internal control activities in their respective SMMEs. Results indicated that the implemented internal control activities in sampled SMMEs added value to these business entities. This view is specifically supported by the above average mean scores of characteristics – implemented internal control activities were adaptable to changes in the immediate business environment (4.07), assisted management with the execution of their responsibilities (4.06), were robust (4.01), were suitable for the industry in which these business entities operated (4.06), supportive of policies and procedures (4.08) and were supportive of risk management strategies (3.92). Although it appears that the internal control activities evident in sampled SMMEs were both adequate and effective, it should, however, be noted that very few internal control activities had an average presence in sampled SMMEs, and the financial performance and financial position of these business entities were only slightly above average.
When analysing the correlation between the managerial conduct and the internal control activities evident in sampled SMMEs, a very weak negative statistically significant relationship existed (refer to
Summary of significant correlations between the managerial conduct and internal control activities.
Internal control activity | Tested correlations | Significant correlations |
Positive correlations |
Strength of positive correlations |
|||
---|---|---|---|---|---|---|---|
% | % | Strength | Correlation range | ||||
Document utilisation and design | 121 | 26 | 21.49 | 4 | 3.31 | Very weak | 0.146–0.161 |
Authorisation activities | 33 | 3 | 9.09 | 2 | 6.06 | Very weak | 0.146 –0.160 |
Safeguarding of assets | 110 | 34 | 30.91 | 8 | 7.27 | Very weak/weak | 0.146–0.225 |
Independent checks | 154 | 42 | 27.27 | 16 | 10.39 | Very weak/weak | 0.147–0.262 |
Segregation of duties | 33 | 12 | 36.36 | 5 | 15.15 | Very weak/weak | 0.150–0.288 |
Of all 451 tested correlations, 154 (34.15%) related to independent checks, 121 (26.83%) to document utilisation and design, 110 (24.39%) to the safeguarding of assets, 33 (7.32%) to authorisation activities, and 33 (7.32%) to the segregation of duties. When referring to the number of employees of these business entities, there appears to be a limited need for sampled SMMEs to make use of internal control activities pertaining to authorisation activities and the segregation of duties with internal control related to segregation of duties having a below-average presence and those pertaining to authorisation activities were not deemed appropriate.
With regard to all tested correlations, only 35 of the 451 tested correlations were significant and positive, with those pertaining to the segregation of duties (15.15%) and independent checks (10.39%) obtaining the highest percentages. Of these, 35 correlations linked to the managerial conduct indicated that the members of management are on par with the latest trends in the industry in which their respective SMMEs operate (17 = 48.57%), have industry-specific knowledge (12 = 34.29%), have leadership skills (4 = 11.42%), promotes ethics (1 = 2.86%) and promotes accountability (1 = 2.86%). Also, pertaining to the remaining 416 correlations, characteristics of the managerial conduct either had a negative significant correlation or no significant correlation with internal control activities – communicate well (41 = 9.86%), have effective management practices (41 = 9.86%), have industry-specific knowledge (29 = 6.97%), have leadership skills (37 = 8.89%), are on par with the latest trends in the industry (24 = 5.77%), promotes accountability (40 = 9.62%), promotes ethics (40 = 9.62%), promotes proper values (41 = 9.86%), promotes responsibility (41 = 9.86%), promote transparency (41 = 9.86%), and solves problems (41 = 9.86%).
Although a very weak negative statistically significant relationship was found to exist between the managerial conduct of sampled SMMEs and the internal control activities evident in these business entities (resulting in the rejection of H1), it should be noted that the views of both members of management and employees were taken into account. To minimise respondent bias, the statistical significance between the views of management and those of employees were tested. The results are presented in
To further test the significant correlations between the views of respondents on the relationship they believed to exist between the managerial conduct in sampled SMMEs and the internal control activities evident in these business entities, separate Spearman rank correlations were conducted for members of management and employees. The calculated results were compared to determine whether members of management and employees had similar views on the relationship between the managerial conduct and the internal control activities in sampled SMMEs. Stemming from the results, of 451 tested correlations for each group, it was found that members of management had 147 (32.59%) statistically significant correlations, while employees had only 31 (6.87%) statistically significant correlations, serving as an indication that members of management believed that their managerial conduct had a greater influence on the internal control activities evident in their business entities when compared with the beliefs of employees. When the direction of these statistically significant correlations were tested, 119 (80.95%) significant correlations of the members of management were negative and 28 (19.05%) were positive, while 9 (29.03%) significant correlations of employees were negative and 22 (70.97%) were positive. In terms of the strength of the statistically significant correlations, 8 (5.44%) significant correlations of members of management were moderate and 107 (72.79%) were weak, while 32 (21.77%) significant correlations of members of management were very weak and 31 (100%) were weak. With this in mind, the significant correlations of members of management were compared with the significant correlations of employees to determine how similar the views of respondents were. After comparing the 147 statistically significant correlations of members of management and the 31 statistically significant correlations of employees, it was found that only eight (4.49%) of all statistically significant correlations of respondents were similar for both respondent groups. A summary of the similarities is shown in
Summary of similar significant correlations between members of management and employees.
