ABSTRACT

The backward development in the public sector has been attributed to weaknesses in the Internal Control Systems in the public sector. Huge amount of money is lost due to Internal Control inadequacies and other criminal temptations, which to say the least, drains the nation’s meager resources with its far-reaching and attendant consequences on the development or even socioeconomic or political programs of the nation. Thus, public sector organizations do not have strong policies and systems to check these activities in the public sector. A sample size of 20 respondents was drawn from the population. The convenience sampling technique was used to select the employees whiles purposive sampling technique was used to select management in the organization. Questionnaire was the main instrument used to collect data.Tables and bar charts were used to determine the frequencies and the percentages in data analysis. The study revealed that Internal Control System had been effective at the Hospital as a result of effective supervision, Segregation of duties, proper authorizations and approval etc. Internal Control System faces some problems in its implementation such as poor judgement in decision making, making errors due to carelessness, fatigue etc. This study concluded that Internal Control System at Edweso Government had been effective and efficient. Hence, having positive effect on employee satisfaction.

 

 

 

 

 

TABLE OF CONTENT

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

1.2 Statement of the Problem

1.3 Objectives of the Study

1.4 Research Questions

1.5 Significance of the Study

1.6 Scope and Limitations of the Study.

1.7 Definition of Terms

1.8 Organization of the Study

 

CHAPTER TWO

LITERATURE REVIEW

2.1 Overview of the Internal Control Systems

2.1.1 Classifications of Internal Controls

2.2 Overview of Fraud

2.2.1 Classification of Fraud

2.2.1a Management Fraud

2.2.1b Employee Fraud

2.2.2 Causes of Frauds

2.2.3     Ways of Preventing Fraud in the Public Sector

2.3 Components of Internal Control System

2.4 Elements of Internal Control System

2.5 Internal Control System in preventing Fraud in the Public Sector

2.5.1 Negative Effects of Fraud Incidence in the Public Sector

2.6 Employee Satisfaction

2.7 Challenges of Implementing Internal Control System

 

CHAPTER THREE

METHODOLOGY

3.1 Type of Research

3.2 Population

3.3 Sample and Sampling Technique

3.4 Data Collection

3.4.1 Type of Data

3.4.2 Source of Data

3.4.3 Instrument for Data Collection

3.4.3a Instrument Validity 

3.4.3b Instrument Structure to Meet Research Objectives

3.4.4 Procedure for Data Collection

3.5 Method of Data Analysis

 

CHAPTER FOUR

RESULTS AND DISCUSSION OF FINDINGS

4.1 General Information on Edweso Government Hospital

4.1.1 Mission Statement

4.2 Data Presentation and Analysis

4.2.1: To examine the effectiveness of Internal Control System

4.2.3:  To determine the challenges of implementing Internal Control System

4.3 Discussion of Research Findings

4.3.1 To examine the effectiveness of Internal Control System at Edweso Government Hospital.

4.3.2 To identify the relationship between Internal Control System and Employee Satisfaction at Edweso Government Hospital.

4.3.3 To determine the challenges of implementing Internal Control System at Ejisu Government Hospital.

 

CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Summary of Findings

5.2 Conclusion

5.3 Recommendations

REFERENCES

 

 

 

LIST OF FIGURES

Figure 4.1 Effectiveness of Internal Control System…………………………………….36

Figure 4.2 Employee Satisfaction………………………………………………………..39

Figure 4.3 Challenges of Implementing Internal Control System…………………….…42

Figure 4.4 Relationship between Internal Control System and Employee Satisfaction....45

 

 

 

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Public demands and expectations at the grassroots for the provision of essential social and basic services using government resources have continued to be astronomically high, as manifested by rising pressure on the resources with which to satisfy these. This assertion is not difficult to appreciate if we accept the simple fact that the strength of any government depends on the success of its development programmes, which largely depend on an effective implementation of its policies, by its bureaucrats and technocrats.  It is obvious that social, political and economic development involves the effectiveness and the efficiency of the bureaucracy on one hand and the probity of the bureaucrats on the other.  Government exists to serve the interest of the citizens.  There must therefore be a way of holding the former accountable to the latter (Bello, 2001).

Huge amount of money is lost through fraud or due to internal control inadequacies and other criminal temptations, which to say the least, drains the nation’s meagre resources through fraudulent means with its far-reaching and attendant consequences on the development or even socio-economic or political programmes of the nation (Bello, 2001).  Thus, as Kamaluddeen (1991) observed “billions of Naira is lost in the public sector every year through fraudulent means”.  This, he argues represents only the amount that is ferreted out and made public.  Indeed, much more substantial or huge sums are lost in undetected frauds or those that are for one reason or the other hushed up.  Cases of frauds in the public sector are so pronounced that everyone in every segment of the public service could seem to be involved in one way or the other in some of these nasty acts (Kamaluddeen 1991).  This assertion is not difficult to appreciate if we accept and adopt the simple definition of fraud as any deliberate false act aimed at deceiving or harming any party, individual or corporate body, in any manner (Bello 2001).  

