Table of content v
1.0 Introduction 1
of the study 2
of the research problem 6
and purpose of the study 7
and limitations of the study 8
1.5 Definition of terms 9
and plans of the study 11
Review of accounting policies 13
Internal control system review 16
Internal auditor and the watch dog role 17
Uses of internal audit department 19
Function of internal audit 20
Factors contributing to an effective audit 24
study and methodology 27
history of Aiico insurance plc 27
structure of Aiico insurance plc 31
of data collection 35
of data analysis 38
of the study 39
Presentation and analysis 41
and analysis of data according to research question 42
CHAPTER FIVE: Summary,
Conclusion and Recommendation
establishment of Aiico Insurance Plc constituting part of the development of
Insurance Company in the country within development and internal control system
system of internal control is the whole system of controls, financial and
otherwise established by the management in order to carry on the objectives of
the organization in an orderly and efficient manner, ensure adherence to
management policies, safeguard the assets and secure as far as possible, the
completeness and accuracy of records.
order to allow for better administration in Aiico Insurance Plc, the company is
divided into various sections and each is charged with specified duties. The
companies is required to render insurance services to the interested insured
and are to keep the following account:
the question that readily comes to mod is, how far has this stewardship role
of embezzlement and misappropriation of fund are rampant these days. Frauds
have taken many in this country with the private sector and public sector, such
as embezzlement of cash and falsification or wronged manipulation of accounts
1.1 BACKGROUND OF
system of control adopted in any business or economy greatly determines one
development and growth of that business or economy. To ensure optimization of
money, materials, machine, tune resource and management of men control is
control is the whole system of controlling financial and otherwise, established
by the management in order to carry on the objectives of the organization in an
order and efficient manner and to ensure adherence to management policies,
safeguard the assets and secure as far as possible the completeness and
accuracy or records.
of the instruments used in internal control to minimize wastage and fraud is
internal auditing. Auditing has been in existence for many years. It is used in
ancient Egypt and Great Mercantile establishment of the middle ages. In recent
time, auditing has become essential more and more people are getting interested
in the annual reports and account of companies, some of the interested people
are owners, shareholders, debenture holders, customers, financial institutions,
educational institutions and other publics.
this shows that auditing can either be neglected or underrated in out modern
economy for it was borne out of the complexities of modern business climate.
term “Audit” is from a latin “Audire” which means “to hear” this is because the
account of an estate domain were checked by having them called out by those in
an authority with the growth of trade and commerce, the need for more accurate
method or recording business activities arouse. Thus, auditing is more of a
question of the hears but whole process whereby the books or accounts and
voucher of business crudities (including charities and trust) are subjected to critical
examination by professionally qualified and independent accountants (Auditor)
on such a details as will enable them form an opinion as to their truth and
fairs, the auditor is the bridge across the creditability gap created by the
separation of management from the ownership.
complexities of the art of management extended to increasing ware of business
fraud. Embezzlement has the cash squeeze which often cripples many companies.
The management has to work inward in order to uphold pace control system of
which internal auditing is a major section.
writers maintain that the existence of an efficient and effective system of
internal control both in design and operation which is the responsibility of
management will at best prevent fraud or at best help to detect fraud earliest
control function helps to sport out deficiencies in the system so as to reduce
correct measure at the earliest opportunity intern10al auditors to appraise,
analyze and report upon the policies and method employed in the company.
Therefore, internal auditor is an element for internal control system set up by
the management of an enterprises to evaluate, examine and report on accounting
and other control operation.
1.2 STATEMENT OF THE
control system may be sufficient based on predicament, this may include lack of
segregation and assignment of duties to accounting officer. Also, the scopes of
duties of internal audit unit are so wide and their seals of operation is so
low as well as the shortage of qualified staff to carry out internal auditing
and accounting duties.
of accounting officers can easily be maneuvered by the management which can
affect the internal audit system of an organization. More so, authorization and approval are not
clearly stated, as a result of two or more dishonest staff can override the
efficiency of the internal control system.
criticism of internal control system has been intended to the company hence,
his study of internal auditing as a control for effective management.
1.3 OBJECTIVE AND
PURPOSE OF THE STUDY
main objective of the study aims to evaluate accounting and internal control
system in private sector. Internal control system which is regarded as the
central or most important part of every organization. Therefore, its efficient
organization means that the establishment is carrying out its objective with
the establishment is carrying out its objective with specific regard to laid down
rules and regulation. The objective of this study is to examine the internal
control system in existence at Aiico Insurance Plc Victoria Island, Lagos and
see how effective, these internal control elements are having ascertained the
existence of the internal control and evaluation will be made as to whether the
system of internal control in operation at Aiico Insurance Plc, the system of
internal control in operation at Aiico Insurance Plc is sound and reliable then
recommendation and suggestions will be made.
1.4 SCOPE AND
LIMITATIONS OF THE STUDY
various measures of internal control system are considered in Aiico Insurance
Plc but more concentration would be made on internal audit aspect for the
purpose of this study. Accounting system and related internal control measure
and position. The independence of an internal auditor as well as the scope of
this work and how it affects the policies of the management of the area of the
1.5 DEFINITION OF
is necessary that clear definition of some technical terms and words are given
to avoid technical confusion that may arise because of their usage.
ACCOUNTING: Accounting can be defined as an art of recording,
analysis, interpreting, summarizing and communicating financial information to
the user for the purpose of decision making.
INTERNAL AUDITING: can be defined as “an independent appraisal
activity within an organization for the review of accounting financial and
other operations basis for service to management”. Internal audit is carried
out by staff of the enterprises. It is managerial control which functions by
measuring and evaluating the effectiveness of other controls, a self accounting
units is expected to have an established internal audit units to do the
pre-auditing if all vouchers and ensure adherence to rules and regulation.
INTERNAL CONTROL: The Institute of Chartered Accountant England and
Wales define it as “A whole system of controlling financial or otherwise
established by the management in order to orderly and efficiently ensure the
adherence to management policies, safeguard the assets and secure as far as
possible the following tools.
duties: This involved division of labour so that work of one officer will serve
as a check on the work of another thereby preventing error, fraud or loss.
Cashbook: All receipts and payment vouchers are supposed to be promptly brought
into the cashbook for future reference.
AUDIT REPORT: A report prepared by a qualified accountant to
express the opinion that the accountant examined show a time and fair view and
complies with statutory requirement.
FRAUD: The term fraud according to Olowo-Okere (2001)
refers to as intention misrepresentation of financial information by one or
more individuals among management, employees or third parties fraud may
1. Manipulation, falsification or alternation of records
2. Suppressing or omission of the effects of
transaction from records or document and mis-application of accounting
1.6 ORGANIZATION AND
PLAN OF THE STUDY
study consists of five chapters (organized). The chapters have been designed to
suit the topic of the study.
first chapter examines what the research work is all about, the purpose of the
study and the background of the study (case study).
two deals with review of related literature. It is based on nature and types of
auditing, uses of internal audit, functions of internal audit.
three forms the core of the project where the research work determines,
selection instrument and procedure for data collection is based on information
from the research methodology.