Significant correlation | Employee correlation coefficients | Members of management correlation coefficients | Absolute difference between correlation coefficients |
---|---|---|---|
‘The person recording the transactions does not authorise or execute them (e.g. the recording of delivery of goods)’ and ‘promotes responsibility’ | −0.326 | −0.399 | 0.073 |
‘The creditors account is regularly reconciled by an independent person’ and ‘has industry-specific knowledge’ | 0.267 | 0.186 | 0.081 |
‘Alarm systems are used’ and ‘communicates well’ | −0.260 | −0.354 | 0.094 |
‘Inventory is periodically counted’ and ‘is on par with the latest trends in the industry’ | 0.302 | 0.192 | 0.110 |
‘Security guards are used’ and ‘is on par with the latest trends in the industry’ | 0.344 | 0.225 | 0.119 |
‘Source documents are used when goods are bought’ and ‘communicates well’ | −0.315 | −0.440 | 0.125 |
‘Inventory is periodically counted’ and ‘has industry-specific knowledge’ | 0.332 | 0.190 | 0.142 |
‘Cash is banked daily’ and ‘promotes responsibility’ | −0.254 | −0.403 | 0.149 |
The views of members of management and employees, on the relationship they believed to exist between the managerial conduct in sampled SMMEs and the internal control activities evident in these business entities, were not significantly similar to one another. In core, from a total of 451 correlations, only four positive statistically significant correlations were found to be similar in relation to the views of both members of management and employees. As employees had only 31 statistically significant correlations on the relationship they believed to exist between the managerial conduct and the internal control activities, members of management should be concerned that their managerial conduct does not influence the views (and also presumably the actions and attitudes) of employees on internal control activities.
In this research study, emphasis was placed on the relationship which exists between the managerial conduct in South African SMMEs and the internal control activities in these business entities. The results show that there exists a very weak negative significant relationship between the managerial conduct and the internal control activities. In particular that internal control activities implemented by these business entities were positively associated with the popularity and/or proven feasibility of these activities in the industry in which they operate, and negatively influenced by the appropriateness of the managerial conduct. Previous research studies explain that the managerial conduct, as a major part of the control environment, should have an influence on the internal control activities in these business entities. The results are also troubling as only 17.14% significant positive correlations pertaining to the managerial conduct were relevant to the characteristics of good corporate governance. Therefore, enough evidence was obtained to reject H1.
This study also concludes that virtually no statistically significant relationship exists between the views of members of management and those of employees, on the relationship they believe to exist between the managerial conduct and the internal control activities evident in sampled SMMEs. This comparison thus serves as confirmation that the views of members of management are most probably biased in respect of the support that their managerial conduct has on the internal control activities in these business entities. This is an avenue for further research.
From the research conducted, although H1 was rejected, it does not mean that this dispensation should remain the
The internal control activities of South African SMMEs should also be revisited by members of management and employees. In particular, emphasis should be placed on internal control activities as built on the control environment of South African SMMEs which, in turn, should help provide reasonable assurance surrounding the attainment of relevant organisational objectives in the foreseeable future. These internal control activities should make provision for: (1) the mandatory utilisation of source documents, (2) proper authorisation activities as supported by written policies and procedures, (3) proper detective controls in relation to the safeguarding of assets (e.g. alarms, CCTV cameras, etc.), (4) the segregation of duties as supported by written policies and procedures and (5) the introduction of mandatory independent checks (daily banking of cash, staff supervision, etc.). To improve the sustainability rate of SMMEs, the government bodies associated with the strengthening of SMMEs in South Africa should provide these business entities with guidance on how to improve their managerial conduct and internal control activities.
The authors declare that they have no financial or personal relationship(s) that may have inappropriately influenced them in writing this article.
Dr Juan-Pierré Bruwer was responsible for conducting the literature review and the rounding off of the entire paper. Prof Philna Coetzee was responsible for compiling the research design and writing the conclusion. Mrs Jacolize Meiring was responsible for the analysis of data and the interpretation and discussion thereof in the paper.
