Autonomous Internal Control System for Small to Medium Firms Juan M. Corchado 1 , M. Lourdes Borrajo 2 , and J. Carlos Yáñez 3 1 Departamento de Informática y Automática, University of Salamanca, Plaza de la Merced s/n, 37008 Salamanca, Spain corchado@usal.es 2 Department of Computer Science, University of Vigo, Campus As Lagoas, s/n, 32004 Ourense, Spain lborrajo@uvigo.es 3 Department of Financial Accounting, University of Vigo, Campus as Lagoas, s/n, 32004 Ourense, Spain jcyanez@uvigo.es Abstract. Small to medium enterprises require an internal control mechanism in order to monitor their modus operandi and to analyse whether they are achieving their goals. A tool for the decision support process has been developed based on a case-based reasoning system that automates the internal control process. The objective of the system is to facilitate the process of internal auditing. The system analyses the data that characterises each one of the activities carried out by the firm, then determines the state of each activity, calculates the associated risk, detects the erroneous processes, and generates recommendations to improve these processes. The developed model is composed of two case-based reasoning systems. One is used to identify the activities that may be improved and the other to determine how the activities could be improved. Each of the two subsystems uses a different problem solving method in each of the steps of the reasoning cycle. The system has been tested in 22 small and medium companies in the textile sector, located in the northwest of Spain during the last 39 months and the results obtained have been very encouraging. 1. Introduction Small to medium enterprises require an internal control mechanism in order to monitor their modus operandi and to analyse whether they are achieving their goals. Such mechanisms are constructed around series of organizational policies and specific procedures dedicated to giving reasonable guarantees to their executive bodies. This group of policies and procedures are named "controls", and they all conform to the structure of internal control of the company. As a consequence of this, the need for periodic internal audits has arisen. Nevertheless the evaluation and the prediction of the evolution of these types of systems, characterized by their great dynamism, are, in general, complicated. It is necessary to construct models that facilitate the analysis of work carried out in changing environments, such as finance.