ABSTRACT
Internal control in banks helps to protect the bank against fraudulent
act and practices. Though its procedure varies from one institution to the
other, its aim and objective remains the same. Internal control have therefore
help banks to be better managed, more liquid and directed toward profit making
by the bank. This project is therefore undertaking to know the effectiveness of
this internal control system and procedures on innovation of product in Nigeria.
The result was that with effective control internally, product would be well
innovated. The result of the findings of the questionnaires would be tested
through the chi-square method.
TABLE OF CONTENT
Title Page i
Certification ii
Dedication iii
Acknowledgment iv
Abstract v
Table
of content vi-vii
CHAPTER ONE
1.1 Introduction 1
1.2 Statement of the Problem 1
1.3 Significance of the Study 2
1.4 Limitation of the Study 2
1.5 Research Questions 3
1.6 Definition of Terms 3-4
CHAPTER TWO
2.0 Historical
Background 5-7
2.1 Definition of
Internal audit
7-8
2.2 Objective of
Internal Control System 8-10
2.3 Internal
Control System 10
2.4 Types of
Internal Control 10-12
2.5 Function of
Internal Control Department 12
2.6 Internal
Audits Report 13
2.7 Drafting Audit
Reporting 13
2.8 Appointment of
Auditors 13
2.9 Qualification
of External Auditors 14
2.10 Qualification of
Internal Auditors 14
2.11 Relationship
Between Internal and 14
External
Auditor Common Interest
2.12 Differences 15
2.13 Provision of
CAMA ’90 on Independence
of Auditors. 15
CHAPTER THREE
3.1 Research
Methodology 16
3.2 Sample Size
and Procedure 16
3.3 Method of Data
Collection 17
3.4 Research
instrument 17
CHAPTER FOUR
4.0 Data
Presentation and Procedure 18-20
4.1 Discussion of
Findings 21
CHAPTER FIVE
5.0 Summary of
Finding, Recommendation and Conclusion 22
5.1 Summary of
Finding 22-23
5.2 Recommendation
23
5.3 Conclusion
23
References 24
Appendix 25
CHAPTER ONE
1.1
INTRODUCTION
This research work is an attempt to review
thoroughly the effectiveness or otherwise of internal control system and
procedure in a banking environment. A case study of Wema Bank Plc.
The
importance of an effective internal audit, internal check and control system
cannot be overemphasized. More so with government policy of promoting
accountability by others interested with government fund.
Auditing can be described as an
activity carried out by an independent person with the sole aim of reporting on
the truth. And fairness of a financial statement. It can be regarded as the
activity embarked upon by the author when verifying accounting data.
Determining the accuracy and reliability of accounting statement. Report and
issue reports based on his finding.
Internal
audit can be appropriately termed as one conducted by employee of an
organization into any aspect of its affairs and work exclusively for the
organization. Internal audit can be described as the eye of the board and the
watch of the organization activities.
Internal
control is the whole system of controlling financial and established by
management in order to carry on 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.
1.2 STATEMENT OF THE PROBLEM
The
role of internal auditors of an organization has been under estimated. If not
totally relegated to the background when compared with their counterparts in
the private practice.
That
is the external auditor may be attributed to the fact that internal auditors
are employees of the organization. The act of underestimating the role of
internal auditor is not exhibited by the authority alone. Worker of the
organization also underrate the work of the internal auditors.
1.3 SIGNIFICANCE OF THE STUDY
The
purpose of the organization research work is to examine control system in
operating in a banking environment to look out for any loop hole out of any
loop hole or weakness in the audit programme as revealed in the response of
questionnaires to be administered.
Study
the relation and interdependence the internal auditors and external auditors.
Make recommendations for improvement or a complete change of the system in
operation so that the new improved methods can be introduced to replace the old
system.
The
researcher is of the option that the stakeholders of the research work will be
beneficial to all stakeholders in the banking environment.
If
the recommendation put forward in adopted, it will surely go a long way to
reduce cases of fraud. Misappropriation inefficient use of assets and
availability.
1.4 LIMITATION OF THE STUDY
Many
people believe internal auditor can never be independent. This is largely true.
Since the scope of any internal department is determined by the management of
the organization concerned. The management also dictates low for the audit
department can carry out its duties and the types expended from them.
1.5 RESEARCH
QUESTIONS
It
is assumed that lack of adequate and lack of organized internal audit system
creates an avenue for fraudulent practices. Unreliable accounting data, lack of
good and proper maintenance culture, wasteful spending as well as lack of strict
adherence to prescribed management policies and financial regulations.
Answers
to the following questions will be important
1. Does the existing internal audit in
the institutions provide safety for their moveable and immovable assets?
2. Is the adoption of good internal
audit procedure the appropriate measure used to eradicate or minimize the
occurrence of fraud and other malpractices in tertiary institutions?
3. To whom should internal audit report
to?
4. To what extent should the management
take action on the internal audits reports?
1.6 DEFINITION OF TERMS
INTERNAL AUDITING
This
can be defined as an independent appraisal function established by the
management of an organization as services to the organization.
INTERNAL CONTROL
This
auditing guideline on internal control defines internal control thus: internal
control system is the whole system of controlling financial and otherwise,
established by the management in order to carry on the business manner, ensure
adherence to management policies safeguard the assets and score as far as
possible the completeness and accuracy of the records.
INTERNAL CHECK
Internal
check is meant on the day activities or transaction which operates continuously
as part of the routine system whereby the work of one person is proved
independently to work of another, the prevention of error, all transaction
independent of each other. Internal check involve the distribution of duties of
accounting staff in such a way the work of each employee will be subject to
continuous and automatic check by the other members of the company’s staff.
AUDITING
Auditing
can be defined as the independent examination of and expression on the
financial statement of an enterprise by an appointed in pursuance of the
appointment and in compliance with any relevant statutory obligation.
MANAGEMENT AUDIT
This
is an enquiry into the advisability of any of the policies of the direction in
furthering the objects of the company as defined in the memorandum and into
efficiency which they secure the execution of these policies.
PRIVATE AUDIT
This
is audit conducted into organization affairs by independent auditor. Because
the owners (usually) sole proprietors when the audit to take place not because
the law requires it.
STATUTORY AUDIT
These
are audits carried out because the law requires that the accounts be audited at
specific intervals. The company and Allied Matters Act (CAMA ’90) make the
audit to limited liability Company to be compulsory on annual.
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