Sole trader [ ] Partnership [ ] Close corporation [ ] Private company [ ]
Frequently sold by the business [ ] Frequently consumed by customers [ ] Necessity products [ ] Non-necessity products [ ] Fast-moving consumer goods [ ]
Based in Cape Town only [ ] Based in the greater Western Cape [ ] Based in the greater South Africa [ ] Based beyond South Africa [ ]
Cash sales only [ ] Credit sales only [ ] Cash and credit sales [ ]
This is the only outlet [ ] Another outlet(s) in Cape Town [ ] Another outlet(s) in the greater Western Cape [ ] Another outlet(s) in the greater South Africa [ ] Another outlet(s) worldwide [ ]
Retail store [ ] Wholesale store [ ] Caterer [ ] Restaurant [ ] Convenience store [ ] Café [ ] Spaza shop [ ] Tuck shop [ ] Other: _________________________
Buy products to sell to customers [ ] Buy products to sell to businesses [ ]
Franchised [ ] Non-franchised [ ]
0 – 5 employees [ ] 6 – 10 employees [ ] 11 – 50 employees [ ] 51 – 100 employees [ ] 101+ employees [ ]
____________ years
Managerial position (owner/manager) [ ] Non-managerial (employee) [ ]
If you are in a managerial position, please continue to Section C
If you are in a non-managerial position, please continue to Section D
Owner [ ] Manager [ ] Owner and manager [ ]
____________ years
Yes [ ] No [ ]
Lower than Grade 12 [ ] Grade 12/Senior Certificate/Matric [ ] National Higher Certificate/Higher Certificate/National Certificate [ ] Higher Diploma/Diploma/National Diploma [ ] Bachelor’s Degree/Advanced Degree [ ] Honours degree/Postgraduate diploma [ ] Master’s degree [ ] Doctoral degree [ ]
Yes [ ] No [ ]
If ‘yes’, please continue to Section E
If ‘no’, please continue to Section C(A)
Based on C5, you indicated that you do not have decision-making power in the business. Why is this the case? (Please write a short sentence)
________________________________________________________________________________________________________________
________________________________________________________________________________________________________________
________________________________________________________________________________________________________________
________________________________________________________________________________________________________________
______________________________________________
Yes [ ] No [ ]
What is your exact position in the business? (Tick the most appropriate box below)
Employee [ ] Other: __________________________
How long have you been in this position? (Please write in a number)
____________ years
What is your employment status? (Tick the most appropriate box below)
Full-time employee (permanent) [ ] Part-time employee [ ]
Are you a South African citizen? (Tick the most appropriate box below)
Yes [ ] No [ ]
What is your highest qualification? (Tick the most appropriate box below)
Lower than Grade 12 [ ] Grade 12/Senior Certificate/Matric [ ] National Higher Certificate/Higher Certificate/National Certificate [ ] Higher Diploma/Diploma/National Diploma [ ] Bachelor’s Degree/Advanced Degree [ ] Honours degree/Postgraduate diploma [ ] Master’s degree [ ] Doctoral degree [ ]
Do you have decision-making power in the business? (tick the most appropriate box below)
Yes [ ] No [ ]
If ‘yes’, please continue to Section D(A)
If ‘no’, please continue to Section E
Based on D6, you indicated that you do have decision-making power in the business. Why is this the case? (Please write a short sentence)
________________________________________________________________________________________________________________
________________________________________________________________________________________________________________
________________________________________________________________________________________________________________
Statement
Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Has more income than expenses
Has more assets than liabilities
Has sufficient cash on hand
Has a good reputation among customers
Has a good reputation among competitors
Has a good reputation among its suppliers
Will remain in operation for the foreseeable future
It is very good [ ] It is good [ ] It is neutral [ ] It is bad [ ] It is very bad [ ]
Yes [ ] No [ ]
A process [ ] Realised/implemented by management [ ] Formal [ ] Informal [ ] Helps prevent risks from realising [ ] Helps detect risks as they realise (loss events) [ ] Corrects loss events [ ] Helps the business to achieve operational objectives [ ] Helps the business to achieve compliance objectives [ ] Helps the business to achieve reporting objectives [ ] N/a, the business has no system of internal control [ ]
Statement
Yes
No
Based on the COSO Framework
Based on the CoCo Framework
Based on the COBIT Framework
Based on another framework
Not based on any particular framework
It is very adequate [ ] It is adequate [ ] It is neutral [ ] It is inadequate [ ] It is very inadequate [ ] N/A, the business has no internal control system [ ]
It is very effective [ ] It is effective [ ] It is neutral [ ] It is ineffective [ ] It is very ineffective [ ] N/A, the business has no internal control system [ ]
Statement
Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Source documents are used when goods are bought
Source documents are used when goods are received
Source documents are used when goods are sold
Source documents are used when payments are made
Source documents are used when money is received
Copies of all relevant source documents used are kept
All relevant source documents used are pre-numbered
Unused source documents are kept safe
All relevant source documents used have spaces for the date of transaction
All relevant source documents used have spaces for signatures
All relevant source documents used are simple to complete
Only management may authorise transactions
Employees may authorise transactions based on formal policies and/or procedures
Employees may authorise transactions with management approval only
Access controls are evident at entrances to the premises
Access controls are evident at all doors
Access controls are evident at tills and/or safes
Access controls are evident at storage points
Alarm systems are used
CCTV (surveillance) cameras are used
Security guards are used
Inventory is located and/or stored in a safe location
Staff are protected on premises (bars, security guards, etc.)
