Abstract
This study exposed the researcher to the evaluation of the
effectiveness of the internal control system in the banking industry. “
internal control is the whole system of
control, financial and otherwise, established by the management
in order to carry on the business of the enterprise in an orderly and efficient
manner, ensure adherence to management
policies, safeguard the assets and secure as far as possible the completeness
and accuracy of the records. “Internal
control system has the following element. Organization: The enterprises must
have clear corporate objective, plan
policy and duties of the employee should be clearly defined segregation of
duties: Basic to the concept of internal control system is the segregation of duties of the employee
to ensure that no one person is able to record and process a complete
transaction. Physical:
These involve procedural and security measures designed to
ensure that access to asset is limited to authorized personnel. Authorization
and approval: All transactions require authorization and approval by
appropriate and responsible personnel. Personnel: there should be procedures to
ensure that personnel have capabilities commensurate with their
responsibilities. Supervision: any system of internal control should have means
of supervision by responsible officials for the day to day transactions and
their recording thereof. Arithmetical and Accounting; these are the controls
within the recording function which check that transactions to be recorded and
processed have been authorized and that they are complete and accurately
processed. Internal control which can be likened to the heart which regulates
the business, it helps to adhere to prescribed managerial policy, it also
promotes operational efficiency.
TABLE OF CONTENTS
TITLE PAGE – –
– – –
– – i
APPROVAL PAGE
– – –
– – ii
DEDICATION- –
– – –
– – – iii
ACKNOWLEDGEMENT
– – –
– – iv
ABSTRACT – – –
– – –
– – v
Table of Contents
– – –
– – –
vi
CHAPTER ONE
INTRODUCTION-
– – –
— – –
1
1.1 BACKGROUND OF THE
STUDY – –
– – 1-4
1.2 STATEMENT OF THE
PROBLEM – –
– – 4-5
1.3 OBJECTIVE OF THE
STUDY- – –
– – 5
1.4 RESEARCH
QUESTION – –
– – –
5-6
1.5 STATEMENT OF
HYPOTHESIS – – –
– 6
1.6 SIGNIFICANCE OF
THE STUDY- – –
– 6-7
1.7 SCOPE OF THE
STUDY- – –
– – –
7
1.8 LIMITATION OF THE
STUDY- – –
– – 8
1.9 DEFINITION OF
TERMS- – – –
– – 8-9
CHAPTER TWO
LITERATURE REVIEW
– – –
– – 10
2.1 BRIEF HISTORY OF
INTERNAL CONTROL IN FIRST BANK PLC –
– 10
2.2 OBJECTIVE OF
INTERNAL CONTROL- – – 10-11
2.3 ELEMENT OF
INTERNAL CONTROL- – –
– 12-14
2.4 INTERNAL CONTROL
IN A SPECIFIC AREA OF MANAGEMENT- 14-28
2.5 LIMITATION TO THE
EFFECTIVENESS OF INTERNAL- – –
28-29
2.6 COMPONENTS OF
INTERNAL CONTROL- – – – 29
CHAPTER THREE
RESEARCH DESIGN AND
METHODOLOGY- – -36
3.1 INTRODUCTION –
– – –
– – -36
3.2 RESEARCH
DESIGN- – –
– – –
36-37
3.3 POPULATION OF THE
STUDY- – – –
– 37
3.4 METHOD OF DATA
COLLECTION- – –
– – 37-38
3.5 SAMPLE SIZE
– – –
– – –
– 38
3.6 SAMPLING
TECHNIQUES- – –
– – –
38
3.7 VALIDITY AND
RELIABILITY OF MEASURING INSTRUMENT – – – – 39
3.8 METHOD OF DATA
ANALYSIS- – –
– – 39-40
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA-
– 41
4.1
INTRODUCTION- – –
– – –
– 41
4.2 PRESENTATION OF
DATA AND CLASSIFICATION- – – – – – 42-43
4.3 ANALYSIS OF
DATA- – –
– – –
43-50
4.4 TEST OF
HYPOTHESIS- – –
– – –
50-56
4.5 INTERPRETATION OF
DATA- – –
– – 56-57
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION-58
5.1 SUMMARY OF
FINDINGS- – –
– – –
58-59
5.2 CONCLUSION –
– – –
– – –
59-60
5.3
RECOMMENDATION- – –
– – –
60-62
REFERENCES-
– – –
– – –
– 62-63
QUESTIONAIRE- – –
– – –
– 64-67
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE
STUDY
Every business
unit has certain goals and objectives to accomplish, no matter the size and
scope, management has the responsibility of establishing, maintaining a goal of
its objectives.
