This study examine internal control as an effective tool for management with national petroleum investment management in focus and the objectives of study include: Investigate the effectiveness of internal control system in resolving business issued in order to facilitate growth. Assess if internal control is highly prioritized to prevent mistakes and fraud. Examine the relationships between performance and efficiency towards organizational reengineering process. Appraise the interdependence between internal control and decision making in the organization. Evaluate the extent to which employees are co-opted into internal control and decision making process and draw a logical conclusion from the findings. Survey research design was adopted for the study and 120 respondents. were randomly selected for the survey. 107 questionnaires were returned completed, giving a response rate of 89%. A five-point likert scale question was developed to collect information from the respondents. The data were analyzed using descriptive statistics. The core finding of the study shows that internal-: control is very crucial for a good management decision making process.



Title page





Table of content



1.1     Background of the Study

1.2     Statement of Research Problem

1.3     Objective of the Study

1.4     Research Questions

1.5     Hypotheses

1.6     Significance of Study

1.7     Scope of the Study

1.8     Definition of Terms



2.1     Introduction

2.2     Internal Control Models

2.3     Conceptual Framework of Internal Control

2.4     Objectives of Internal Control Systems

2.5     Essential Features of Internal Control Systems

2.6     Parties Responsible for and Affected by Internal Control

2.7     Elements that Contributes to a Successful Control Environment

2.8     Background Information of National Petroleum



3.1     Introduction

3.2     Research Design

3.3     Restatement of Research Question

3.4     Restatement of Research Hypotheses

3.5     Population of Study

3.6     Sample Size

3.7     Data collection Method

3.8     Description of Research Instrument

3.9     Procedure for Data Analysis

3.10   Limitation of the Study



4.1     Overview of the Chapter

4.2     Analysis of Socio - Economic Data

4.3     Analysis of Structured Part of Questionnaire

4.4     Test of Hypotheses




5.1     Summary of Findings

5.2     Conclusion

5.3     Recommendations

5.4     Suggestion for Further Studies
























1.1     Background of the Study

As the management of an organization strives to achieve excellence in operations, there is the need to continually asses and evaluate her internal control system in order to determine how well it is performing, the degree to which it helps to identify frauds, wastes, abuse, mismanagement and how it might be improved and updated to meet changing conditions.


Internal control is a process affected by an organization structure, work and authority flows, designed to help the organization accomplish specific goals and objectives.


It is a means by which all organizations resources are directed, monitored and measured. It plays an important role in preventing and detecting fraud and protecting the organizations resources both physically (machinery and property) and intangible resources.


At the organizational level, internal control objectives relates to the reliability of financial reporting, timely feedback on the achievement of operational or strategic goals and compliance with laws and regulations.


At the specific transaction level, internal control refers to the action taken to achieve a specific objective (how to ensure that the organizations payment to third parties is for valid services rendered).


Internal controls are an integral part of an organizations financial and business policies.

It consists of all measures taken by the management to achieve the entity's objectives.


The presence of internal control system is not sufficient rather; its effectiveness and efficiency should be most considered.


Internal control is the whole system of controls such as reviews, checks and balance, methods and procedures, instituted by the management of an organization to:

1.     Ensure accuracy and completeness of the financial records.

2.     Conduct business in an orderly manner.

3.     Safeguard assets and information from by unauthorized access or use.

4.     Produce reliable and timely financial and management information and

5.     Ensure adherence to policies.


1.2     Statement of the Problems

The high rate of frauds, errors, irregularities, waste and improper recording of financial statements are the problem faced by most organizations in the public enterprises. These problems are the alterations of documents or invoices, deliberate misappropriation of accounting policies, over invoicing, actual theft of cash balance and mathematical or clerical mistakes.


The manipulations of financial statements in order to meet business expectations or to obtain indirect personal ground which includes diverting organizations resources for personal use.


The alterations of invoices, double payment of invoices, payment to ghost workers amongst others are practice that negatively affect the growth of an organization.