Backup and disaster-recovery measures are in place
Staff are supervised
Staff are monitored (e.g. behaviour changes)
Staff-performance reviews are conducted periodically
Quality checks are performed on goods received
Quality checks are performed on goods before they are sold
Surprise cash checks are performed (at tills)
Surprise cash checks are performed (petty cash)
Inventory is periodically counted
Cash is banked daily
Independent audits are performed periodically
Internal audits are performed periodically
The bank account is regularly reconciled by an independent person
The debtors’ control account is regularly reconciled by an independent person
The creditors’ control account is regularly reconciled by an independent person
The person authorising transactions does not record or execute them / (e.g. the authorising of a delivery)
The person recording the transactions does not authorise or execute them (e.g. the recording of delivery of goods)
The person executing transactions does not authorise or record them (e.g. the actual delivery of goods)
Statement
Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Adaptable to changes in the immediate business environment
Assist management with the execution of their responsibilities
Robust
Suitable for the industry of operation
Supportive of policies and procedures
Supportive of risk management strategies
It is very adequate [ ] It is adequate [ ] It is neutral [ ] It is inadequate [ ] It is very inadequate [ ] N/A, the business has no internal control activities [ ]
It is very effective [ ] It is effective [ ] It is neutral [ ] It is ineffective [ ] It is very ineffective [ ] N/A, the business has no internal control activities [ ]
Statement
Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Communicates well
Has effective management practices
Has industry-specific knowledge
Has leadership skills
Is on par with the latest trends in the industry
Promotes accountability
Promotes ethics
Promotes proper values
Promotes responsibility
Promotes transparency
Solves problems
Statement
Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Accountability
Adaptability
Ambition
Analytical
Cautiousness
Commitment
Communicative
Compassion
Competitiveness
Consistency
Courageous
Creativity
Curiosity
Dependable
Discipline
Diversity
Enthusiastic
Ethical
Fairness
Futuristic
Generous
Humble
Inclusiveness
Independence
Innovation
Logical
Loyalty
Optimiser
Optimist
Organised
Realistic
Responsibility
Strategic
Transparency
Trustworthiness
Statement
Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Employees are given full control of taking action (chaotic)
Employees are persuaded to management’s view before taking action (persuasive)
Employees’ inputs are asked before taking action (democratic)
Management gets input from some employees before taking action (semi-autocratic)
Management has the final say before taking action (paternal)
Management lets employees take action at their own pace (
Management only takes own views into account before taking action (autocratic)
It is very appropriate [ ] It is appropriate [ ] It is neutral [ ] It is inappropriate [ ] It is very inappropriate [ ]
Statement
Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Adequacy of the business’ internal control activities (e.g. proper document design, proper authorisation, etc. – refer to Section G)
Adequacy of the business’ internal control system (e.g. helps prevent risks, detect risks and achieve business objectives – refer to Section F)
Business decisions that are made
Economic sustainability of the business
Effectiveness of the business’ internal control activities (e.g. proper document design, proper authorisation, etc. – refer to Section G)