The role is not an easy one especially in organizations that
are large in size and scope. It is not
possible to exercise first hand supervision of operations as such, the
installation of internal control system as an indispensable aid to efficient
management is inevitable.
According to
Pyle, and Larson, (1981), Fundamental Accounting Principles traced the origin
of internal control to the complexity of modern business techniques. Although
effective system may be operated, in large companies, but smaller enterprises
may have to rely less on formal controls due to personal involvement of
management in the enterprise itself.
Internal
control is very necessary for every business unit whether large, medium or
small. It does not only increase the efficiency of business, but also helps to
self-guard the assets and secure accuracy of the record against error. From
textbooks and research work done by other people on this, it is generally
accepted that internal control is an indispensable aid to efficient management
due to the Fact that it provides assurance to management. It keeps management
informed if the financial position is sound.
Internal
control is as important as the organization itself and should be carefully
designed and effectively carried out. Failure to do this results in creation of
loopholes, which encourages all forms of fraud. At this point, it is necessary
to define internal control. According to auditing standard guidelines, it is
the whole system of control, financial and otherwise, established by the
management in order to carry on the business of the enterprise in an orderly
and efficient manner, ensure adherence to management policies, safeguard the
assets and secure as far as possible the completeness and accuracy of the
records. Internal control is divided into accounting control and administrative
controls and it is elucidated according to Horngren and Foster (1990-1910).
1“Accounting control comprises the method and procedures
that are mainly concerned with the authorization of transactions, the
safe-guarding of assets and the accuracy of the accounting records. Good
accounting controls help increase efficiency; they help decrease waste,
unintentional errors and fraud.
2 Administrative controls Comprises the plan of organization
and all management planning and control of operation.
First bank Nigeria
Plc is one of the universal banks in Nigeria. It was founded in the year 1894,
more than a century ago, by Sir Alfred Jones, a shipping magnate from
Liverpool. The bank started out as a small
operation in the office of Elder Dempter and company in Lagos. They render
Universal banking services to the public, some of which are acceptance of cash
lodgments and savings deposit. They were among the first banks that introduced
western Union Money Transfer Services to the public. Another interesting aspect
of services which the researcher found they render to the public is the
Automated Teller Machine (ATM) services, which they offer to the public
recently. These three services, you need not to have account with them to
affect such transactions.
Telegraphic transfer is an aspect of transaction where by a
customer or potential customer come up to a bank and request for a transfer of
fund to another branch of first bank in another town which if affected by Fax
and receives a spontaneous remittance at the correspondence branch. Equally
they have the same effect of transfer, but in the case of draft the purchaser
handles the drafts to the paying branch unlike the telegraphic transfer whereby
the fund is already at the branch.
On a daily
basis First Bank open more than fifty (50) new savings bank accounts, and their
internal rate is as stipulated by the central bank of Nigeria (CBN).
STATEMENT OF THE PROBLEM
Every financial institution strives for fair public
recommendation, efficiency, strong management and profitability. However, with
complexities in modern day business network, overwhelming introduction of
information technology and other human Factors, these objectives seems
unachievable except with the infusion of strong internal control system into
the main stream of the organization process.
No internal
control system can by itself guarantee efficient administration, completeness
and accuracy of records. This could be attributed to
1. Employment of incomplete and dishonest personnel
Inadequate documents and records
Lack of proper
procedures for records keeping