PROPOSAL
1.1 INTRODUCTION
In banking, Accounting and auditing
internal control is defined as a process effected by an organization structure,
work and authority flows, people and management information system designed to
help the banking accomplish specific goals or objectives.
It is a mean by which organization
resources are directed, monitored and measured. It plays an important role in
preventing and detecting fraud and protecting the organization’s resources.
Internal
control-integrated framework, a widely-used frame-work in not only the United
State but around the world, internal control is broadly defined as a process,
effected by an entity’s board of directors, management and other personnel,
designed to provide reasonable assurance regarding the achievement of
objectives in the following categories.
A.
Effectiveness and efficiency of
operation
B.
Reliability of Financial reporting
C.
Compliance with law and regulations
Internal
control has five components
1. Control Environment: set the tone for the
organization, influencing the control consciousness of it people.
2. Risk Assessment: the identification and analysis of
relevant risk to the achievement of objective, forming a basis for how the risk
should be managed.
3. Information and Communication: System or process
that supports the identification, capture and exchange of information in a firm
and time frame that enables people to carry out responsibilities.
4. Control Activities: the policies and
procedure that help ensure management directive are carried out.
5. Monitoring: process used to assess the quality
of internal control performance over time.
The
internal control relates to the aggregate control system of the organization,
which is composed of many individual control procedures.
Discrete
control procedures, control are defined by the SEC as a specific set of
policies, procedures and activities designed to meet an objective. A control
may exist with a designated function or activities in a process. A control’s
impact may be entity wide or specific to an account balance class of
transaction or application.
Internal
control procedure reduce process variation, leading to more predictable
outcomes. Internal control is a key element of the foreign corrupt practices
Act (FCPA) of 1977 and the Sarbanes-Oxley Act of 2002, which requires
improvement in internal control within business entities are also referred to
as OPERATIONAL CONTROLS.
The
internal control system (ICS) consists of a set of rules, procedures and
organization structure which aims to.
v
Achieve effective and efficient
corporate process
v
Safeguard the value of corporate
asset ensure that corporate strategy is implemented
v
Ensure the reliability and
integrity of accounting and management data.
v
Ensure that operation comply with
all existing rules and regulations
1.2 STATEMENT OF THE PROBLEM
The problem of the
study by the researcher is to find out the appraisal of internal control system
as a means of efficiency and profitability in Nigeria banks. The major
statement of the problem are:
1.
The various means employed by
customer and staff or official in defrauding the money deposit bank in Nigeria.
This is one of the problems confronting the money deposit bank and this affect
the bank efficiency and profitability.
2.
The likely challenges to be
encountered by money deposit banks in tackling fraud; it has become paramount
for bank to employ control system internally to check fraud.
3.
The researcher work will aimed at
finding lasting remedies or solution to solve problem of frauds in money
deposit bank in Nigeria.
1.3 RESEARCH QUESTION
The focus of this
study is to identify the appraisal of internal control system as efficiency and
profitability in banks, hence, in the course of the study effect has been to
find solution to the following research question.
1.
What is the bank concept of
internal control system?
2.
What is the historical background
of internal control system in commercial bank?
3.
What are the various mean employed
in defrauding banks?
4.
What are the remedies to
profitability in commercial bank (money deposit)?
5.
What are the main effects of fraud
in banks?
1.4 OBJECTIVE OF THE STUDY
The primary objective
of this study is to examine the appraisal of internal control system as a mean
of efficiency and profitability in the Nigeria commercial bank (money deposit).
The
objectives of the study are:
1.
To examine the basic concept of
internal control system of banks.
2.
To discuss the theoretical
framework of internal control system in the banking industry.
3.
To enumerate the remedies to
efficiency in commercial bank (money deposit).
4.
To expatiate the form and nature of
profitability in banking industry.
5.
To analyze the problem uncounted by
the commercial banks (money deposit).
1.5 RESEARCH HYPOTHESIS
The basic fundamental
for testing hypothesis involved the formulation is:
Ho: Null hypothesis
Hi: Alternative hypothesis
Ho: Internal control system has no correlation
with profitability and efficiency of money deposit bank in Nigeria
Hi: Internal control system has a effective
correlation with profitability and efficiency of money deposit bank in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The
research work is predicted in nature of the study is enable the banking
industry on the way to meet the profit on banks that meet the directives has
been stronger.
The study in also be beneficial to the
shareholders, the policy is bring about improved and increased in the
shareholders value and with through appreciate of their share and it’s market
ability through the mega bank customers is also benefit through reduction in
cost of paying for services, prompt receiving of services, reductions in time
spent in the banking hall.
1.7 SCOPE AND LIMITATION OF THE STUDY
The research intend to carry out
research work on the appraisal of internal control system as a means of
efficiency and profitability in Nigeria bank using Skye bank of Nigeria Plc as
a case study.