Effectiveness of the business’ internal control system (e.g. helps prevent risks, detect risks and achieve business objectives – refer to Section F)
Efficiency and effectiveness of business operations
Going-concern status of the business
Morale levels inside the business
Productivity of employees
All correlation between the managerial conduct and internal control activities.
Managerial conduct |
Communicates well | Has effective management practices | Has industry-specific knowledge | Has leadership skills | Is on par with the latest trends in the industry | Promotes accountability | Promotes ethics | Promotes proper values | Promotes responsibility | Promotes transparency | Solves problems | |
---|---|---|---|---|---|---|---|---|---|---|---|---|
Internal control activities |
||||||||||||
Source documents are used when goods are bought | 1 | −0.402 |
−0.124 | 0.076 | 0.079 | 0.073 | −0.088 | −0.104 | −0.201 |
−0.144 |
−0.168 |
−0.135 |
2 | 0.000 | 0.081 | 0.289 | 0.271 | 0.309 | 0.219 | 0.144 | 0.005 | 0.044 | 0.018 | 0.058 | |
Source documents are used when goods are received | 1 | −0.262 |
−0.098 | 0.098 | 0.004 | 0.146 |
0.011 | −0.035 | −0.102 | −0.205 |
−0.012 | −0.082 |
2 | 0.000 | 0.172 | 0.172 | 0.950 | 0.040 | 0.879 | 0.627 | 0.153 | 0.004 | 0.864 | 0.251 | |
Source documents are used when goods are sold | 1 | −0.212 |
0.035 | 0.046 | −0.010 | 0.089 | −0.096 | −0.012 | −0.077 | −0.173 |
−0.076 | −0.097 |
2 | 0.003 | 0.623 | 0.517 | 0.888 | 0.212 | 0.178 | 0.868 | 0.283 | 0.015 | 0.290 | 0.176 | |
Source documents are used when payments are made | 1 | −0.288 |
−0.205 |
0.127 | 0.005 | 0.111 | −0.063 | −0.027 | −0.132 | −0.260 |
−0.096 | −0.018 |
2 | 0.000 | 0.004 | 0.074 | 0.943 | 0.121 | 0.378 | 0.702 | 0.063 | 0.000 | 0.179 | 0.800 | |
Source documents are used when money is received | 1 | −0.334 |
−0.012 | 0.144 |
0.000 | 0.161 |
−0.152 |
0.039 | −0.187 |
−0.199 |
0.000 | −0.121 |
2 | 0.000 | 0.872 | 0.043 | 0.999 | 0.023 | 0.033 | 0.587 | 0.008 | 0.005 | 0.997 | 0.088 | |
Copies of all relevant source documents used are kept | 1 | −0.088 | 0.034 | 0.085 | −0.008 | 0.101 | 0.129 | 0.011 | −0.172 |
−0.170 |
−0.038 | 0.002 |
2 | 0.215 | 0.639 | 0.233 | 0.916 | 0.158 | 0.070 | 0.877 | 0.016 | 0.016 | 0.593 | 0.976 | |
All relevant source documents used are pre-numbered | 1 | −0.112 | 0.043 | 0.057 | −0.118 | 0.069 | −0.006 | −0.008 | −0.023 | −0.014 | 0.035 | −0.033 |
2 | 0.117 | 0.551 | 0.426 | 0.097 | 0.335 | 0.929 | 0.912 | 0.746 | 0.846 | 0.627 | 0.648 | |
Unused source documents are kept safe | 1 | −0.228 |
−0.085 | 0.034 | −0.070 | 0.144 |
−0.025 | −0.076 | −0.043 | −0.052 | −0.123 | −0.099 |
2 | 0.001 | 0.235 | 0.631 | 0.330 | 0.043 | 0.729 | 0.285 | 0.550 | 0.467 | 0.085 | 0.167 | |
All relevant source documents used have spaces for the date of transaction | 1 | −0.144 |
0.000 | 0.123 | 0.054 | 0.138 | 0.054 | −0.012 | −0.105 | −0.012 | −0.158 |
−0.017 |
2 | 0.043 | 0.996 | 0.084 | 0.450 | 0.053 | 0.454 | 0.872 | 0.141 | 0.868 | 0.026 | 0.810 | |
All relevant source documents used have spaces for signatures | 1 | −0.233 |
−0.087 | 0.031 | 0.125 | 0.131 | −0.121 | 0.028 | −0.050 | −0.088 | −0.016 | −0.118 |
2 | 0.001 | 0.223 | 0.666 | 0.080 | 0.066 | 0.090 | 0.693 | 0.484 | 0.215 | 0.827 | 0.098 | |
All relevant source documents used are simple to complete | 1 | −0.220 |
−0.007 | 0.053 | 0.046 | 0.034 | 0.079 | −0.030 | −0.033 | −0.026 | −0.049 | 0.009 |
2 | 0.002 | 0.919 | 0.460 | 0.523 | 0.638 | 0.271 | 0.670 | 0.648 | 0.717 | 0.491 | 0.896 | |
Only management may authorise transactions | 1 | −0.228 |
−0.070 | 0.004 | −0.068 | 0.138 | 0.049 | −0.020 | −0.059 | −0.111 | 0.047 | −0.134 |
2 | 0.001 | 0.330 | 0.953 | 0.341 | 0.052 | 0.496 | 0.777 | 0.413 | 0.120 | 0.514 | 0.059 | |
