Internal controls in a Maltese medium-sized food company : a study

Abstract

Purpose: The purpose of this dissertation is to evaluate those internal controls present within the purchasing, inventory stock management, sales, and cash management cycles of the local medium-sized Food Company. Additionally, this study also aims to examine any issues or barriers within the evaluated internal control processes. Design: The research methodology involves the adoption of a qualitative approach, in which semi-structured interviews were carried out with the Food Company’s staff members. In addition to this, observation of internal control processes was also conducted. Both these tools were implemented so as to reach this study’s research objectives. Findings: The Food Company’s existing internal control system was deemed as being quite effective. An identified strength of the Food Company is the close relationships maintained between top management and staff. Additionally, the Food Company’s thorough documentation procedures, checking measures, and multi-level approval and authorization processes further contribute to their strengths. However, certain weaknesses were identified. It was noted that the majority of these weaknesses may be improved through the involvement of further individuals within the observed processes. Conclusion: This study concludes that, while the existing internal control processes of the Food Company are deemed to be effective, certain areas require further improvements and the inclusion of additional internal controls in order to establish a truly robust internal control system. In this regard, this study proposes recommendations to be undertaken by the Food Company, which will improve its internal control system. Value: The aim of this study is to demonstrate how effective internal controls contribute towards the success of organisations, with particular reference to those within the food and beverage industry. Additionally, the adoption of the proposed recommendations should lead to a more robust internal control system, thereby improving the efficiency of operational activities