The Impact Of Internal Control System On The Effective Management In Government Ministries

Project and Seminar Material for Human Resource Management (HRM)

The Impact Of Internal Control System On The Effective Management In Government Ministries


Abstract


Internal control are organizational measures put in place by an organization to ensure effective management system and organizational productivity. This study is therefore carried out to evaluate the impact of internal control system for effective management in government ministries. The study was conducted in ministry of finance, Kaduna state. The broad objective was to re-examine and re-asses the general financial administration and control system as regard the ministry over revenue and expenditure. The study adopted a stratified sampling method where 50 respondents from the ministry were selected for the study. The method of data analysis used in this project work is the simple percentage method. This method is simple and easy tounderstand. The study concluded based on the findings that effective internal control system has helped in the prevention and detection of fraud in the ministry of financial. In the course of this study the findings also revealed that complex financial management techniques such as payment period not represented on value approach, internal rate of return and average rate of return are used as basis for project evaluation in the ministry.


Chapter One


1.0 Introduction

1.1 Background of the Study

Traditionally, most of our constitution and institutions arrangement has been the management and accounting of public funds. As a result of this, various rules, regulations and instructions are instituted to guide public officers in the proper conduct of the finance entrusted in their care. The constitution generally sets out total financial management and accounting of the public funds which has been in demand to the public sector more so the rendering or proper stewardship of income and expenditure of public funds.

Management involves responsibility of effective and economically planning and regulation of the operation of the operation of an enterprise which entails controls of the established pattern of accountability over receipts and expenditure of public funds. Public funds should be use for the public purpose so as to obtain proper value for money spent.

Government in the recent times believes at the demand of public financial management that is by ensuring that all financial transaction are properly document and conducted in accordance with providing rules and regulation, but this has proved wrong because public funds can be and quite often sophisticated and embezzled within the frame work of laid down procedures through inflated contract and over statement of bills and the accounting system. The value of law or the system of the organization or the management that do not know and do their works. This work seeks to look into problems and stewardship being carried out.


1.2 Statement of Problem

This research embarked upon is an impact of internal control system on government ministries i.e. the importance of internal control system in government ministries.

This is so because the importance of an internal control unit in government ministries is for the verification of accounts, check cases of fraud and embezzlement within the ministries. But in recent times most of this controls are no longer functioning as it seems inevitable resulting to misappropriation of funds in such ministries.

The study would address the following research problems:

  1. What are the impacts of the internal audit unit in the ministry of finance?
  2. What are the relationships of the practical application of internal control in Kaduna state ministry of finance?
  3. What are the needs for internal audit unit in government ministries?
  4. What are the measures to be taken to provide useful recommendations where necessary to the study as related?

1.3 Objectives of the Study

The objective of the study is to re-examine and re-asses the general financial administration and control system as regard the ministry over revenue and expenditure. It is also to take the various measures, techniques and professionalism used to check the activities of the ministry in such away as to give it the desired attention, remuneration and compensation.

More, so as related to the execution, the research is intended to result in determining the effectiveness, efficiency and economical utilization of source resources using public opinion as part of financial administrative control techniques so as to achieve the desired result. The result will help in harmonizing the relationship of the ministry and public so that proper utilization of the public funds is achieved.

The research work carried out the impact of internal control system for effective financial management in the Kaduna State Ministry of finance.

The following objectives are the bases for the ministry;

  1. Analyzing the impact of an internal audit unit in Kaduna state ministry of finance.
  2. To relate the impact to its practical application in Kaduna State Ministry of Finance.

1.4 Research Hypothesis

The research is intended to investigate the impact of internal control system in the circumstances of embezzlement and fraud detection in the ministry of finance.

Therefore the data to be collected in this exercise will be used to test the following hypothesis.

H1: Effective internal control system can help to prevent and detection of fraud in the finance ministries.

H0: That effective internal control system may not help to prevent and Research is poised to confirm true or otherwise, to achieve this purpose the research has formulated the above hypothesis.

