Overview of Internal Control Theory and Factors Affecting its Effectiveness in Small and Medium-Sized

This article provides a theoretical overview of Internal Control (IC) and analyzes factors affecting its effectiveness, especially within the context of Small and Medium-sized Enterprises (SMEs). IC plays a foundational role in governance, helping businesses achieve objectives, safeguard assets, ensure information reliability, and comply with legal regulations. However, IC in SMEs often faces limitations due to resource constraints, simple organizational structures, and insufficient awareness. The study systematizes IC theory based on the COSO framework and clarifies factors from the control environment, risk assessment, control activities, information and communication, monitoring, along with specific characteristics of SMEs. The article emphasizes the necessity of understanding these factors to enhance IC effectiveness, providing a premise for empirical research and practical solution proposals.