Internal Control Systems and Non-Financial Performance of Micro and Small Enterprises: Evidence from the Quezon City, Philippines

Jomar Valonda Villena; Emmanuel M. Serna, Jr.; Fideliz Arca C. Vidal; Alfred Bautista

doi:10.36948/ijfmr.2026.v08i03.80306

Internal Control Systems and Non-Financial Performance of Micro and Small Enterprises: Evidence from the Quezon City, Philippines

Author(s)	Dr. Jomar Valonda Villena, Atty. Emmanuel M. Serna, Jr., Prof. Fideliz Arca C. Vidal, Prof. Alfred Bautista
Country	Philippines
Abstract	This study examines the relationship between internal control systems and non-financial performance among micro and small enterprises in the Philippines. Using the Committee of Sponsoring Organizations (COSO) framework, the research explores how internal control components—control environment, risk assessment, control activities, information and communication, and monitoring—contribute to addressing operational inefficiencies commonly observed in small businesses. A quantitative descriptive-correlational research design was employed. Data were collected through a structured survey questionnaire administered to 56 owners and/or managers of micro and small enterprises. Statistical tools, including weighted mean and Pearson correlation analysis, were used to evaluate the level of implementation of internal control systems and their relationship to non-financial performance indicators, namely external stakeholder management, employee-related measures, and internal process efficiency. The findings indicate that internal control systems are generally highly implemented across the surveyed enterprises, with particular strength in control activities and monitoring mechanisms. Non-financial performance was also rated highly, especially in terms of process efficiency. Correlation analysis revealed a positive and significant relationship between internal control implementation and non-financial performance, suggesting that stronger internal control systems contribute to improved operational effectiveness and business sustainability. The results underscore the importance of enhancing internal control mechanisms in micro and small enterprises to improve service delivery, ensure regulatory compliance, and support long-term operational sustainability. The study contributes to the growing body of literature on internal control in small businesses and provides practical insights for enterprise owners, policymakers, and management practitioners.
Keywords	Internal Control Systems; Non-Financial Performance; Micro and Small Enterprises; COSO Framework; Service Industry; Stakeholder Management; Employee Performance; Process Efficiency
Field	Business Administration
Published In	Volume 8, Issue 3, May-June 2026
Published On	2026-06-02
DOI	https://doi.org/10.36948/ijfmr.2026.v08i03.80306

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Internal Control Systems and Non-Financial Performance of Micro and Small Enterprises: Evidence from the Quezon City, Philippines

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