TABLE OF CONTENTS
Title page i
Certification ii
Dedication iii
Acknowledgements iv
Table of contents v
CHAPTER ONE: INTRODUCTION 1
1.1
Background
of the Study 1
1.2
Statement
of the Study
1.3
Research
Questions 4
1.4
Purpose
of the Study 5
1.5
Scope
and Limitation 7
1.6
The
Significant of the Study 8
1.7
Organization
and Plan of the Study 9
1.8
Definition
of Terms 11
CHAPTER TWO: LITERATURE REVIEW 15
2.1
Literature
review 15
2.2
Review
of Related Control 16
2.3
Objective
of internal Control system in
Banking Industry 18
2.4
Causes
and Prevention of Banking Industry Failure
2.5
The
Principle of Effective and Reliability of Internal control in banking
Industry. 23
CHAPTER THREE: RESEARCH METHODOLOGY25
3.1
Introduction 26
3.2
Historical
background of Guarantee Trust Bank 27
3.3
Modification
of the Research Question and Hypothesis 29
3.4
Research
Design 30
3.5
Population
Study 31
3.6
Sampling
design and procedures 32
3.7
Pilot
study validity and reliability 32
3.8
Procedure
for processing and analyzing
collection data 33
3.9
Administration
of the data collection schedule 34
3.10 Limitation of Methodology 35
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA
4.1
Respondents,
characteristics and classification 36
4.2.1 Occupational table Data 37
4.2.2 Sample sex Table data 38
4.2.3 Sample Age Table data 39
4.2.4 Sample Department data 40
4.2.5 Sample level of education table
data 43
4.2.6 Comparism of statement reflecting
whether internal controls are in place and how can the be improved. 46
4.2.7 Comparism of statement reflecting
whether effective and reliable internal control can help to prevent business
failure 48
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1
Summary,
50
5.2
Conclusion 52
5.3
Recommendations
53
Bibliography 55
CHAPTER ONE
1.0
INTRODUCTION
1.1
BACKGROUNDS
OF THE STUDY
The
term audit is derived from the Latin word “Audire which means to hear in the
holding days. The origin of an audit dates back to the ancient times when the
land owners allows tenants farmers to work on the land whilst the land owners
themselves did not become involved to the business of farming. The Landlords
relied upon an overseer who listened to the report of stewardship given by the
tenants.
The
account of the parties responsible for non financial transaction is used to be
called and hear the explanation needed by the person who held the account know
as an auditor.
Originally,
the function of an auditor is to ascertain the fact, whether the accounting
party has properly received the receipts and payment of cash on behalf of his
principal and whether the financial statement prepared before him show true and
fair view but the scope of audits today has been wide, because the modern
auditing is a complex operation calling on a wide variety of skills varying
from auditing and financial accounting knowledge to statistics, computing and
communication skills.
This
therefore become the most important part of the auditors duties owning the
enlargement of size and complexity of business enterprises.
Today,
the concept and scope of auditing has changed a comprehensive definition of
auditing given has Roberts Eschlessors as quoted by Jagdish Drakash in his
book. Adding, principle practice and problem (1990) says auditing is an
examination of financial statements, records and related operation to determine
adherence is generally accepted accounting principle, management policies
restated requirement.
In
this definition, emphasis laid on auditing being related to operations and how
far the adhere to management policies or stated requirements, in other words we
find out that we needs to introduce the effectiveness and breakable control of
the system.
What
then is this internal control system? Internal control system is the while
system of control, financial or otherwise established by the management in
order to carry on the business of the enterprise in an orderly and efficient
manner ensuring adherence to management policies, safe guarding the assets and
securing as far as possible the completeness and accuracy of records.
Millicham
A.H (1990) In his institution manual for accounting also stated the auditor
operational standard required that of an audit to be reliable on any internals
control, he should ascertain and evaluate those control and perform compliance
test on their control we therefore see that to have a sound reliable and
effective control system in an organization we minimize the possibility failure
of an enterprise.
1.2 THE STATEMENT OF
THE STUDY
With
reference to what was mentioned is the introduction that business failure could
result to ineffective and unreliable controls system in an organization. This
research work therefore will look into ineffective and unreliable control
system in the banking industry, today, this posses as a problem because it
bring so many associated problems which could be determinate of working
capital, high debt equity ratio decline, profit decline, high labour turnover,
law capital utilization, low quality service and finally focused which could be
either sales fraud, purchases, wages of petty cash fraud.
1.3 RESEARCH
QUESTIONS
This
paper intends to find answer to these questions so as to achieve it objective
and for the purpose of this research work.
i. What
are the saving services of the banks and their operation?
ii. What
are the native of operation of the bank?
iii. What
are the conditions to grant loan and on what type of collateral do you grant
loan?
iv. How
does cash manager meet the demand of the deposit and the shareholder?
v. What
is the policy of bank on the shortage or surplus declared by the central banks?
vi. Does
your bank has any has investment in other bank or industry?
