The Effect Of Internal Control System In Manufacturing Company (A Case Study Of Nigeria Bottling Company Ilorin Plant)

Project and Seminar Material for Accountancy / Accounting

The Effect Of Internal Control System In Manufacturing Company (A Case Study Of Nigeria Bottling Company Ilorin Plant)

Chapter One


1.1 Background of the Study

Internal control can be defined as a whole system of the control financial and otherwise, established by the management of an organization in order to carry out the business of the enterprises orderly and the efficient manner. its main objective is to ensure adherence to the management polices, safeguard its asset and to make sure the record of the organization is complete and secured.

An auditor is defined as a competent and impartial critic appointed to verify the financial other accounting statement of the organization.

He must certify the statement exhibit a true and fair in view of the state of the affairs of the organization concerned.

However, he is not concerned with the financial strength of the organization but is task is to see the financial strength as showed in the balance sheet is infact the actual and the true value of the organization.

Moreover, auditing can be defined as an independent examination of the expression of an appointed in the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligation.

The internal control statement to be evaluated should be divided into components in order to give room for major segment to be examined and analyzed.

1.2 Statement of the Problem

Internal control system, however elaborate can not by itself guantee on the efficient administration and the completeness and the accuracy of the record.

As a matter of fraud by any organization will always face in number if pushed of which the internal control system is expected to be adopted. Due to this fact most of the organization unit observe and always have auditor which could enable them to check their record often.

Although, having the auditor is very important to an organization, is relevant is only when they are able to carry out their task/work effectively in order to aid us in achieving the stated objectives and goals.

  1. Two or more dishonest person working his collusion can override the efficiency of the best possible control.
  2. Authorization control can be abuse by those whom the authority is vested.
  3. Management is in a position to take control of the set up by it.
  4. Pressure exerted from the within and the outside. this enterprises can influence the integrity and the competence of the staff.
  5. Human error due to the error of judgment and the interpretation misunderfunding, carelessness or fatigue or distraction can underline the effective of the operation of the internal control.

Most of the problem stated alone with happen due to lack of an effective and the efficiency internal control system, these and many other problem have wreck many organization to split and may have also close down.

The liability of a business organization is when its be able to achieve the pre-determine objectives and denied its desires either the socially or economically.

1.3 Research Questions

The following shall be the research question to address

  1. What is the extent to which internal control can be effective in the manufacturing company?
  2. Whether the internal control system applied work in the company or not.

1.4 Purpose / Objective of the Study

The main objective of the study is to evaluate the effectiveness of the internal control system in the manufacturing company, other specific objectives of the study includes :

  1. To test as far as the scope permit, the accuracy and the completeness of the accounting record in the manufacturing industry.
  2. To determine the completeness accuracy and the validity of the company.
  3. To see how the company safeguard its asset by enforcing street adherence to the management policies.
  4. The purpose of the research work is to establish the effective internal control system in the organization under the study.The necessity of such role and why more organization should be devoting more resource towards the internal control system. This research work also aim at investigating and examining the system of the control in the organization under the study.
  5. The role of the internal audit in the attainment of the efficient and the effective internal control system is to be studies and it will be interesting to know that this is not be more checking of functional unit of the organization.

1.5 Significance of the Study

The research work is very important because it examines the internal control system of the organization and evaluate it with the overall performance of the company. The research should be able to identity its areas of strength and the weakness as regards the management of the company and hence its internal control system with a view of enhancing the recommended performance of the company.

1.6 The Research Hypothesis

So as to ensure an empirically tested research the following hypothesis shall be tested.

  • H0: there is no relationship between internal control system and the effectiveness of the operation system in the manufacturing companies.
  • Hi: there is no relationship between the internal control system and the effectiveness of the operation system in the manufacturing companies

1.7 Scope and Limitation of the Study

The topic would have covered the whole of the manufacturing sector but due to the fact that the entire manufacturing company are under some legislation and the same module operand, the scope focused on some selected companies.

The research is also restricted to the effectiveness of the internal control system in the manufacturing sector with the specific emphasis on some selected companies.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Summary of the whole study.

The research work will be divided into five chapter. Each chapter contains the following.

  • Chapter one will have the background of the study, statement of the research problem, objective of the study . significant of the study , scope and the limitation of the study, research question , research hypothesis and the limitation of the study.
  • Chapter two treat past the current literature review which includes : historical background of the subject , meaning of the internal control , types of the internal control system, feature of the internal control system, limitation of the internal control, condition for the internal control and the international aspects of the internal control.
  • Chapter three highlight the research design and study the population, sample and sampling techniques, data collection instrument, method of data collection, method of the data analysis and the limitation of the methodology.
  • Chapter four discussed the data presentation , analysis and the interpretation , testing of hypothesis and summary of the chapter.
  • Finally, chapter five throw light on a brief introduction of the chapter, summary of the whole study , summary of the findings , conclusion and the recommendation and the suggestion for the further studies.

5.2 Conclusion

Internal control is a relatively new field and public account i.e auditor hence, there is need to evaluate it constantly to determine it effectiveness.

It is strong but it has the following weakness which the management should pay the attention:

  1. Relationship of the internal audit department staff are not very good but improve upon.
  2. Some of the respondent of the internal audit did not want to divulge information required in the questionnaire and so, proper orientation should be given to them to corporate with the researcher at this enhance machinery development
  3. Discussion reach and recommendation with the appropriate management level is good but can be improve.

5.3 Recommendation

This work basically highlighted and strength and the weakness of the internal control system in the manufacturing institution. The researcher is therefore in a position making recommendations.

In view of this, the following recommendations are made:

  1. Nigeria bottling company should create a service bond so that no one goes on further studies especially oversees expected after certain years of service in Nigeria bottling company and should be of condition service
  2. Any act of the chief inspector subordinate contrary to the ethnic of their profession (auditing) should attract serious discipline action.
  3. Supervision of all aspects of the Nigeria bottling company limited should be improve upon
  4. Manufacturing institution should attach a method of the rewarding their employee in to its operating system.
  5. The Nigeria bottling company should try and improve there service training and encourage the staff to go and study the professional bodies examination such as ACCA, ICAN etc.

5.4 Suggestion for Further Studies

Based on this research work the work lack adequacy of time in order to obtain information through the country in which it’s limited to the coca cola company Ilorin plant. The researcher suggested that the researcher under this topic should try to generate adequate information in order to obtain the large information to test the hypothesis of the internal control system in the manufacturing institution.

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