GlossaryTTK Art. 378 (listed companies)
Internal Control System: Key Elements for SMEs
As businesses grow, it is not possible for one person to look at every transaction. Internal control rests trust not on people but on rules.
Five core elements
| Element | Practical meaning |
|---|---|
| Authority and approval | It is defined who approves which amount |
| Segregation of duties | The people who place the order, make the payment and keep the record are different |
| Documentation | Every transaction is supported by an invoice, contract or delivery note |
| Reconciliation | Bank, ledger account and stock records are compared regularly |
| Monitoring | Deviations are reported and corrected regularly |
First steps for SMEs
- Payment approval: Two signatures or two approvals for payments above a set amount.
- Bank access: The person who makes the payment should not be the one who records it.
- Monthly reconciliation: Customer and supplier accounts.
- Stock count: At regular intervals.
- Authority table: Who signs what should be written down clearly.
Legal framework
In companies whose shares are traded on the stock exchange, setting up an expert committee for early detection of risk is compulsory (TTK Art. 378). There is no such obligation for other companies, but managers’ duty of care also covers setting up a system that prevents financial loss.
Why does it matter?
Well-built internal control shows errors early, reduces cash leakage and increases trust among banks, investors and partners. It is the first step towards institutionalisation.
How Denova can help
In our Corporate Solutions Advisory we map processes, identify risk areas and set up a practical internal control system that fits your business.
Frequently asked questions
Does a small business need internal control?
Yes. In small businesses dependence on one person is an even bigger risk. Internal control does not need to be a large system. Even simple approval and separation rules on money and document flows reduce risk.
Are internal control and internal audit the same?
No. Internal control means rules built into daily operations. Internal audit is a separate function that independently assesses whether those rules work.
This article is for general information only and is not legal advice. Every case must be assessed on its own facts. It reflects Turkish law as of the publication date.