1.4 PURPOSE OF THE
STUDY
The Purpose of the study is to
critically look at the problems at land (Business failure) the associated
problem bring an interrelationship between those variable and how one lead to
the other or its effect and provide deterioration working capital. The amount
available for running the days today business if there is uncontrolled wastage
writing off to many debts e.g high debt equity, The ratio of outside investor to
the share holders is important for business gearing, but when the gearing ratio
becomes too high, there could by problems of insufficient profit to pay divided
after the deduction of increasing debenture, interest interference of debenture
holder in the affairs of a company in respect of non payment, irregularities
invading the used of deposit to obtain an illegal or unjust advantages, this
could either be cash or sales fraud, these type of fraud relate closely because
before a cash fraud may occur a sale must have occurred, purchase fraud could
be misuse of order form, creation of non-existing supplier, presentation of two
cheques for signature with the same supporting document e.t.c
Wages Frauds: This could occur by including name on
payrolls, leading ex-employees on the payroll or overcastting gross and net
columns in the wages sheet. Wages fraud can be effective and reliable internal
control which help to reduce business failure and other relates problems.
1.5 SCOPE AND
LIMITATION OF THE STUDY
Internal control system being a very large topic could
therefore be said that it would be different to work at all departments of
internal control in an organization as a result of this the researcher limits
himself to accuracy and authorization of operation with respect to cheques,
cash receipts wages, salaries, petty cash and measuring the reliability and
effectiveness control in the banking industry.
Personal interviews and structured questionnaire will be
employed appropriately; also textbook, journals, and annual report shall be
consulted.
The limitation encountered were those and willingness of
respondents to answer important question.
1.6 THE SIGNIFICANCE
OF THE STUDY
The
financial services sectors such as banking building society, consumer credit,
purchase leading, factory business ventures e.t.c bank represent probably the
most important sector, this is not just in term of turnover profit and
employment of labour but also in its paramount impact on the other sphere of
the economy. Any problem on the banking system would invariable have strong
effect on the economy and that is why the research work tries in study the
internal control on the banking sector with respect to guarantee trust bank and
see how its effectiveness and reliability would be uses to prevent business
failures.
This
work will serve as a basis of broadening the research knowledge on internal
control, it the research knowledge on internal control, the customer audits
investors, their would be confidence control in place that can be relied upon
for safeguarding their depositor.
Management
on the other hand will be able to reduce losses and improve on internal control
system finally, the academic world will use this work as a basis for further
study for the student.
1.7 ORGANIZATION AND
PLAN OF THE STUDY
Plan of the study to this project is
divides into five (5) chapters; that it: -
Chapter one of this project focus on or comprises the
introduction background of the study, statement of the problem, purpose of the
study, untative research question, definition of term, scope and limitation of
the study and also the significant of the study.
Chapter two laid emphasis on the literature review that is
what other author, newspaper, magazine involved and also to verify the interest
figure that have said about objective, course and preventing of banking
industry and the principle of effectiveness and reliability of the internal
control system in bank industry.
Chapter Three deals with research methodology, historical
background of guarantee trust bank, modification of the research question and
hypothesis, research design and population study, sampling design procedure and
pilot study validity and reliability, procedure for processing and analysing
collection of data, Administration of the data collection schedule and
limitation of methodology.
Chapter Four contains on the presentation and analysis,
respondent characteristic and classification, occupation table data, sample
sex, age, department and level of education data, comparison of statement reflection
whether internal control are in place and how can this be improve the effective
and reliable internal control to prevent business failure in an economy.
Finally chapter five formed the
summary of the whole study, conclusion, recommendation and bibliography of the
study.
1.8 DEFINITION OF
TERMS
1.7.1 AUDIT:- In modern sense, an audit is an process (carried out by
suitable qualified auditor) whereby the account of business enterprises
including limited comprises, charities, trust and professional firms are
subjected to scrutiny to form an opinion as their accuracy, truth and fairness.
This opinion is imbedded in an “audit profit” addressed to those interested
parties who commissioned the audit, or to whom the auditors are responsible
undertake.
1.7.2 AUDIT TEST: - Test is carried out in
the process of auditing to determining the trueness and failure of the
transaction.
1.7.3 AUDIT EVIDENCE: - This is obtained by
carrying out audit tests.
1.7.4 COMPLIANCE TEST: - These are those test
which seek to provide, Audit evidence that internal control procedures are
being applied as prescribed.
1.7.5 EFFECTIVENESS: - This is the degree to
which predetermined objective of target is meet.
1.7.6 ENQUIRYS:- Seeking relevant information
from knowledgeable persons inside the enterprises whether formally or
informally.
1.7.7 COMPUTATION: Checking the arithmetical
accuracy of the accounting records or seeking independent calculations.
1.7.8 INTERNAL AUDIT: This is an independent appraisal function within an
organization for the review of system and the quality of performance as a
services to the organization. It objective is to examine adequacy and internal
control as contribution of the proper economic efficient and effective use of
resources.
1.7.9 INTERNAL CHECK:- This is an aspect of internal control which is exclusively
concerned with the prevention and detection or errors this involve the
arrangement of book keeping and other clerical duties in such away as to ensure
(1) that no signal fraud is encountered from its beginning to its conclusion by
only one person (2) that the work of each clerk engaged upon a task is subject
to an independent check in the source of another duties.
1.7.10 INTERNAL EVALUATION QUESTIONNAIRES:- This is list of question designed to
get specific information about a particular item.
1.7.11 ORGANIZATION CHART: - This is pictorial presentation of
level of authority and such that no person is responsible for the recording the
processing of a complete transaction.
1.7.12 SUBTANTIVES TESTS: - These are the test of review, which
seek to provide evidence as to the competence accuracy and validity of
information in the accounting records in the financial statement.
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