However, the research intend to cover
the lack of recent and adequate material, unwillingness of the respondents and
the case study to given the true replies, lack of co-operation of the case
study.
However, effort has been made to
ensure that the above limitation did not hide effective completion and quality
of research work and how it can be improved upon now and the future.
1.8 DEFINITION OF KEY TERMS
Banker: A company carrying on
the business of receiving money, collecting draft for customer subject to the
obligation of honoring cheque drawn upon them from time t by customers to the
extent of the amount available on the account.
Cheque
kite flying: this
is a method whereby depositors utilize the time a cheque to clean to obtain an
authorized loan without any interest charge.
Control: this mean to check
put a stop in the activity uses a limit in the activities of individual or a
group of individual in the banking industry.
Deflation: this is making or
alteration of writing to the prejudge of another man’s right or litter to which
he is ordinary entitled to.
Fraud: is an act of cause of
deception deliberately practiced to gain unlawful or unfair advantages, such as
deception in directly to the detriment of another.
Negligence: an act of negligence
in committed where employees through ignorance of lack of commitment to duties
guard the interest of his employees or railed to follow a prescribed procedure.
1.9 PLAN AND ORGANIZATION OF THE STUDY
For clarity of
research context, the research work has divided into five (5) chapters and
adequate research findings and conclusion was drawn to make relevant
recommendations for the research.
Chapter one deals with introduction of
the topic
Chapter two deals with literature
review
Chapter three deals with research
methodology
Chapter
four deals with data presentation and analysis
Chapter
five base on findings, summary, conclusion and recommendations.
TABLE OF CONTENT
Title page
Certification
Dedication
Acknowledgment
Proposal
Table of content
CHAPTER
ONE
1.1 Introduction 1
1.2 Statement
of the problem 3
1.3 Research
question 4
1.4 Objectives
of the study 4
1.5 Research
Hypothesis 5
1.6 Significance
of the study 5
1.7 Scope
and limitation of the study 6
1.8 Definition
of the term 6
1.9 Plan
and organization of the study 7
CHAPTER
TWO
2.1 Literature
Review 8
2.2 Historical
background of Skye bank plc 9
2.3 Conceptual
issue of internal control system 13
2.4 Appraisal of internal control system in
Nigeria
Banking Industry 15
2.5 Types
of fraud 17
2.6 Remedies to fraud and forgeries in Nigeria
banking system. 18
2.7 The
effect of fraud in Nigeria banks 19
2.8 General
cause of fraud in bank 21
CHAPTER
THREE
3.1 Research
methodology 23
3.2 Sources
of data 23
3.3 Population
of the study 24
3.4 Method
of data collection and data analysis. 24
CHAPTER
FOUR
4.1 Data
presentation and analysis 30
4.2 Presentation
of data 30
CHAPTER
FIVE
5.1 Findings 38
5.2 Summary 39
5.3 Conclusion
40
5.4 Recommendation 41
REFERENCES 44
CHAPTER
ONE
1.1 INTRODUCTION
In
banking, Accounting and auditing internal control is defined as a process
effected by an organization structure, work and authority flows, people and
management information system designed to help the banking accomplish specific
goals or objectives.
It
is a mean by which organization resources are directed, monitored and measured.
It plays an important role in preventing and detecting fraud and protecting the
organization’s resources.
Internal
control-integrated framework, a widely-used frame-work in not only the United
State but around the world, internal control is broadly defined as a process,
effected by an entity’s board of directors, management and other personnel,
designed to provide reasonable assurance regarding the achievement of
objectives in the following categories.
A. Effectiveness
and efficiency of operation
B. Reliability
of financial reporting
C. Compliance
with law and regulations
Internal
control has five components
1. Control Environment: set
the tone for the organization, influencing the control consciousness of it
people.
2. Risk Assessment: the
identification and analysis of relevant risk to the achievement of objective,
forming a basis for how the risk should be managed.
3. Information and Communication: System
or process that supports the identification, capture and exchange of
information in a firm and time frame that enables people to carry out
responsibilities.
4. Control Activities: the policies and procedure that help ensure management
directive are carried out.
5. Monitoring: process
used to assess the quality of internal control performance over time.
The internal control
relates to the aggregate control system of the organization, which is composed
of many individual control procedures.
Discrete control
procedures, control are defined by the SEC as a specific set of policies,
procedures and activities designed to meet an objective. A control may exist
with a designated function or activities in a process. A control’s impact may
be entity wide or specific to an account balance class of transaction or
application.
Internal control
procedure reduce process variation, leading to more predictable outcomes.
