EFFECT OF AUDIT COMPETENCE AND INTERNAL CONTROL SYSTEMS ON SUSTAINABLE PERFORMANCE OF SMES IN ENUGU STATE NIGERIA

Abstract

The study examined the effect of audit competence and internal control systems on the sustainable performance of Small and Medium Enterprises (SMEs) in Enugu State, Nigeria. Specifically, the study determined the effect of audit professional qualification on financial sustainability, audit experience on operational efficiency, audit technical knowledge and skills on profitability, and internal monitoring and supervision on fraud prevention and accountability. A descriptive survey research design was adopted. Data were collected from SME owners, managers, and accounting personnel using a structured questionnaire. The population comprised registered SMEs in Enugu State, while data were analyzed using descriptive statistics and multiple regression analysis with the aid of SPSS. The findings revealed that audit professional qualification has a significant positive effect on financial sustainability (β = 0.724, p < 0.001), audit experience significantly improves operational efficiency (β = 0.698, p < 0.001), audit technical knowledge and skills significantly enhance profitability (β = 0.751, p < 0.001), while internal monitoring and supervision also has a significant positive effect on fraud prevention and accountability (β = 0.736, p < 0.001). The study concluded that audit competence and effective internal control systems are critical determinants of the sustainable performance of SMEs in Enugu State. The study recommends continuous professional training for auditors, engagement of experienced audit personnel, and strengthening of internal monitoring and supervision to improve accountability, operational efficiency, profitability, and long-term sustainability of SMEs.