THE ROLE OF INTERNAL CONTROL IN RISK MANAGEMENT Abstract
The fact remains that internal control department has much
role to play in managing risk in ever organizations and financial institution.
The aim of the research work is to analyze the role of internal control in risk
management. In this research work 60 questions were distributed while 40 were
returned. It made use of simple percentage in analyzing the questions where
chi-square was used to test the hypothesis. Furthermore, the following finding
were made during the course of this research work. That there is an existence
of internal department. The need for continues audit was also emphasized is
independent of the management and report if mostly prepared and reviewed
bi-annually. The independent of internal control department should always be
maintained. Regular training of the staff and personnel and also adequate
development programs should also be organized to enhance performances,
understanding and appreciation of organization objective.
TABLE OF CONTENTS
Title page
Approval page
ii
Dedication
iii
Acknowledgement
iv
Abstract v
Table of contents
vi
CHAPTER ONE
Introduction
1
Statement of the problem 2
Need for the study 4
Objectives of the study 5
Research questions 6
Scope of the study 7
Assumptions of the study 8
Limitation of the study 9
Operational definition of terms 10
CHAPTER TWO
Background of
internal control
12
Nature of internal
control 18
Management duty
regarding internal control 19
Installation of an
effective accounting system 21
Employees codes of
conduct
24
Monitoring relevant legal requirement 24
Limitations of the effectiveness of internal control 25
Auditors use of internal control system 26
Essential features of internal control system 27
The nature of risk 29
Classes of risk
30
Risk management 34
Functions of risk manager 35
Objectives of risk management 35
Identification and management of risk 36
How to identify risks 37
CHAPTER THREE
Summary of
findings
41
Conclusions 43
Recommendation 43
Areas for further
study 45
Bibliography 46
Appendix
CHAPTER ONE
INTRODUCTION
Internal control has played a major role in risk management
especially in the banking industry in Nigeria.
According to British auditing guideline which defines
internal control as the whole system of control financial and otherwise
established by the management in order to carry out the business of the
enterprises in an orderly and efficient manner, ensure adherence to management
policies, safe guarded the assets and secure as far as possible the
completeness and accuracy of records. Whereas Hornaren and Foster (1990:910)
defined internal control as the set of accounting and administrative control
and practice that helps to ensure that approved and appropriate decisions are
made in an organization. internal control as organization of accounting duties
is such a way as to maximize the chance of accurate accounting and minimize the
chance of risk or the occurrence of impact of such losses if they occur.
The management has the duties is risk identification
evolution, avoidance transfer, retention recruiting and financing. However,
Chris Aloma Osondu (2008) emphasized on risk management whereby business can
hardly operate without an element of risk and defined risk management as a
scientific possible accidental losses and feigning and implementation
procedures that minimizes the occurrence or the impact of such losses if they
occur.
According to Anyanwu F.A. (2007) Risk can be designed as the
general uncertainty doubt, chance of loss or insurance the insured object. An
organization of management is such that if internal control system is not
efficient there is every tendency that risks cannot be managed properly in such
an organization.
1.1 STATEMENT OF
PROBLEM
When risks occur the concern is always the economic lose
associated with the loss. Hence it is regarded as an involuntary parting of
value. The economic loss may take many forms such as a loss of property by
physical perils as fire or theft, it may also take the form of premature death
of the key man of a business enterprise or a family bread winner. It may arise
out of the ineffectiveness in the management of an enterprise or seen as a
result of law suit to recover damaged for some negligent act therefore for the
problems intended to study are:
How management handles their risk.
How efficient is the internal control of the organization.
If the internal control system in that organization helps at
all in management.
If the organization is insured.
A Research proposal for the role of internal control in risk management:
Reviews: A Review on the role of internal control in risk management, role, internal, control project topics, researchcub.info, project topic, list of project topics, research project topics, journals, books, Academic writer.
The fact remains that internal control department has much role to play in managing risk in ever organizations and financial institution. The aim of the research work is to analyze the role of internal control in risk management. In this research work 60 questions were distributed while 40 were returned. It made use of simple percentage in analyzing the questions where chi-square was used to test the hypothesis. Furthermore, the following finding were made during the course of this research work. That there is an existence of internal department. The need for continues audit was also emphasized is independent of the management and report if mostly prepared and reviewed bi-annually. The independent of internal control department should always be maintained. Regular training of the staff and personnel and also adequate development programs should also be organized to enhance performances, understanding and appreciation of organization objective... accounting project topics
THE ROLE OF INTERNAL CONTROL IN RISK MANAGEMENT