In some case, employees use their organizations name for personal business thus reducing the profitability of the organization.


Therefore, an effective internal control system will reduce and probably eliminate the risks associated with undetected errors irregularities and fraud.


1.3     Purpose of study

Internal control system is very useful as it decides to a large extent the success of an organization. This study will ensure that all control systems are effective and organizations objectives are achieved which includes:

-        Effective and efficient operations

-        Reliable financial records

-        Compliance with law and regulations and

-        Accurate and complete financial statements amongst others


1.4     Research Questions

This is an inquiry about the research problem which is used to explore the objectives of the research. They are drawn from the concepts associated with the research problem which describes the problems specific terms.

1.     Does the management have a sound basis setting realistic and achievable goals?

2.     Are assets such as cash, supplies, inventories and equipment periodically counted and compared with the control records?

3.     Does the management take action when there are violations of policies and procedures or codes of conducts?

4.     Are identification plates and numbers fixed to office furniture, equipment and other portable assets?

5.     Does the management provide training and counseling in order to help employees maintain and improve their competence for the job?

6.     Does the management periodically evaluate the organizational structure and makes changes as necessary in response to changing conditions?

7.     Does the senior leaders and manager build team work, reinforce the shoed vision of the organization and encourage feedback from employees as evidenced by action taken to communicate this to all employees and the existence of opportunity for management to obtain feedback?

8.  Is the compensations system adequate to acquire, motivate and retain personnel and are incentives and rewards provided to encourage personnel to perform at a maximum capacity?


1.5     Statement of Hypotheses

H0:    That there is no significant relationship between effective internal control          and management of organization:

H1:    That there is significant relationship between effective internal control and management of organization.


1.6     Significance of the Study

Internal control system will assist an organization in checking its activities in order to ensure that the directives of management are carried out.


Control activities occur throughout the operations of an organization at all level and in all functions. These include approvals authorization, verification, and reconciliation, security of assets and segregation of duties. The adequacy of internal control system is assessed by determining whether proper control activities have been established.

1.7     Scope of the Study

This study is focused on internal control system an effective tool in management. However, it is limited to other operations and activities of the organization.


1.8     Definition of Terms

Internal Control System: This is the whole system of controls both financial and otherwise established by the management of an organization to ensure adherence to policies, safeguard assets and information, ensure completeness and accuracy of financial records and that the business is being run in an orderly way.

Management: This is the process by which actions are direct towards the accomplishment and achievement of a common goals.


It is the function of guiding, directing, co-coordinating, motivating, controlling and unifying human efforts and activities for the accomplishment o: organizational goals and objectives.

Error: These are unintentional mis-statement in the financial statements of an organization.

Fraud: This is an intentional misrepresentation of the financial statement by one or more individuals among the organizations employees, third parties or management. It involve the use of criminal deceit to obtain an illegal advantage.

Irregularities: These are intentional distributions in the financial statement of an organization.

Audit: The International Audit and Assurance Standard Board (IAASB), a sub­committee of the international federation of Accounts (IFAC) defines an audit as an independent examination of an express of opinion on the financial statements of a business enterprise by an auditor in accordance with his terms of appointment and in compliance with relevant statutory and professional requirement.

Internal Audit: This is an independent appraisal activity with an organization for the review of operations. It is a managerial control which functions by measuring and evaluating the effectiveness of control within an organization.

Goals of an Organization: These consist of what the organization seeks to accomplish.


They are the expectations of an organization.


Policies of organization these are guidelines that states how an organization will work towards achieving it goals.


They are general procedures that indicate the limits or constraints on what is to be attempted because it states the prescribed, permitted and prohibited forms of behaviour.


Organization: this is an organized group of people with a common goals and objective.


Financial Statement: This is any periodic report which gives a summary of the, financial condition for the period represented.


It may also show the income, source of such income and the application made

for it.


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