The Effect of Accounting and Internal Control System in Deposit Money Banks Operation
CHAPTER ONE
OBJECTIVE OF THE STUDY
The main purpose of this study is to examined the effect of accounting and internal control system in Commercial banks. In other words to assess control measures that management of the Commercial banks can adopt within their organizations to ensure the effectiveness and efficiency of operations; reliability of financial and management reporting; compliance with applicable accounting laws and regulations; prevent fraud; intentional errors in accounting records and misappropriation embezzlement of the organization’s assets in order to achieve its goals effectively and efficiently.
Therefore the study intends to;
- Examine the adequacy or otherwise of the relevance of internal control system in Commercial banks.
- Examine the contribution of internal control components (prevent controls’ and defect controls’) to the effectiveness and efficiency of Commercial Banks’ management.
- To determine the level of correlation between accounting internal control and the effectiveness and efficiency of operation in Commercial Banks.
- To determine whether accounting and internal control ensures compliance with applicable laws and regulations.
- To determine the degree of reliance to be placed on the accounting system and internal control in commercial banks.
- To identify and analyze the prevailing problems associated with the accounting and internal control system and to examine the extent to which these problems affect the banks.
- To offer useful suggestions and recommendations on how to improve the accounting system, procedures and internal control system of commercial banks in order to be more effective in meeting future challenges.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
Fraud, according to Nwankwo (1991) arises when a person/organisation in position of trust and responsibility deliberately breaks the rules for personal or corporate gains at the expense of public interest. It is a global malaise that spares no institution and economy. Bank fraud on the other hand is the use of illegal means to obtain money and/or assets held or owned by financial institutions (Nwaeze, 2008). The increasing wave of fraud in financial institutions in recent years pose serious threats to the stability and survival of financial sector and banks in particular (Usman & Shah, 2013). Akinyomi (2012) opined that fraud if not properly checked, might result in huge financial losses to banks and their customers, depletion of shareholders’ funds and banks’ capital base as well as loss of public confidence in banks. Also, the incidence of frauds and forgeries could, in extreme cases, lead to the closure of banks (Fatoki, 2015). Many of the distressed banks in Nigeria today had suffered a great deal from frauds and insider credit abuses (Nwaeze, 2008).
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter deals with the method used in collecting data required in carrying out this research work it explains the procedures that were followed and the instrument used in collecting data.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
INTRODUCTION
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY CONCLUSION AND RECOMMENDATION
INTRODUCTION
It is pertinent to note that the objective of this study is to ascertain the effect of accounting and internal control system in deposit money banks operation.
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 the challenges of internal control in deposit money banks.
SUMMARY
The overriding purpose of this study was to establish the effect of accounting and internal control system in deposit money banks. To accomplish this purpose the researcher developed some research questions based on the scope and area of study which is First Bank And UBA Plc. Enugu main. Internal control system, as a tool for management control an assurance service, represents more than a legal requirement. Timely detection of irregularities is important for all economic and financial market players, for all users of financial information. A well-implemented internal control structure and internal control activities conducted carefully and conscientiously could signal potential dangerous situations due to poor management of assets (this should include all categories of resources, including human resources) with negative, if not so disastrous consequences for the company’s own business and also with implications over the economic environment. Development, implementation and continuous monitoring of internal controls system and procedures are the responsibility of the entire management and not just the auditor alone. Premchand (1999) sees public financial management as the link between the community’s aspirations with resources, and the present with future, Management of every organization has the line responsibility for designing, implementing and monitoring their internal controls system. The study revealed that there is no regular review of financial transaction by management and adequate segregation of duties
Conclusion
The study findings revealed that deposit money Banks that effectively implemented elements of internal controls had relatively better financial performance. The large peer banks had relatively better financial performance than the medium and smaller peer banks. From the regression analysis there was a significant positive relationship between Internal Controls and Financial Performance of Commercial Banks in Kenya, and absence of internal controls results in negative financial performance. In a nutshell the banking sector in Kenya enjoys a strong financial performance partly as a result of implementing and maintaining effective internal controls. The existence of effective internal controls may be attributed to the highly regulated and structured environment in the banking sector.
Recommendations
The study recommended that the banks should effectively implement and maintain internal controls due to the nature of the riskiness of the banking sector and its impact on the economic growth of the Country. The banks must have an independent Board of Directors and its committee as a Corporate Governance regulatory requirement. Besides this, an independent audit department that is well trained and staffed should be set in all the branches of the banks to facilitate effective implementation of internal controls. Banks should have in place an information system that facilitates relaying of timely, relevant and reliable information to stakeholders and free upward and downward flow of information between management and employees. Ethical values should be upheld in decision-making, integrity and competence enhanced. Above all the management should ensure an atmosphere of mutual trust exist within their banks. Banks should design and organize for constant seminars and workshops to train its management and employees in finance, accounting, and internal audit departments pertaining Internal Controls, policies and procedures in order to enhance their professional skills and practices.
Reference
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