Employees may authorise transactions based on formal policies and/or procedures | 1 | −0.098 | −0.029 | 0.160 |
0.057 | 0.146 |
0.025 | −0.008 | −0.034 | −0.098 | −0.056 | 0.114 |
2 | 0.169 | 0.688 | 0.025 | 0.426 | 0.040 | 0.729 | 0.909 | 0.636 | 0.170 | 0.435 | 0.110 | |
Employees may authorise transactions with management approval only | 1 | −0.137 | −0.005 | 0.089 | −0.004 | 0.058 | −0.068 | 0.030 | −0.010 | −0.115 | −0.112 | −0.098 |
2 | 0.054 | 0.946 | 0.215 | 0.955 | 0.413 | 0.344 | 0.674 | 0.890 | 0.106 | 0.115 | 0.171 | |
Access controls are evident at entrances to the premises | 1 | −0.268 |
−0.043 | 0.056 | 0.008 | 0.009 | 0.071 | −0.116 | −0.225 |
−0.055 | −0.070 | −0.008 |
2 | 0.000 | 0.548 | 0.430 | 0.907 | 0.895 | 0.323 | 0.102 | 0.001 | 0.442 | 0.330 | 0.911 | |
Access controls are evident at all the doors | 1 | −0.112 | 0.010 | −0.023 | 0.153 |
0.111 | 0.063 | −0.106 | −0.057 | −0.039 | −0.048 | −0.053 |
2 | 0.116 | 0.889 | 0.751 | 0.031 | 0.120 | 0.374 | 0.137 | 0.423 | 0.582 | 0.500 | 0.459 | |
Access controls are evident at tills and/or safes | 1 | −0.172 |
−0.039 | 0.040 | −0.033 | 0.194 |
−0.029 | −0.112 | −0.018 | −0.157 |
−0.069 | −0.187 |
2 | 0.015 | 0.581 | 0.574 | 0.643 | 0.006 | 0.682 | 0.116 | 0.803 | 0.027 | 0.335 | 0.008 | |
Access controls are evident at storage points | 1 | −0.142 |
−0.029 | −0.046 | 0.007 | −0.005 | 0.134 | −0.004 | −0.127 | −0.221 |
−0.099 | −0.138 |
2 | 0.046 | 0.690 | 0.523 | 0.926 | 0.943 | 0.060 | 0.956 | 0.074 | 0.002 | 0.165 | 0.053 | |
Alarm systems are used | 1 | −0.325 |
−0.125 | 0.156 |
0.061 | 0.146 |
−0.009 | −0.112 | −0.206 |
−0.226 |
−0.132 | −0.120 |
2 | 0.000 | 0.078 | 0.029 | 0.394 | 0.041 | 0.897 | 0.117 | 0.004 | 0.001 | 0.063 | 0.091 | |
CCTV (surveillance) cameras are used | 1 | −0.232 |
−0.076 | 0.115 | 0.028 | 0.088 | −0.137 | −0.116 | −0.176 |
−0.283 |
−0.137 | −0.018 |
2 | 0.001 | 0.289 | 0.108 | 0.691 | 0.220 | 0.055 | 0.103 | 0.013 | 0.000 | 0.055 | 0.804 | |
Security guards are used | 1 | −0.161 |
−0.114 | 0.195 |
−0.003 | 0.271 |
−0.094 | −0.004 | −0.080 | −0.141 |
−0.053 | −0.149 |
2 | 0.024 | 0.110 | 0.006 | 0.962 | 0.000 | 0.187 | 0.953 | 0.265 | 0.048 | 0.460 | 0.036 | |
Inventory is located and/or stored in a safe location | 1 | −0.283 |
−0.085 | −0.145 |
0.007 | −0.117 | 0.012 | −0.088 | −0.161 |
−0.175 |
−0.164 |
−0.028 |
2 | 0.000 | 0.236 | 0.042 | 0.917 | 0.101 | 0.869 | 0.218 | 0.023 | 0.014 | 0.021 | 0.692 | |
Staff are protected on premises (bars, security guards etc.) | 1 | −0.198 |
−0.087 | 0.207 |
0.065 | 0.225 |
−0.213 |
0.080 | −0.100 | −0.167 |
−0.042 | −0.031 |
2 | 0.005 | 0.223 | 0.003 | 0.363 | 0.001 | 0.003 | 0.261 | 0.162 | 0.019 | 0.559 | 0.667 | |
Backup and disaster-recovery measures are in place | 1 | −0.217 |
−0.051 | 0.103 | 0.017 | 0.036 | −0.060 | −0.048 | −0.029 | −0.154 |
−0.107 | −0.128 |
2 | 0.002 | 0.475 | 0.150 | 0.811 | 0.615 | 0.402 | 0.500 | 0.686 | 0.030 | 0.134 | 0.072 | |
Staff are supervised | 1 | −0.214 |
−0.213 |
0.081 | −0.001 | 0.029 | −0.052 | 0.040 | −0.148 |
−0.184 |
−0.128 | 0.002 |
2 | 0.002 | 0.003 | 0.254 | 0.991 | 0.690 | 0.464 | 0.577 | 0.038 | 0.010 | 0.072 | 0.981 | |
Staff are monitored (e.g. behaviour changes) | 1 | −0.128 | −0.110 | 0.088 | −0.054 | 0.079 | −0.058 | −0.168 |
0.004 | −0.102 | −0.120 | −0.002 |
2 | 0.073 | 0.124 | 0.217 | 0.446 | 0.267 | 0.415 | 0.018 | 0.952 | 0.153 | 0.092 | 0.976 | |
Staff-performance reviews are conducted periodically | 1 | −0.092 | 0.014 | 0.063 | −0.016 | 0.222 |
0.025 | 0.151 |
0.003 | −0.074 | 0.025 | −0.038 |
2 | 0.198 | 0.844 | 0.377 | 0.820 | 0.002 | 0.727 | 0.034 | 0.972 | 0.300 | 0.729 | 0.597 | |
Quality checks are performed on goods received | 1 | −0.209 |
−0.166 |
0.042 | 0.037 | 0.045 | −0.084 | −0.148 |
−0.237 |