Internal control is a key element of the foreign corrupt practices Act (FCPA)
of 1977 and the Sarbanes-Oxley Act of 2002, which requires improvement in
internal control within business entities are also referred to as OPERATIONAL CONTROLS.
The internal control
system (ICS) consists of a set of rules, procedures and organization structure
which aims to.
v
Achieve
effective and efficient corporate process
v
Safeguard
the value of corporate asset ensure that corporate strategy is implemented
v
Ensure
the reliability and integrity of accounting and management data.
v
Ensure
that operation comply with all existing rules and regulations
1.2 STATEMENT OF THE PROBLEM
The problem of the study by the researcher is to find
out the appraisal of internal control system as a means of efficiency and
profitability in Nigeria
banks. The major statement of the problem are:
1. The
various means employed by customer and staff or official in defrauding the
money deposit bank in Nigeria. This is one of the problems confronting the
money deposit bank and this affect the bank efficiency and profitability.
2. The
likely challenges to be encountered by money deposit banks in tackling fraud;
it has become paramount for bank to employ control system internally to check
fraud.
3. The
researcher work will aimed at finding lasting remedies or solution to solve
problem of frauds in money deposit bank in Nigeria.
1.3 RESEARCH QUESTION
The focus of this study is to identify the appraisal
of internal control system as efficiency and profitability in banks, hence, in
the course of the study effect has been to find solution to the following
research question.
1. What is the bank concept of
internal control system?
2. What is the historical background
of internal control system in commercial bank?
3. What are the various mean employed
in defrauding banks?
4. What are the remedies to
profitability in commercial bank (money deposit)?
5. What are the main effects of fraud
in banks?
1.4 OBJECTIVE OF THE STUDY
The primary objective of this study is to examine the
appraisal of internal control system as a mean of efficiency and profitability
in the Nigeria
commercial bank (money deposit).
The
objectives of the study are:
1. To examine the basic concept of
internal control system of banks.
2. To discuss the theoretical
framework of internal control system in the banking industry.
3. To enumerate the remedies to efficiency
in commercial bank (money deposit).
4. To expatiate the form and nature of
profitability in banking industry.
5. To analyze the problem uncounted by
the commercial banks (money deposit).
1.5 RESEARCH HYPOTHESIS
The basic fundamental for testing hypothesis involved
the formulation is:
Ho: Null
hypothesis
Hi: Alternative
hypothesis
Ho: Internal control system has no correlation
with profitability and efficiency of money deposit bank in Nigeria
Hi: Internal control system has a effective
correlation with profitability and efficiency of money deposit bank in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The research work is
predicted in nature of the study is enable the banking industry on the way to
meet the profit on banks that meet the directives has been stronger.
The
study in also be beneficial to the shareholders, the policy is bring about
improved and increased in the shareholders value and with through appreciate of
their share and it’s market ability through the mega bank customers is also
benefit through reduction in cost of paying for services, prompt receiving of
services, reductions in time spent in the banking hall.
1.7 SCOPE AND LIMITATION OF THE STUDY
This
research work focused on the bank and other organization with special emphasis
on Skye bank plc being that case study. Never the less the research work has
been constrained to the below statement.
I.
Time
Constraint: the time has not always a friend due to the fact that time
available is too short to combine this project work with my other academic programms.
II.
Material
constraint: banks staff own their customers duty of secrecy. This will make it
impossible to get through data and information as regard primary source of
information.
III.
Financial
constraint; with current economic situation where there is financial wash up
through the sale of government debt instrument.
1.8 DEFINITION OF KEY TERMS
Banker:
A company carrying
on the business of receiving money, collecting draft for customer subject to
the obligation of honoring cheque drawn upon them from time t by customers to
the extent of the amount available on the account.
Cheque
kite flying: This is
a method whereby depositors utilize the time a cheque to clean to obtain an
authorized loan without any interest charge.
Control: This
mean to check put a stop in the activity uses a limit in the activities of
individual or a group of individual in the banking industry.
Deflation:
This is making or
alteration of writing to the prejudge of another man’s right or litter to which
he is ordinary entitled to.
Fraud:
Is an act of cause
of deception deliberately practiced to gain unlawful or unfair advantages, such
as deception in directly to the detriment of another.
1.9 PLAN AND ORGANIZATION OF THE STUDY
This spells out the organization structure of the
topic with a brief or summary of what expected in each chapter, it is divided
into five chapters, each chapter contain the following.
Chapter
one we be the introduction of the study, statement of the problems, research
question, objective of the study, research hypothesis, significance of the
study scope and limitation of the study, definition of the term, plan and
organization of the study.
Chapter two contain the
literature review, chapter three contain the research methodology. Chapter four
discuss the data presentation and analysis. Chapter five is devoted essentially
to summary, conclusion and recommendations.
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