Selected internal controls in a Maltese bakery production company : a case study

Abstract

PURPOSE: The study analyses the internal control of the purchasing, inventory and production functions in a Maltese Bakery Production Company. Furthermore, this dissertation will analyse the effect of the Budgeting, KPI and IT system on these internal controls functions. DESIGN: A qualitative evaluation composed of semi-structured interviews with the managers and administrators of the company and observation to authenticate the data provided during the interviews were conducted. FINDINGS: Research indicated that, a moderate system of internal control is present in the proposed functions of the company. Through the analysis of the proposed internal control functions it can be ascertained that the company has deficiencies with regards to segregation of duties, traceability, authorisation, documentation and buffer stock system together with a lack of an inventory information system and lack of control during the inventory process. Moreover, although the budgeting and KPI system are still being implemented, an unreliable estimate of costs and lack of involvement from the BOD in the budgeting system together with insufficient management and lack of a software package in the KPI system can hinder the internal controls in the proposed systems. Furthermore, from the analysis of the IT controls in the company, it can be concluded that it assists the company in its internal control however; minor adjustments will enhance this relationship. CONCLUSION: Although a basis for internal controls is present in the proposed systems, improvement is nevertheless required. Thus, recommendations are suggested to enhance the current internal controls in these systems. VALUE: It is hoped that the weaknesses identified in this study are analysed by the Maltese Bakery Production Company and an enhanced internal control system is implemented through the recommendations suggested by this study.