An Appraisal of Internal Control System in a Medium Scale Business
CHAPTER ONE
Objectives of the Study
The broad objective of this study is to appraise internal control system in a medium scale business focusing on Innoson Company, Enugu.
The specific objectives include the following:
- To determine the contribution of internal control in detection of fraud in medium scale businesses.
- To ascertain the contribution of internal control system to prevention of fraud in medium scale businesses.
- To find out the contribution of internal control system in investigation of fraud in medium scale businesses.
CHAPTER TWO
REVIEWED OF RELATE LITERATURE
Conceptual Framework
The structure of modern banking system and the high expectation from the investors and society at large has called for a more tightened internal control system.
Internal control has been variously defined. According to Abbott, Parker, and Peters (2013), internal control is a process affected by an organization structure, work and authority flows people and management information system, designed to help the organization accomplish specific goal or objective from the definition, the objective of any internal control should be directed towards the attainment of the organization objective.
An efficient internal control system involves a clear definition and separation of duties for various employers of groups within a company. The intent separating the duties is to protect against fraud, waste abuse and mismanagement of resource. Effective internal control helps to assure the accuracy of reports to management and the various supervising bodies (in the case of banks).
According to Agrawal and Chadha (2011), internal control is made up of internal checks, internal audit, accounting controls and other forms of controls such as budgetary and physical control. Amudo (2008) defines internal control as a process, affected by an entity’s board of directors, management and other personnel designed to provide reasonable assurance regarding the achievement of objective in the following categories; effectiveness and efficiency of operation, reliability of financial reporting and compliance with applicable laws and regulations.
From these definitions, it can be deduced that internal control comprises the plan of an organization and all of the coordinated methods and measures adopted by an organization to safeguard its assets, check the accuracy and reliability of its accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies. Internal control objectives are channeled towards ensuring adherence to managerial policies and achieving organizational goals in general.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain An appraisal of internal control system in a medium scale business. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing An appraisal of internal control system in a medium scale business
Summary
This study was on An appraisal of internal control system in a medium scale business. Three objectives were raised which included: To determine the contribution of internal control in detection of fraud in medium scale businesses, to ascertain the contribution of internal control system to prevention of fraud in medium scale businesses and to find out the contribution of internal control system in investigation of fraud in medium scale businesses. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from Innoson Motors, Enugu. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
Based on the summary of findings, it is concluded that internal control system has significant contribution in fraud control and the study also concluded that internal control system l has helped in elimination of flaws in the audit plan, detecting illegal conduct in organizations.
Recommendations
The following recommendations are made for this study:
The internal control of government enterprises should be effectively implemented as it aids in detecting cash larceny in organizations.
There should be enlightenment of staff on the basics of internal control system. This is due to the fact that internal control helps in detecting voucher padding.
For organizations to maintain their professional codes of conduct and ethical considerations, internal control should be adequately maintained as it helps in detecting illegal conduct like fake receipt among staff
References
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- Amudo, A. (2008), Evaluation of internal control systems: The case of public sector. Projects financed by the African Development Bank Group, an unpublished MBA Thesis, Maastricht School of Management, The Netherlands, August.
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