ABSTRACT
The importance
of internal control in the administration of wages and salaries in ministry
cannot be over emphasized. It is the responsibility of management to establish
and maintain an effective internal control system that will enhance the
attainment of organizational goals.
Therefore, this
study seeks to find out what extent the effectiveness of internal control
system in ministries in Imo State can checkmate frauds. To carry out this
assignment both the primary and secondary sources of data were used. A
descriptive design was adopted for the study. One hundred and twenty
questionnaire were distributed but only one hundred were returned. All the two
were testing using Chi-square at 0.05 level of significance.
One accepted
the null and rejected the alternative indicating that gross payment in the
ministry is not inflated while the other one reject the null and accepted the
alternative indicating that there is a significant relationship between an
effective internal control and financial accountability.
The summary of
the finding revealed that
1) There exists an
internal control system in ministry.
2) That there is a
laid down procedure but the problems lies in its operations
3) Those handling
cash or near cash item are properly checked but sometimes superiors may
encourage those handling cash to spend it inappropriately.
4) Importance is attached
to the separation of duties in the area of execution and custody of cash and
bank reconciliation.
Based on the findings the following recommendations were
made.
1) It is suggested
that all wages and salaries irrespective of the amount should be paid by cheque
as to allow the authenticity of wages and salaries payment.
2) It is strongly
recommended that workers should be effectively motivated to attain
organizational goal.
3) Young officer
should be made aware of the internal control measure in the environment in
which they operate.
TABLE OF CONTENT
Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of contents
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 of the
study
1.7 Limitation of the
study
1.8 Definition of
terms
CHAPTER TWO
Literature review
2.1 Definition of
internal control
2.2 Principles of internal
control
2.3 Importance of
internal control
2.4 Objective of
internal control
2.5 Internal control
environment
2.5.1 A good account system
2.5.2 Personnel quality and welfare
2.5.3 Organization structure
2.5.4 Internal Audit
2.5.6 Characteristics of reliable
2.6 Component of
internal control
2.6.1 Internal Audit
2.6.2 Internal check
2.6.3 Financial control
2.6.4 Moral control
2.7 Type of internal
control
2.7.1 Organization
2.7.2 Segregation duties
2.7.3 Physical
2.7.4 Authorization and approval
2.7.5 Arithmetical and accounting
2.7.6 Personnel
2.7.7 Supervision
2.8 Management
2.9 Limitation of the
effective
CHAPTER THREE
Research methodology
3.1 Introduction
3.2 Restatement of
the research question
3.3 Research design
3.4 Sampling
procedure
3.5 Data collection
and allocation
3.6 Statistical tools
3.7 Questionnaire
design
CHAPTER FOUR
Presentation, analysis and interpretation
4.1 Questionnaire
analysis
4.1 Analysis of
questionnaire respondent
CHAPTER FIVE
Summary of findings
5.1 Conclusion
5.2 Recommendation
5.3 Bibliography
5.4 Appendix
5.5 Questionnaires
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE
STUDY
Ministries
faced and saddled with the responsibility of administration of wages and
salaries. The need for this arises so as to eliminate the case of ghost
workers, to ensure that standards are maintained and adhered to, to ensure that
workers are paid at the appropriate rate and to detect fraud by managers or
other persons. These motives led to the introduction of an internal control
system which has been defined in statement on auditing (U.4) as being “not only
internal check and internal audit but the whole system of control, financial
and otherwise, established by management in order to carry on the business of
the company in an orderly manner, safeguard its assets and secure as far as
possible the accuracy and reliability of its records”.
It is known fact that management in all
ministries irrespective of their size and nature has financial statement as
their main vehicle for presenting accountability and stewardship to the
shareholders of their ministries.
Accounting to
LYNN (1983) “The statistical data that must be estimated and accumulated to
plan and control virtually all operation of ministries are best used in
conjunction with financial data”. It can then be deducted that accountability
and stewardship are best rendered in form of financial statement. Hence,
management must device adequate means of promoting efficiency in operations
safe guarding resources from fraud and other forms of mis-management and
creating a reliable atmosphere over recorded transaction. This necessitates the
concept of internal controls system in any ministry. If a financial statement
is to present a true and view, then there must be effective control at all
facts of ministries.
Internal
control includes internal checks, internal audit and other forms of control
like budgets, budgeting control, variance analysis etc. internal control ensure
the division of the whole work of an organization such that the work of one
person is complementary to another or is proved independently so that fraud
cannot be perpetrated without being detected. Frauds are perpetrated and
concealed because of the weakness that exists in a control system established
by management.
In most case, wrong and effective procedure are exploited by
unscrupulous members of staff at all levels in the organization hierarchy. Thus
a ministry that ignore the importance of internal control mechanism against
fraud and other irregularities are highly susceptible to the risk of being
defrauded
Taylor (1982)
stated that “ministries that use one payroll cheque require at least two
signatories before the cheque can be cashed in the bank to guard against the
unscrupulous employee who may want to defraud the company by signing the
cheque”. He opined that without control in an accounting system, it would be
very difficult for a ministry to protect its resources, rely on its records or
in the effect of the accounting. He further stated that the effect of the
accounting provision in the foreign corrupt practice Act (FCPA) is to require
public companies to maintain reasonable and effective financial records and an
adequate system of internal control.
To emphasize the concept of internal control system,
further, in making up wages sheets, one operator may enters their time from
their time cards. This ensures that no “dumming” workmen are paid wages. A
proper internal control system ensure reliability of financial statement by
ensuring that wages and salaries are paid correctly and in their true value so
that frauds, errors be erase or detected.
The installation of an effective internal
control system is one step towards the achievement of true and fair financial
records and the implementation and adherence to the control system is another.
The benefits derived from maintaining effective internal control system by
ministry with respect of the administration of wage and salaries cannot be
over-emphasize. The study therefore is concerned with the effectiveness of the
internal control system in the administration of wages and salaries in ministries
in Imo Stat. the emphasis will be the factors affecting the effectiveness of
their internal system in the area of administration of wages and salaries.
STATEMENT OF THE PROBLEM
Internal control in some ministries dates back to the period
when such ministries were established. The purpose of this study is to remedy
the situation were people intentionally or unintentionally perpetrate frauds,
act of mis-management and without being detected its purpose has been to guide,
detect and print out lapses that made mismanagement and misappropriation a
possible act.