−0.117 | −0.164 |
−0.134 |
2 | 0.003 | 0.019 | 0.561 | 0.600 | 0.528 | 0.239 | 0.037 | 0.001 | 0.102 | 0.021 | 0.060 | |
Quality checks are performed on goods before they are sold | 1 | −0.053 | −0.035 | 0.075 | −0.068 | 0.008 | 0.105 | 0.092 | −0.073 | −0.234 |
−0.075 | −0.116 |
2 | 0.458 | 0.622 | 0.293 | 0.344 | 0.907 | 0.142 | 0.196 | 0.309 | 0.001 | 0.294 | 0.103 | |
Surprise cash checks are performed (at tills) | 1 | −0.224 |
0.000 | 0.147 |
0.028 | 0.107 | −0.027 | −0.017 | −0.095 | −0.177 |
−0.061 | −0.077 |
2 | 0.002 | 0.996 | 0.039 | 0.696 | 0.133 | 0.708 | 0.817 | 0.185 | 0.012 | 0.390 | 0.284 | |
Surprise cash checks are performed (petty cash) | 1 | −0.080 | −0.029 | 0.051 | 0.125 | 0.112 | 0.091 | −0.047 | 0.003 | −0.183 |
0.107 | −0.008 |
2 | 0.263 | 0.681 | 0.478 | 0.079 | 0.116 | 0.201 | 0.507 | 0.962 | 0.010 | 0.134 | 0.910 | |
Inventory is periodically counted | 1 | −0.185 |
−0.024 | 0.239 |
0.164 |
0.250 |
−0.067 | −0.117 | −0.146 |
−0.141 |
−0.096 | −0.142 |
2 | 0.009 | 0.735 | 0.001 | 0.021 | 0.000 | 0.349 | 0.101 | 0.041 | 0.048 | 0.178 | 0.046 | |
Cash is banked daily | 1 | −0.224 |
−0.140 |
−0.010 | −0.172 |
0.049 | −0.072 | −0.069 | −0.113 | −0.360 |
−0.044 | −0.114 |
2 | 0.001 | 0.049 | 0.888 | 0.016 | 0.493 | 0.313 | 0.332 | 0.111 | 0.000 | 0.538 | 0.110 | |
Independent audits are performed periodically | 1 | −0.130 | 0.014 | 0.241 |
0.262 |
0.213 |
0.139 | 0.028 | −0.033 | −0.197 |
−0.082 | −0.054 |
2 | 0.068 | 0.841 | 0.001 | 0.000 | 0.003 | 0.051 | 0.692 | 0.648 | 0.005 | 0.252 | 0.452 | |
Internal audits are performed periodically | 1 | −0.253 |
−0.033 | 0.110 | 0.214 |
0.130 | −0.065 | 0.067 | −0.078 | −0.199 |
−0.068 | −0.185 |
2 | 0.000 | 0.644 | 0.123 | 0.002 | 0.069 | 0.362 | 0.348 | 0.272 | 0.005 | 0.341 | 0.009 | |
The bank account is regularly reconciled by an independent person | 1 | −0.006 | 0.094 | 0.047 | 0.012 | 0.176 |
0.186 |
0.037 | 0.036 | −0.044 | −0.070 | −0.109 |
2 | 0.930 | 0.186 | 0.511 | 0.867 | 0.013 | 0.009 | 0.608 | 0.616 | 0.540 | 0.329 | 0.127 | |
The debtors’ control account is regularly reconciled by an independent person | 1 | −0.114 | −0.051 | 0.049 | 0.095 | 0.184 |
0.132 | −0.035 | −0.002 | −0.102 | 0.030 | −0.055 |
2 | 0.111 | 0.478 | 0.495 | 0.182 | 0.009 | 0.065 | 0.628 | 0.974 | 0.152 | 0.677 | 0.438 | |
The creditors’ control account is regularly reconciled by an independent person | 1 | −0.048 | 0.004 | 0.215 |
0.154 |
0.148 |
0.130 | 0.071 | −0.033 | −0.082 | −0.021 | 0.023 |
2 | 0.503 | 0.952 | 0.002 | 0.031 | 0.037 | 0.068 | 0.320 | 0.647 | 0.250 | 0.773 | 0.743 | |
The person authorising transactions does not record or execute them (e.g. the authorising of a delivery) | 1 | −0.266 |
−0.064 | 0.177 |
−0.003 | 0.283 |
0.037 | −0.060 | −0.156 |
−0.205 |
0.064 | −0.189 |
2 | 0.000 | 0.372 | 0.013 | 0.968 | 0.000 | 0.603 | 0.402 | 0.028 | 0.004 | 0.368 | 0.008 | |
The person recording the transactions does not authorise or execute them (e.g. the recording of delivery of goods) | 1 | −0.115 | −0.058 | 0.150 |
0.063 | 0.288 |
0.089 | 0.070 | −0.105 | −0.393 |
0.055 | −0.134 |
2 | 0.108 | 0.416 | 0.034 | 0.382 | 0.000 | 0.214 | 0.328 | 0.140 | 0.000 | 0.445 | 0.060 | |
The person executing transactions does not authorise or record them (e.g. the actual delivery of goods) | 1 | −0.232 |
−0.097 | 0.166 |
0.077 | 0.137 | 0.077 | −0.050 | −0.059 | −0.263 |
−0.019 | −0.093 |
2 | 0.001 | 0.175 | 0.019 | 0.278 | 0.055 | 0.282 | 0.482 | 0.405 | 0.000 | 0.790 | 0.191 |
Correlation is significant at the 0.05 level (2-tailed); **, Correlation is significant at the 0.01 level (2-tailed); 1 = Correlation Coefficient; 2 = Significance (2-tailed).
Significant differences between the views of members of management and employees.
