Implementation of internal controls in supply chain management : a case study

Abstract

BACKGROUND: Internal controls in the supply chain management (SCM) are very important as they are the checks and balances that ensure compliance with rules and regulations. Internal controls further promote compliance, increase transparency and accountability and reduce the risk of fraudulent transactions. OBJECTIVES: The study examined the factors influencing internal controls within the SCM function in the Department of Social Development (DSD), South Africa. METHOD: Using a qualitative research approach and a case study design, data were collected through semi-structured interviews. Thematic analyses were used to interpret the findings. RESULTS: The study’s findings established that there are challenges affecting the effectiveness of internal controls in the SCM function, namely, poor policy implementation, outdated SCM policy, a lack of training on policies and procedures, inadequate monitoring and evaluation of SCM, non-compliance with SCM rules and regulations, capacity constraints in the SCM directorate and a lack of consequence management. CONCLUSION: Effective internal controls are crucial for organisations to compete successfully in the supply chain environment. In this regard, there must be adherence to financial management processes and procedures that guide and serve as internal controls. CONTRIBUTION: The study contributes towards the strengthening of internal controls in the DSD by paying particular attention to the five essential components of the Committee of Sponsoring Organizations (COSO) framework.