work aimed among others at determining the relationship between internal
measures to proper accounting records. A survey research design was adopted for
this research study and a sample size was selected using sampling technique as
data used were obtained from both primary and secondary sources. Nine,(9)
research questions were formulated out of which three hypothesis were
formulated using regression co-efficient analysis method at 5% level of
significance and the Z table was also used for comparison between calculated value
of significance B and table value. The finding from the analysis indicates that
internal control measure management performance and is necessary for the growth
and effectiveness of the organization.
Title Page i
Table of Contents vii
Chapter One: Introduction
to the Study 1
of Problem 3
of the Study 5
of hypothesis 7
of the Study 8
of the Study 8
of the Study 9
of Terms 10
Chapter Two: Review of
Related Literature 12
and Purpose of Internal Control 14
of Internal Control 16
of Internal Control 20
Control in Financial Institution 22
of a good Internal Control System 26
2.8 Relationships between Internal Auditing and Internal Control System 29
and Internal Control System 30
and Shortcoming of Internal Control 32
2.11 Possible Solution to Defects
Internal Control System 34
of Internal Control 36
Chapter Three: Research Method and Design 38
3.1 Introduction 38
of Data Collection 38
of Population of the Study 39
of Data Presentation 40
3.8 Method of Data Analysis 41
Chapter Four: Data Presentation, Analysis and Interpretation 42
4.1 Introduction 42
Chapter Five: Summary of Findings, Conclusion and Recommendations 60
5.1 Introduction 60
of Findings 60
5.3 Conclusion 61
5.4 Recommendations 62
to the Study
organization both profit or non-profit organization has its objectives and
goals in mind to achieve. For the non-profit making organization, their goal is
to satisfy the social need of the citizens and in the effort to achieve these
purposes supervision more often than not play a vital role.
and scope of these organizations have sometimes made it hard for the executors
to exercise personal and first hand supervision of operation. It is in this
light that internal control established by management is initiated. For an
organization to carryout its business there must be some factors put in place
for the smooth running of the organization like materials, machines, money etc.
to be well co-ordinated in order for the success of the organization to be
achieved. These factors are used by a group of persons known as management.
Neither can management exist without organizations both are inseparable. The
system of internal control provides assurance to management of the
dependability of the accounting data used in the decision making of the
It has been
discovered that due to lack of internal control several banks have been
discovered to have defrauded its customers mostly foreign investors, Having
discovered this, banks now take extra precaution before clearing a cheque
because of rampant incidence of fraud and forgeries which have placed bank.
Loss on average of N1m each working day of the year in Nigeria. Due to this challenges,
CBN issued a directive to banks to increase its capital base to N25 billion.
use internal control as a tool to check it staff due to the fact that managers
are not able to monitor the activities of the organization. It therefore adopts
the internal control in such a way that the system checks itself and any
irregularity within the system is been detected and corrected.
that the system checks itself, management could use devices such as
segregations, supervision of work and acknowledgement of performance. The
effective arrangement and implementation of this control system would ensure
not really understand the impact of internal control system in an organization
until probably we run an organization void of internal control system.
of adequate internal control measures exposes the financial management of an
organization to certain threats such as:
financial statement and /loss of the company’s assets.
and mismanagement of organizational vital documents which may be done by an
employee to take undue advantage.
and unreliable financial records which may lead to loss of organizational
implementation of accounting policies in consistent with the applicable
legislation appropriate in presentation of financial statement.
following research questions will be used to form the research hypothesis and
i To what extent does the internal control
measures impacts on appropriation of organizational assets and funds?
i To what extent does internal control
enhance a true reflection of organization activities as presented in the
i To what extent does perpetration of
fraud and losses of Revenue in an organization are as a result of weakness in
the internal control system?
i To what extent does a relationship
exists between internal control and proper keeping of accounting records?
i To what extent does segregation of
duties among the employee of an organization could improve financial
i To what extent does verification of
document enhances financial management?