Question | Mann–Whitney U | Z | p | Result (based on 5% level) |
---|---|---|---|---|
In the business source documents are used when goods are bought | 3867.000 | −2.393 | 0.017 | Significant |
In the business source documents are used when goods are received | 3696.000 | −2.876 | 0.004 | Significant |
In the business source documents are used when goods are sold | 4180.500 | −1.436 | 0.151 | Not significant |
In the business source documents are used when payments are made | 3967.500 | −2.016 | 0.044 | Significant |
In the business source documents are used when money is received | 3657.500 | −2.802 | 0.005 | Significant |
In the business copies of all relevant source documents used are kept | 4310.500 | −1.066 | 0.286 | Not significant |
In the business all relevant source documents used are pre-numbered | 4153.000 | −1.444 | 0.149 | Not significant |
In the business unused source documents are kept safe | 3944.500 | −1.999 | 0.046 | Significant |
In the business all relevant source documents used have spaces for the date of transaction | 3692.000 | −2.828 | 0.005 | Significant |
In the business all relevant source documents used have spaces for signatures | 3899.500 | −2.242 | 0.025 | Significant |
In the business all relevant source documents used are simple to complete | 4593.000 | −0.294 | 0.769 | Not significant |
In the business only management may authorise transactions | 3964.500 | −2.069 | 0.039 | Significant |
In the business employees may authorise transactions based on formal policies and/or procedures | 4389.500 | −0.849 | 0.396 | Not significant |
In the business employees may authorise transactions with management approval only | 3745.500 | −2.580 | 0.010 | Significant |
In the business access controls are evident at entrances to the premises | 4474.500 | −0.607 | 0.544 | Not significant |
In the business access controls are evident at all the doors | 3996.500 | −1.927 | 0.054 | Not significant |
In the business access controls are evident at tills and/or safes | 4596.000 | −0.279 | 0.780 | Not significant |
In the business access controls are evident at storage points | 4307.000 | −1.088 | 0.277 | Not significant |
In the business alarm systems are used | 4060.000 | −1.763 | 0.078 | Significant |
In the business CCTV (surveillance) cameras are used | 4225.000 | −1.265 | 0.206 | Not significant |
In the business security guards are used | 4427.000 | −0.717 | 0.473 | Not significant |
In the business inventory is located and/or stored in a safe location | 4133.000 | −1.523 | 0.128 | Not significant |
In the business staff are protected on premises (bars, security guards etc.) | 3874.500 | −2.290 | 0.022 | Significant |
In the business backup and disaster-recovery measures are in place | 4211.500 | −1.317 | 0.188 | Not significant |
In the business staff are supervised | 4694.500 | −0.017 | 0.986 | Not significant |
In the business staff are monitored (e.g. behaviour changes) | 4459.500 | −0.671 | 0.502 | Not significant |
In the business staff-performance reviews are conducted periodically | 3910.000 | −2.167 | 0.030 | Significant |
In the business quality checks are performed on goods received | 4180.500 | −1.416 | 0.157 | Not significant |
In the business quality checks are performed on goods before they are sold | 4396.500 | −0.830 | 0.407 | Not significant |
In the business surprise cash checks are performed (at tills) | 4675.000 | −0.068 | 0.946 | Not significant |
In the business surprise cash checks are performed (petty cash) | 3737.000 | −2.569 | 0.010 | Significant |
In the business inventory is periodically counted | 4131.000 | −1.562 | 0.118 | Not significant |
In the business cash is banked daily | 3771.500 | −2.404 | 0.016 | Significant |
In the business independent audits are performed periodically | 4051.500 | −1.718 | 0.086 | Not significant |
In the business internal audits are performed periodically | 3921.000 | −2.090 | 0.037 | Significant |
In the business the bank account is regularly reconciled by an independent person | 4621.500 | −0.207 | 0.836 | Not significant |
In the business the debtors’ control account is regularly reconciled by an independent person | 4597.500 | −0.271 | 0.786 | Not significant |
In the business the creditors’ control account is regularly reconciled by an independent person | 4688.000 | −0.033 | 0.974 | Not significant |
In the business the person authorising transactions does not record or execute them (e.g. the authorising of a delivery) | 3947.500 | −1.961 | 0.050 | Significant |
In the business the person recording the transactions does not authorise or execute them (e.g. the recording of delivery of goods) | 3948.500 | −1.953 | 0.051 | Not significant |
In the business the person executing transactions does not authorise or record them (e.g. the actual delivery of goods) | 3968.000 | −1.902 | 0.057 | Not significant |
The business’ management communicates well | 4071.000 | −1.847 | 0.065 | Not significant |
The business’ management has effective management practices | 4586.500 | −0.336 | 0.737 | Not significant |
The business’ management has industry-specific knowledge | 4273.000 | −1.197 | 0.231 | Not significant |
The business’ management has leadership skills | 4496.000 | −0.571 | 0.568 | Not significant |
The business’ management is on par with the latest trends in the industry | 4362.000 | −0.920 | 0.357 | Not significant |
The business’ management promotes accountability | 4585.000 | −0.324 | 0.746 | Not significant |
The business’ management promotes ethics | 4631.500 | −0.194 | 0.846 | Not significant |
The business’ management promotes proper values | 4380.000 | −0.909 | 0.363 | Not significant |
The business’ management promotes responsibility | 3617.000 | −3.072 | 0.002 | Significant |
The business’ management promotes transparency | 4182.500 | −1.426 | 0.154 | Not significant |
The business’ management solves problems | 4642.000 | −0.165 | 0.869 | Not significant |