1.1 BACKGROUND OF THE STUDY
Formulation and implementation of bound policies is one of the attributes of a successful business. It’s the function of management in any business either large or small to formulate policies for the business and ensure that the policies that they have formulated one religiously implemented.
Santocks (1979), states the management to set guidelines for documentations of transaction for safeguarding of assets of the enterprise and for approval and authorization of transaction. Management also have function task and responsibilities to it’s employees and ensures that organizational goals and objective are not only met, but are met on target.
In short, the success of failure of any business rests on the shoulder of it’s management. This bread function can only be achieved by the management, if it has a control measure and standard to which all it’s employees should adhere to also not possible for the management of a business to be at all times and place to personally supervise operations. Hence management usually installs all system of control which guide it’s employees on how to perform in accordance to managements stated policies and guidelines. And the measure is known as internal control.
The establishment and maintenance of a system of internal control is an important responsibility to management (Auditing standards: 1982, p55). And the system once installed, should be under continuous supervision by management to determine that it is functioning as prescribed and modified as appropriate for change conditions.
Large and small organizations have the financial, capability and human resources to police their employees, and supervise them more appropriate as a complement of internal control, but small organizations do not posses either financial capacity or the supervisory man power to assist management in their asset to closely monitor operation and compliance to policies and guidelines. Hence, internal control becomes more compulsory and relevant to them.
1.2 BRIEF HISTORY OF ANCHOR INSURANCE, UYO
Anchor Insurance was incorporated on 16th June, 1989 as an insurer and was licensed on 17th October, 1989 to commence general business. Anchor Insurance is wholly owned by Akwa Ibom State Government. The companies head office was formerly in NO. 57 Wellington Bassey Way, Uyo. But now is in No. 7 Aka Road, Uyo.
It formally commenced operation on 10th November 1989 with general business. It has now added a life business line to this operation. The company has branches various cities in the country, examples are Lagos, Port Harcourt, Calabar, Aba, Ikot Ekpene, Ikot Abasi, Ikono, Itu, Abak, Oron, Etinan, Ukanafun, and the head of it at Uyo.
The company is headed by the Managing Director (MD). It has a broad which make policies for companies. The board has the honourable commissioner for finance as chairman. It has functional departments such as finance/accounting, personnel administrative, marketing department, life/pension department as also public relation department.
The general business department takes charge of fine as special rents. Consequential, law, burglary goods transit, marine insurance, personal assistance group personal assistance / workmen compensation and merrier insurance.
Life assurance is effected as a protection against loss caused by death. The life assurance policy may be whole life assurance or endowment. While the bond department takes care of performance bond advance payment, customer bond and also credit bonds.
1.3 RESEARCH PROBLEM
In organization with very few employee’s (Mergs et al, 1977, p. 169)” there is little or no opportunity for division of duties are responsibilities”. This makes their interest control to be weak or even completely non – existence in some cases.
Weak or lack of control, lead to fraudulent practice carelessness and outright embezzlement of company properties. This weak or lack of impact of internal control has contributed to the winding up of organizations due to the problems name above. With this in mind, the importance of internal control to organization cannot be over emphasized.
1.4 PURPOSE OF THE STUDY
The purpose of the study is to:
- Find out if internal control system exist in anchor insurance company Uyo, Akwa Ibom State.
- To ascertain how they have complied with the system that they have.
- To determine if it has helped to reduced error rate in the company.
- To determine if that system has helped in controlling fraudulent practices in the company rate in the company.
- To suggest means of enhancing effective internal control in the organization.
1.5 RESEARCH QUESTION
- Does the anchor insurance company really has an internal control system?
- Does the management utilizes the internal audit and annual report is managed decisper internal control system of the organization?
- Has the internal control system reduced error rate organization?
- Is there any problem mutilating against efficient internal control system?
1.6 SIGNIFICANCE OF THE STUDY
Many organizations do not even know what internal control is all about. Some of these who has the knowledge think that it is too expensive to install or that it is impossible in companies.
Also, this research would guide and would be a source of reference or significance to the accounting student of Uyo City Polytechnic and other institutions of higher learning in Nigeria. It could be a source of information for their academic advancement.
This study has been improved on the growing need of our industries especially those undertaken, accounting practice on manufacturing companies as in Anchor Insurance Companies.
1.7 ASSUMPTION OF THE STUDY
It is assumed that
- The officials of the company under study would co-operate with the researcher and give positive responses to questionnaire submitted to the company.
- Another assumption is that, the supervision should give the researcher the necessary guidance and useful suggestion so as to complete the project on schedule.
- Distributed questionnaires would be completed and promptly returned by the workers of Anchor Insurance Company, Uyo.
- Another important assumption is that God would strengthen the researcher to stand and complete the project successfully.
- That the information gathered would be vital and correct.
1.8 LIMITATION /SCOPE OF THE STUDY
The scope of this study was limited to accounting information supplied by Account Department of Anchor Insurance Companies and the significance of these information and how it help management to achieved it’s corporate object.
1.9 DEFINITION OF TERMS USED IN THE STUDY
Business: This is a series of profit directed activities that are designed to supply and distribute useful and valuable goods and services to customers.
System: The term “system” is used extensively and sometimes rather loosely in connection with many factors of life and existence, e.g. business system, computer systems, school system etc. A system therefore is composed of parts that are inter-department and interact to achieve a purpose.
Accounting Controls: These are internal based directly on the accurateness and reliability of the accounting data and financial statement.
Effects: The result or outcome of purpose or intention.
Internal Control: This includes the method by which top management authority and assigns responsibility for such function as selling, purchasing, accounting and production.
It is also includes programmes for preparing, verifying and distributing to various of supervision to maintain and control over the variety of activity and function that constitute a large scale corpta enterprise.
Administrative Control: These are internal controls that are not based upon the accurateness are reliability of accounting data.
Efficiency: This means the capacity of produce desired result with minimum costs.
Company: This is an association of person for carrying on a commercial or industrial enterprise of business.
Management Control: This is the process by which company personnel consisting of line managers and supervisors assure that the organization carries out it’s activities effectively and efficiently.