INTERNAL CONTROL SYSTEM AND PERSONNEL PERFORMANCE IN SMALL SCALE MANUFACTURING ENTERPRISES IN ONDO STATE, NIGERIA

Abstract

This study investigates the effect of internal control system on personnel performance of small scale manufacturing enterprises in Ondo State, Nigeria. Descriptive research statistics such as tabular presentation, simple percentage distributions, frequency distributions and ranking were used to analyse some of the data and inferential statistics namely ordered logistic regression was also used. The sample chosen for this study was 195 small scale manufacturing enterprises from the three senatorial districts of Ondo State, Nigeria. The population of the study was the 4,500 enterprises registered with Nigerian Association of Small Scale Industrialists (NASSI) in Ondo State. The sample size was chosen using Yamane’s (1967) Formula. The findings revealed that most small scale manufacturing enterprises had different control activities in place such as employment of qualified staff at 29.2 %, authorisation and approval procedures for transactions at 22.1%, documentation and record retention at 15.4%, time and leave reporting at 14.4%, new technologies at 5.1%, physical restrictions at 2% and segregation of duties at 1% in the ranking order. It was also established that the problems encountered in the implementation of internal control system in the small scale manufacturing enterprises are employees’ lateness to work being 28.2%, employees lack of skills 21.5%, no defined job descriptions 19.5%, lack of cooperation 10.3%, human error 9.2%, misunderstanding 7.2% and stress and fatigue 4.1% in the ranking order. The statistical result of the ordered logistic regression with the significant level at p=0.05 revealed that control environment and monitoring have signifiant effect on the perceived personnel performance. The Pseudo R2 of 0.0353 indicated that the significant independent variables of the model accounted for 3.53% variation in the personnel performance. It was concluded that control environment and monitoring have significant effect on the perceived personnel performance in the selected small scale manufacturing enterprises. And it was recommended that small scale manufacturing enterprises should focus more on the control environment and monitoring components of internal control system as they will aid personnel performance.