Presenting the 1989 budget, Babangida (1989) lamented that “This administration has always appreciated the desirability of fiscal discipline and the need to bring planned expenditure and projected revenue into reasonable alignment. Our performance in this regard in 1988 was far from satisfactory” (p.16).  According to Zayyad (1990), an estimated 8 billion has been lost in abandoned projects during the two decades 1970-1990; this is not to talk of what was lost in the last decade, through abandoned projects and other fraudulent means.  Thus, one need not wonder too much to see how devastatingly frauds have compromised the administrative competence, performance capacity and general credibility of the public sector.  Initial estimates of major projects become little fractions of ultimate costs paid, original cash projections produce less than half of the benefits expected and projects which seemed technically feasible and economically viable, turnout “white elephant” if not, abandoned, with serious implications for growth and development (Bello, 2001). 

1.2 Statement of the Problem

In spite of efforts made by the government to combat fraud in the public sector, millions of state funds meant for national development go into the wrong pockets through fraudulent acts by some individuals in the sector. Some public sector stewards spend funds on themselves and on projects based on their own interest and not that of the nation (Ricchiute, 2000). 

According to Csazer (2000), there are lots of fraudulent activities in the public sector due to weak internal control systems and measures. Thus, public sector organisations do not have strong policies and systems to check fraudulent activities in the public sector. Financial laws and regulations are implemented and courts and tribunals continue to administer justice to fraudsters, all in a bid to prevent and control fraud but to no avail due to the weak internal control systems and checks in the public sector (Csazer, 2000).

Hence, this study intends to look at the role of Internal Control System at Edweso Government Hospital.

1.3 Objectives of the Study

          The following are the objectives for this study:          

1.      To examine the effectiveness of Internal Control System at Edweso Government

Hospital.

2.      To identify the relationship between Internal Control System and Employee Satisfaction at Edweso Government Hospital.

3.      To determine the challenges of implementing Internal Control System at Edweso

Government Hospital.

1.4 Research Questions

The following research questions are posed by the study:

1.      How effective is the Internal Control System at Edweso Government Hospital?

2.      What relationship exists between Internal Control System and Employee Satisfaction at

Edweso Government Hospital? 

3.      What are the major challenges Edweso Government Hospital faces in implementing

Internal Control System?

1.5 Significance of the Study

This research study is aimed at helping the public institutions in Ghana to implement effective Internal Control. This is to ensure that the state fulfils its mission and achieves its goals while providing safeguard to government resources.

Again, it will help the management of Edweso Government Hospital to prepare and implement effective and efficient plans by providing correct and reliable information in decision making process. Thus, this study will help them to implement management policies to attain corporate goals and objectives.

Finally, to students and researchers, a copy of this study will be put at the University’s library to serve as a source of information and reference. To other readers, copies of this study will be published in the electronic media for easy accessibility.

1.6 Scope and Limitations of the Study.

This study is to find out the role of internal control in detecting and controlling fraud in the public sector using Edweso Government Hospital as a case study. It is Internal Control Systems because it helps to protect the assets of the public sector from misuse, theft, and fraud etc. It also boosts efficiency in the public sector and ensures orderly running of business through supervision of duties and proper managerial review.

This research study also seeks to address the issue of fraud because it has become a great pain in the neck of public sector organisations due to weak Internal Control Systems. Fraudulent activities such as theft, double payment of invoices etc. are on the rise in the public sectors which hamper national growth and development. 

Moreover, it is Edweso Government Hospital because of easy access to accurate and reliable data. Also, because the researcher resides in that area which will lead to easy access to the hospital.

Finally, the major problem encountered during the study was inadequate time and financing the work.

1.7 Definition of Terms

Internal Control System: Internal controls are policies, procedures, practices and organizational structures implemented to provide reasonable assurance that an organization’s business objectives will be achieved and undesired risk events will be prevented or detected and corrected, based on either compliance or management initiated concerns. 

Controlling: This is a managerial function which helps to check the errors and to take the corrective action so that the deviations from standards are minimized and stated goals of the organization are achieved in a desired manner.

Fraud: This is an action or an instance of deception in order to make money or obtain goods

illegally.

Public Sector: This is an area which belongs to the government which deals with the production, ownership, sale, provision, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local municipal.

 

1.8 Organization of the Study

The study is organized in five chapters as follows: 

Chapter one is the Introduction. It highlights Background of the Study, Statement of the Problem, Objectives of the Study, Research Questions, Significance of the Study, Scope and Limitations of the Study, Definition of terms and Organization of the Study.

Chapter two talks about the Literature Review. It covers an Overview of Internal Control

System, Overview of Fraud, Components of Internal Control System, Elements of Internal

Control System, Internal Control System in preventing Fraud in the Public Sector, Employee Satisfaction and Challenges of Implementing Internal Control System. 

Chapter three is the Methodology. This looks at the Type of Research, Population, Sample and Sampling Techniques, Data Collection and Method of Data Analysis.

Chapter four is the Results and Discussion of Findings. This covers General Information on Edweso Government Hospital, Data Presentation and Analysis, and Discussion of Research Findings.

Chapter five gives the Summary of Findings, Conclusion and Recommendations of the Study.