ABSTRACT
This study examine internal control as an effective tool
for management with national petroleum investment management in focus and the
objectives of study include: Investigate the effectiveness of internal control
system in resolving business issued in order to facilitate growth. Assess if
internal control is highly prioritized to prevent mistakes and fraud. Examine
the relationships between performance and efficiency towards organizational
reengineering process. Appraise the interdependence between internal control
and decision making in the organization. Evaluate the extent to which employees
are co-opted into internal control and decision making process and draw a
logical conclusion from the findings. Survey research design was adopted for
the study and 120 respondents. were randomly selected for the survey. 107
questionnaires were returned completed, giving a response rate of 89%. A
five-point likert scale question was developed to collect information from the respondents. The data were
analyzed using descriptive statistics. The core finding of the study shows that
internal-: control is very crucial for a good management decision making
process.
TABLE OF CONTENTS
Title page
Certification
Dedication
Acknowledgement
Abstract
Table of content
CHAPTER ONE: INTRODUCTION
1.1 Background
of the Study
1.2 Statement of
Research Problem
1.3 Objective of
the Study
1.4 Research
Questions
1.5 Hypotheses
1.6 Significance
of Study
1.7 Scope of the
Study
1.8 Definition
of Terms
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction
2.2 Internal
Control Models
2.3 Conceptual
Framework of Internal Control
2.4 Objectives
of Internal Control Systems
2.5 Essential
Features of Internal Control Systems
2.6 Parties
Responsible for and Affected by Internal Control
2.7 Elements
that Contributes to a Successful Control Environment
2.8 Background
Information of National Petroleum
CHAPTER THREE: METHODLOGY
3.1 Introduction
3.2 Research
Design
3.3 Restatement
of Research Question
3.4 Restatement
of Research Hypotheses
3.5 Population
of Study
3.6 Sample Size
3.7 Data
collection Method
3.8 Description
of Research Instrument
3.9 Procedure
for Data Analysis
3.10 Limitation of
the Study
CHAPTER FOUR: DATA PRESENTATION
4.1 Overview of
the Chapter
4.2 Analysis of
Socio - Economic Data
4.3 Analysis of
Structured Part of Questionnaire
4.4 Test of
Hypotheses
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION
AND RECOMMENDATIONS
5.1 Summary of
Findings
5.2 Conclusion
5.3 Recommendations
5.4 Suggestion
for Further Studies
APPENDIX
QUESTIONNAIRE
CHAPTER ONE
INTRODUCTION
1.1 Background
of the Study
As the management of an organization strives to achieve
excellence in operations, there is the need to continually asses and evaluate
her internal control system in order to determine how well it is performing,
the degree to which it helps to identify frauds, wastes, abuse, mismanagement
and how it might be improved and updated to meet changing conditions.
Internal control is a process affected by an organization
structure, work and authority flows, designed to help the organization
accomplish specific goals and objectives.
It is a means by which all organizations resources are
directed, monitored and measured. It plays an important role in preventing and
detecting fraud and protecting the organizations resources both physically
(machinery and property) and intangible resources.
At the organizational level, internal control objectives
relates to the reliability of financial reporting, timely feedback on the
achievement of operational or strategic goals and compliance with laws and
regulations.
At the specific transaction level, internal control
refers to the action taken to achieve a specific objective (how to ensure that
the organizations payment to third parties is for valid services rendered).
Internal controls are an integral part of an organizations
financial and business policies.
It consists of all measures taken by the management to
achieve the entity's objectives.
The presence of internal control system is not sufficient
rather; its effectiveness and efficiency should be most considered.
Internal control is the whole system of controls such as
reviews, checks and balance, methods
and procedures, instituted by the management of an organization to:
1.
Ensure accuracy and
completeness of the financial records.
2.
Conduct business in
an orderly manner.
3.
Safeguard assets
and information from by unauthorized access or use.
4.
Produce reliable
and timely financial and management information and
5.
Ensure adherence to
policies.
1.2 Statement of the Problems
The high rate of frauds, errors, irregularities, waste
and improper recording of financial statements are the problem faced by most
organizations in the public enterprises. These problems are the alterations of
documents or invoices, deliberate misappropriation of accounting policies, over
invoicing, actual theft of cash balance and mathematical or clerical mistakes.
