Statement on auditing standard defined
internal controls, the whole system of controls, financial and
otherwise, established by the management in order to carry on the
business of the enterprise orderly 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 and good accounting
system ensure that controls and operating procedure are functioning
efficiently in order to protect the bank from fraudulent manipulations,
losses, errors and irregularities.
In view of huge investments by the
community development Associations, organizational/societies, individual
shareholders should be controlled, safe guarded, and made result
yielding venture, The recruitment of a qualified internal auditor acts
as a safety value in internal control. In recent times, defalcation,
misapplication of depositors funds, inside abuse, theft of properly, and
other types of financial improprieties have been found in our banks.
Internal control and good accounting structures should assist to
eliminate all the vices.
The urgent challenge facing this nation is the eradication of mass poverty.
(1) Banking has been an important economic indicator, spanning over a hundred years in Nigeria.
(2) The history of
Community Bank cannot be completed without remembering the former
president, Commander in Chief of the Armed Forces, General Ibarhim
Badamasi Babangida, on the occasion commissioning of the First Community
Bank in the Country Viz Adhere Community limited of the Tundun Wada
Community Bank of Kaduna in Kaduna State on 31st December 1990. the speech was unique and Historical, it spelt out to the rural Dwellers:
(a) What are the objectives behind the establishment of the Community Banking system?
(b) Have these objectives been attained
(c) What are the functions of Community banks?
(d) What are the structures of National Board for Community Banks?
(e) What are the internal controls of a Community bank case study Umuchinemere Community Bank?
(f) What are the types of Accounts in a community Bank?
(g) What are the
significance of the basic lending considerations of Community Banks and
to what extent has it enhance the profitability of the bank.
(h) What are the problems and prospects of community Banks in Nigeria.
(i) What are the causes and remedies of Distress Community Banks?
BRIEF HISTORY OF UMUCHINAEMERE COMMUNITY BANKS
Umuchinaemere Community Bank
Nigeria Ltd, situated at N0 5 Ikwuato Street, Uwani Enugu, was
incorporated as a limited liability company and commenced business on 1st
June 1995. The Bank came into being as a result of the determination on
the part of promoters to introduce the first Catholic Community Bank in
Enugu. It has an initial capital of
The ownership structure of the
Bank are as follows, viz Catholic Diocese of Enugu 30%,
organizations/Societies in Enugu Diocese 30%, individuals 35%, Director
The banks board of directors
is composed of the Chairman and six other members. The day-to-day
operation of the bank is the responsibility of the management team of
five. The management team has developed banking and financial products
and services to ensure maximum benefit to our people.
1.1 STATEMENT OF THE PROBLEM
The failure of many community Banks
animated partly as a result of poor internal control and structure of
the Bank. Over one thousand Community Banks were established but over
three hundred Community Banks are distress.
1.2 OBJECTIVE OF THE STUDY
This research work is to be carried out with the objective of investigating or inquiring for the following:
(1) Evaluate the Accounting system uses and internal control in a Community Banks.
(2) To ascertain the extent to
which the Accounting structure and internal control have contributed
towards the overall goals of Community banks.
(3) Identify the causes and remedies of distress Community Banks.
1.3 SIGNIFICANCES OF THE STUDY
The study exposes the ownership
structure, the accounting structure, and the potential effects of
internal control. The study is also important as it appraise the problem
of Community Banks and its recommendations. It also serves as a
reference materials for operators, of the system with particular
reference to its lending guilds and policies. It provides a springboard
upon which other researchers could base.
1.4 STATEMENT OF HYPOTHESIS
The following hypothesis shall be tested by the researcher in the course of carrying out this research paper:
- Ho. Accounting system and internal control have not enhanced
efficient management and control of resources in Umuchianemere Community
Hi: Accounting system and internal
control have enhanced efficient management and control of resources in
Umuchinemere Community Bank.
2. NULL HYPOTHESIS
Ho: Accounting system and internal
control have not contributed towards the achievement of the overall
goals of Umuchinemere Community Bank.
Hi: Accounting system and internal
control have contributed towards the achievement of the overall goals of
Umuchinemere Community Bank.
3. NULL HYPOTHESIS
Ho: Poor accounting system and
internal control have not led to cash manipulations or fraudulent
activities in Umuchinemere Community Bank.
Hi: Poor accounting system and
internal control have led to cash manipulations or fraudulent activities
in Umuchinemere community Bank.
1.5 SCOPE OF THE STUDY
The study of accounting system and
internal control in a Community Banks covers all the community bank in
Enugu State in particular and Nigeria in general. But due to the limited
time factor and cost, the researcher decided to link the study to Enugu
based Community Bank. In Enugu also, not all the Community Banks were
visited, but since National Board for Community Banks (NBCB) usually
conduct a feasibility study ion community banking system, the researcher
rely mainly on them for most of the information.
1.6 LIMITATIONS OF THE STUDY
The desire to make the research work as
elaborate as possible is aimed at making this paper an accurate,
reliable and indispensable medium for any individual, groups of
individuals, and society at large that may be interested. The following
limitations may reduce its reliability and accuracy:
(j) ATTITUDES OF
RESPONDENTS: The reluctance of the some of the staff of Umuchinemere
Community Bank hinders the elected intentions of a deeper analysis of
(ii) OBTAINATION OF VITAL
INFORMATION NEEDED: Some important information needed by the researcher
could be termed. “Absolute confidential” and sometimes the researcher
may final it almost impossible to obtain them from those concerned.
(iii) FINANCE: Inadequate funding is a major problem for the researcher and this has hindered the rate of this work.
(iv) TIME FACTOR: Time is
another limitation to the extent at which the researcher intended to go
considering the shortness of time needed to coming out with the research
work. Much effort are being made to achieve the goals of the study.
DEFINITIONS OF TERMS
1.7.1 COMMUNITY BANK: This is a bank
independently owned and operated by a Community to cater for the savings
and credit needs of the Community.
1.7.2 COMMUNITY: By a Community we
meant individuals or people living in one place, district or country
considered as a whole.
1.7.3 ACCOUNTING: Accounting is the
system that measures business activities, process that information into
reports, and communicates the results to decision makers.
1.7.4 INTERNAL CONTROL:
Organizational plan and all the related measures adopted by an entity to
safeguard assets, ensure accurate and reliable accounting records,
promote operational efficiency, and encourage adherence to company