i To what extent do internal checks and
balances enhance financial management?
i To what extent does internal control measured
by an external auditor improve financial performance and management of your
i To what extent does non-financial
transaction in organization enhances financial management?
of the Study
purpose of this research work is to evaluate and determine the effect of
internal measures in an organizational financial management.
defined organizational structure helps management to run the business in an
orderly manner. This enhance operational and efficiency, which is the important
features of internal control.
this research work stands to achieve the following objective.
determine the impact of internal control to proper use of organizations funds
ascertain whether perpetration of fraud and losses of Revenue in an
organization are as a result of weakness in internal control system.
ensure whether a true reflection of organizational activities are presented in
financial statement where there is an active observation of internal control
determine the relationship between internal control measures and proper keeping
of accounting records.
research is undertaken on the basis of the following hypothesis.
Ho: Internal control measure does not
ensure proper use of organizations funds and assets.
Hi: Internal control measure ensures proper use of
organization funds and assets.
Ho: Fraud perpetration and losses of
revenue in an organization are not as a result of weakness in the internal
Hi: Fraud perpetration and losses of Revenue in an
organization are as a result of weakness in the internal control system.
Ho: Internal control does not ensure a true reflection of
organizational activities as presented in financial statement.
Hi: Internal control ensures a true
reflection of organizational activities as presented in financial statement.
of the Study
There is no
controversy that this research works have been conducted on internal control
system, however much emphasis has been placed on the impact of a good internal
control system on financial management of organizations.
research work will go a long way in helping an organization discover the impact
of weakness in internal control and suggest measures in correcting them. It
will also reveal the problems caused by bad internal control system and be
useful to students, scholars, lecturers and other third parties as it shall
open new area of further research work and at same time advance challenges to
of the Study
of a good internal control aids management effectiveness in its organization.
This research will specifically focus attention on the activities of
organizations in Nigeria
and due to the logical point that not every organization can be studied; this
research is therefore limited to the Nigeria Bottling Company. The focus of
this research is to show the impact of a good internal control system in the
performance of organization financial management.
of the Study
constraints in this study include the conservating nature of organization and
their apathy towards providing information, especially with respect to their
internal operation policies, human errors and biasness are other limiting
factor of this study.
because some data’s were obtained through discussions and interviews therefore
there is the possibility of human error of omitting some vital information.
Respondent may also exaggerate important information in order to give their
organization a positive credit for fear of what seems an invasion into the
following terms have been used in the course of this research work and as such
need to be explained. They were as stated below:
Internal Control: It has been defined by the Auditing Planning
Committee (APC1979) in UK as “the whole system of control financial and
otherwise established by management in order to carry out the business of the
enterprise in an orderly and efficient manner to safeguard the assets and
secure as far as possible, the competence and accuracy of records, the
prevention and detection of errors and fraud in accordance with the final
preparation of financial statement.”
Control: Is an exercise performed in the
present to achieve a plan drawn up for the future.
Management: It is defined as the process of
planning, organizing coordinating and controlling the activities of an
organization. It is seen as a group of people who monitor and control the
organization activities towards the achievement of the organization objectives.
Audit: This comes from a Latin word “AUDIRE”
meaning to hear in other words it means official examination of account and
Fraud: This is
defined as a deception deliberately practiced in order to secure unfair or
unlawful gain. Fraud is simply an intentional wrongful act with the purpose of
deceiving or causing harm to another party.
is an independent examination and the expression of opinion on accounts of
companies as presented by appointment, and in keeping with any reliant
legislature and other requirements, whether in his opinion the account show a
true and fair view and had been prepared in accordance with law.
Audit Report: This is
the means by which the auditors express their opinion on the truth and fairness
of the company’s financial statement.
Auditing Standards: These are
the basic principle and practices to be followed in all audits. They specify
the requirement that an audit must meet if it is to be considered a
satisfactory and professional effort.