INTERNAL CONTROL SYSTEM AS A MEANS OF DETECTING AND MINIMIZING FRAUD IN GOVERNMENT ESTABLISHMENTS (A CASE STUDY OF LOWER NIGER RIVER BASIN AND RURAL DEVELOPMENT AUTHORITY ILORIN)

Table of contents

Title page

Certification

Dedication

Acknowledgement

Table of contents

CHAPTER ONE: - INTRODUCTION

1.1      background of the study

1.2      statement of the problem

1.3      aim and objective of the study

1.4      research question

1.5      research Hypothesis

1.6      significant of the study

1.7      scope/definition of the study

1.8      limitation of the study

CHAPTER TWO :- LITERATURE REVIEW

2.1      introduction

2.2      Historical background of first lower Niger River basin and rural development authority Ilorin.

2.3      Characteristic of good internal control system

2.4      Definition of fraud

2.5      Classification of fraud

2.6      Form of fraud

2.7      Causes of fraud

2.8      Circumstances that allow fraud to be perpetrated

2.9      Effect of fraud in an organization and general public

2.10  How to prevent fraud

CHAPTER THREE: - RESEARCH METHODOLOGY

1.1      Introduction

1.2      Research design

1.3      Population of the study.

1.4      Sample and sampling technique

1.5      Method of data collection

1.6      Method of data analysis

1.7      Limitation of the methodology

CHAPTER FOUR:- DATA PRESENTATION ANALYSIS AND INTERPRETATION

4.1              Introduction

4.2              Data presentation, analysis and interpretation

4.3              Testing of hypothesis

4.4              Summary of the chapter

CHAPTER FIVE: - SUMMARY, CONCLUSION AND RECOMMENDATION

5.1              Introduction

5.2              Summary

5.3              Summary of findings

5.4              Conclusion

5.5              Recommendations

5.6              Suggestion for further studies

Bibliography

Appendix.

CHAPTER ONE

INTRODUCTION

1.1      BACKGROUND OF THE STUDY

In any organization be it small, medium or big, it is very crucial to work towards achieving a goal. To struggle towards the realization of this goal, one needs to employ human, financial and material resources. The degree of achievement largely depends on the organization’s ability to coordinate the above resources towards achieving the stated objectives.

No doubt, the economic recession has affected both individual and companies in general and this has gone a long way to guide expenditure pattern and disbursement of income, hence the need for proper planning and administration. There is also the need to harness all available designing on appropriate and acceptable management and accountability to the owners of the business.

The managerial technique is known as internal control system. It is devices introduce to ensure that managerial polices are strictly adhering to it is also advice to safeguard assets and to secure as far as possible the accuracy and completeness of records.

Internal control is defined by American institute of certified public accountant is any means for internal audit but it comprises the plans of organization and all of the coordinate methods and means adopted within a business to safeguard its assets, checks the accuracy and reliability of its accounting data, promote operational efficiency and encourage adherence to prescribed.

1.2      STATEMENT OF THE PROBLEM

Fraud practice as a result of improper talking account record in global phenomenon. It is general believe that fraud can only be minimize but cannot be eradicated. On the other hand, internal control comprises of all control. (Administrative, finance and erterial) put eradication, an organization are always mead to minimize, if not totally eradicated in government establishment.

The extend to which certain control is performing in public or government establishment is in question yet to be addressed with the rate of fraud in some government.

However, in this research attempt to addressed such question in order to bone a close approval of their system of internal control system in the government establishment management policies. Another school of thought sees internal control as the plan of organization and all of the coordinated method and measures adopted within business to safeguard its assets check the accuracy and reliability of its accounting data promote operational efficiency and encourage to prescribed management policies”

The main reason for internal control is to detect and minimize on the other hand fraud is a criminal and deceptive device employed by the use of false representation to obtain unjust advantage either in cash or kind to the detriment of the company.

The system of internal control can very widely up upon the organization and activities that are involved however, there is a common frame work of every internal control system and these are usually in the form objective measurement of performance against objectives , analysis and appraisal of the objective.

The most important things is that for any organization to succeed, the most effective internal control system is to detect and minimize fraud to its lowest in order to achieve a statement objective of the organizations.

1.3      AIM AND OBJECTIVE OF THE STUDY

Internal control comprises the whole system of financial control and other control established and operated within a business including internal audit and all other form of control. Internal control relates to the entire system of control in an organization and it is not limited to accounting matters alone.

The immediate objective of this study are:-

i.            To examine critically how assets of an organization can be safeguard through internal control

ii.          To identify internal control system that the works done by junior officers are duly checked by their superior to ensure conformity with established standard.

iii.        To examine that the use of the organization facilities are authorize and used for the benefit of the organization.

iv.         To examine that funds and property of an organization are kept in proper custody and suitable condition.

v.           To examine how all payment and receipts are dully accounted for.

vi.             To identify internal control system that would detect and minimize fraud in order to facilitate the attainment of organization objectives.

                               1.3     RESEARCH QUESTION

1.      What does an organization stand to lose if it internal control system are ineffective?

2.          Can effective internal control actually increase the level of profitability and accountability by an enterprise?

3.      What are the impacts that internal control system has in an organization?

4.          If the internal control system is weak, is the management being noted about such weaknesses?  

1.4      RESEARCH HYPOTHESIS

The researcher have formulated hypothesis as a guide to adhere to the main purpose of the study.

Ho:- An effective internal control system does not prevent

or reduce irregularities in government establishment.

HI:-an effective internal control system prevent or

reduces irregularities in government establishment.

Ho:- The cooperation of all members of staff is not

necessary for the smooth operation of an internal control system.

HI:- The cooperation of all members of staff is necessary

for the smooth operation of an internal control system.

Ho:- Internal control is more or less paper works hence

errors and fraud continue to re-occur.

HI:- Internal control is more or less paper work, it does

not allow errors and fraud continue to re-occur.

1.5      Significance of the study

The significance of the study is to enable the responsible officers or manager handle the rime of counterfeiting financing documents and stealing materials and money in order to minimize fraud to its lowest rate so as to achieve the organization objective this is wealth maximization. Also to make management sees the need to make use of effective internal control system in order to map the strategy to minimize fraud if not make proper record keeping part of its life.

Na organization with an ineffective internal control system will no doubt suffer a great loss and this adversity affects its progress. Therefore, it is this context that the researcher wishes to analyze and emphasis the need of internal control on suggests ways by which effective control could be established in an organization.

1.6      SCOPE / DELIMINATION OF THE STUDY

It is not possible to look into the system of internal control of all government establishments due to limitation in times, the project will be limited to the internal control development authority ilorin. The objectives ad relevance of internal control system will be covered by the study.

Furthermore, out of the techniques that can be use in evaluating the system of internal control this research is limited to internal control questionable.

The data gathered from the internal control department of the case study as well as the result and conclusion is expected to bear relevance to all companies with internal control.

1.7      LIMITATION OF THE STUDY

The research works will cover the use of internal control in organization taking government parastatal (lower Niger River Basin and Rural Development Authority) as a case study. It will also cover the implementation of internal control in the authority and the suggested to the weakness of the control if any.

This will not go beyond aforementioned above, due to some custards stated below:-

i.            Inadequate information together with necessary data for the basis of the internal control system.

ii.          Lack of enough textbooks in the library

iii.        Lack of financial aid for the proper analysis of the research work such as the use of questionnaire.