The manipulations of financial statements in order to
meet business expectations or to obtain indirect personal ground which includes
diverting organizations resources for personal use.
The alterations of invoices, double payment of invoices,
payment to ghost workers amongst others are practice that negatively affect the
growth of an organization.
In some case, employees use their organizations name for
personal business thus reducing the profitability of the organization.
Therefore, an effective internal control system will
reduce and probably eliminate the risks associated with undetected errors
irregularities and fraud.
1.3 Purpose of
study
Internal control system is very useful as it decides to a
large extent the success of an organization. This study will ensure that all
control systems are effective and organizations objectives are achieved which
includes:
- Effective
and efficient operations
- Reliable
financial records
- Compliance
with law and regulations and
- Accurate
and complete financial statements amongst others
1.4 Research
Questions
This is an inquiry about the research problem which is
used to explore the objectives of the research. They are drawn from the
concepts associated with the research problem which describes the problems
specific terms.
1.
Does the management
have a sound basis setting realistic and achievable goals?
2.
Are assets such as
cash, supplies, inventories and equipment periodically counted and compared
with the control records?
3.
Does the management
take action when there are violations of policies and procedures or codes of
conducts?
4.
Are identification
plates and numbers fixed to office furniture, equipment and other portable
assets?
5.
Does the management
provide training and counseling in order to help employees maintain and improve
their competence for the job?
6.
Does the management
periodically evaluate the organizational structure and makes changes as necessary
in response to changing conditions?
7.
Does the senior
leaders and manager build team work, reinforce the shoed vision of the
organization and encourage feedback from employees as evidenced by action taken
to communicate this to all employees and the existence of opportunity for
management to obtain feedback?
8. Is the compensations system adequate to
acquire, motivate and retain personnel and are incentives and rewards provided
to encourage personnel to perform at a maximum capacity?
1.5 Statement of
Hypotheses
H0: That there is
no significant relationship between effective internal control and management of organization:
H1: That there is significant relationship
between effective internal control and management of organization.
1.6 Significance
of the Study
Internal control system will assist an organization in
checking its activities in order to ensure that the directives of management
are carried out.
Control activities occur throughout the operations of an
organization at all level and in all functions. These include approvals
authorization, verification, and reconciliation, security of assets and
segregation of duties. The adequacy of internal control system is assessed by
determining whether proper control activities have been established.
1.7 Scope of the Study
This study is focused on internal control system an
effective tool in management. However, it is limited to other operations and
activities of the organization.
1.8 Definition
of Terms
Internal Control System: This is the whole system of
controls both financial and otherwise established by the management of an
organization to ensure adherence to policies, safeguard assets and information,
ensure completeness and accuracy of financial records and that the business is
being run in an orderly way.
Management: This is the process by which actions are direct towards
the accomplishment and achievement of a common goals.
It is the function of guiding, directing,
co-coordinating, motivating, controlling and unifying human efforts and
activities for the accomplishment o: organizational goals and objectives.
Error: These are unintentional mis-statement in the financial
statements of an organization.
Fraud: This is an intentional misrepresentation of the
financial statement by one or more individuals among the organizations
employees, third parties or management. It involve the use of criminal deceit
to obtain an illegal advantage.
Irregularities: These are intentional distributions in the financial
statement of an organization.
Audit: The International Audit and Assurance Standard Board
(IAASB), a subcommittee of the international federation of Accounts (IFAC)
defines an audit as an independent examination of an express of opinion on the
financial statements of a business enterprise by an auditor in accordance with
his terms of appointment and in compliance with relevant statutory and
professional requirement.
Internal Audit: This is an independent appraisal activity with an
organization for the review of operations. It is a managerial control which
functions by measuring and evaluating the effectiveness of control within an
organization.
Goals of an
Organization: These consist of
what the organization seeks to accomplish.
They are the expectations of an organization.
Policies of organization these are guidelines that states
how an organization will work towards
achieving it goals.
They are general procedures that indicate the limits or
constraints on what is to be attempted because it states the prescribed,
permitted and prohibited forms of behaviour.
Organization: this
is an organized group of people with a common goals and objective.
Financial Statement: This is any periodic report which gives a summary of the, financial
condition for the period represented.
It may also show the income, source of such income and
the application made
for it.
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