Factors Affecting the Effectiveness of Internal Control in Small and Medium-Sized Enterprises in Hanoi

Small and medium-sized enterprises (SMEs) rely on effective internal control systems to manage risks and achieve organizational objectives. This study examines the factors influencing the effectiveness of internal control in SMEs located in Hanoi. Drawing on the COSO (2013) [1] internal control framework, we combine qualitative and quantitative methods to identify key influencing factors, including Control Environment, Risk Assessment, Control Activities, Information & Communication, and Monitoring. A survey of SMEs was conducted using a structured questionnaire, followed by data analysis with exploratory factor analysis (EFA), confirmatory factor analysis (CFA), and multiple regression. The results confirm that all five components have a positive and significant impact on internal control effectiveness (p < 0.05). Notably, factors related to information flow and control procedures exhibit the strongest influence on the effectiveness of internal controls, while the monitoring component shows a smaller yet still significant effect. These findings highlight the importance of a comprehensive internal control framework in SMEs. The study concludes with recommendations for SME managers to strengthen each internal control component, thereby improving the overall effectiveness of internal control systems in their organizations.