Internal accounting controls, financial reporting quality and profitability in resource-constrained firms: a mediation analysis
Mario de la Puente et al.
Abstract
Purpose This research investigates the mediating role of accounting information quality in the relationship between internal accounting controls and operational profitability in resource-constrained microenterprises. It focuses on 60 firms in Barranquilla, Colombia, during the 2023 fiscal year. Design/methodology/approach The study employs a COSO-based internal control assessment and applies accrual-based accounting quality measures. Statistical techniques include Spearman correlation, hierarchical regression, quantile regression and mediation analysis using structural equation modeling. Data validation was performed through triangulation with tax records and banking documents. Findings Internal controls explain 31% of the variance in accounting quality, which mediates 52% of the variance in profitability. Risk assessment shows the strongest association with accruals quality (rs = 0.612, p < 0.01). Quantile regression reveals that low-performing firms benefit the most from improved controls. Research limitations/implications Findings suggest targeted internal control enhancements can improve financial outcomes in microenterprises. Results offer insights for policymakers, auditors and SME development programs in emerging economies. Originality/value This is among the first empirical studies in Latin America to validate a mediation model linking internal controls, information quality and profitability in microenterprises using a rigorous multi-method approach.
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.50 × 0.4 = 0.20 |
| M · momentum | 0.50 × 0.15 = 0.07 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.