That the general financial management and control system as regard revenue and expenditure is effective, efficient and technical. Also the general financial management and control system as related to the public opinion is inadequate, ineffective, and this lacks improvement in its operation achievements which will hinder general development.


1.5 Significance of the Study

The importance of the study is not related to the general public wishing to known that improvement would be made of the system where there are loop holes. It also seeks to identify problems associated with the general financial management and control system in order to help in harmonizing relationship of the inadequate financial resources with the general development. It will help in planning, controlling, modeling analyzing and decision making.

The internal audit unit is the most integral part of the internal control system in the organization. Therefore, there is need for proper organization of the internal and audit system. This research work will give a prospective view as to how the internal audit could be organized in order to keep the activities in order.

This study will also be of help to the ministry and other related organizations as to show errors and frauds and other irregularities could be easy or easily detected and prevented. It is a strong feature of any successful business. An organization could be easily detected and prevented. It is a strong feature of any successful business. An organization with in effective internal control system will find it very difficult to protect and properly manage its funds.


1.6 Scope and Limitation of the Study

This study work is to look into the relationship at the public with the financial management control system of the ministry being administered. The subject of financial management is external or extremely broad and complex, the deficiency of the field is compounded by the fact that it can be approached in a variety of ways i.e. descriptive, theoretical, analytical or appreciative; for the purpose of this project these areas may not be correct completely. A situation helps greatly in the success of the study, so this study is being under light and hard financial situation.

Thus, the study encountered obstacles which militated its scope such as:

  1. This study would require a longer period of time than the time allowed for the study.
  2. Also the financial situation will make it hard to meet up with the traveling fees to where vital information is forgotten.
  3. Also there will be lack of cooperation from the public and staff concerned. People will deliberately refuse to give out required information out of ignorance and fear of revealing the secret of the cheque as pertaining financial data.

The study being subjected to various newsletters, journal, public broadcasting etc where vital information is likely to be obtained i.e. in this present democratic system of government.

Accessibility to data: the research could not have access to all the needed data from the organization classified, confidential secret etc. this hindered collecting of adequate information for the preservation of future data. The books available are outdated and as such one is forced to rely on external sources for the purpose of research. This caused a delay in the work of this.


1.7 Historical Background of Kaduna Minstry of Finance.

The historical record of the ministry of finance, Kaduna dated back to the time of Northern Nigeria Region government with the headquarters in Kaduna. When in 1967 the General Yakubu Gowon Administration created 12 states in the country, the ministry became the North central states ministry of finance.

In 1976, the state was renamed Kaduna State without any change in status and thus the ministry came to be known as the ministry of Finance Kaduna. The creation of Katsina state out of the distinct Kaduna state in 1987 brought about a change in status of the state but the ministry remained as the Kaduna state ministry of finance.

Principal Functions

The Kaduna state ministry of finance is saddled with the responsibilities, which concern aspect of finances which include, among others, the following:

  1. Custody and maintenance of records of public funds.
  2. Disbursement of funds from the consolidated revenues and other public funds.
  3. Maintenance of records and preparation of annual accounts of the state government.
  4. Control of the state treasury
  5. Public debt servicing and repayment
  6. Handles matters relating to losses of funds and stores.
  7. Supervising ministry as far as issue of finance is concerned in the state.
  8. Maintenance of government vehicles register and serve as centre for central stores purchases.
  9. Board of survey and enquires (including disposal of boarded vehicles, equipment and stores).
  10. Stores administration and management
  11. Review of financial instructions, stores regulation and their enforcement.
  12. Control and deployment of accounting and stores staff including recruitment and training programmed.
  13. Maintenance of relationship with other state governments and financial institutions.

1.8 Definition of Terms

It is intended that the following terms are going to be used from time to time in this book. It is therefore of paramount importance to define the actual information.

Financial:

This deals with monetary perspective of every transaction; it can also be viewed as part of government activities which deals with the collection, custodys and disbursement of public funds.

Public:

This is any activity concerned with the society in general.

Budget:

This is an annual comprehensive report of the state of the national economy. It reviews old economic and social problems and anticipates new ones. It also surveys the future project of the economic and transactions problems into goals and objectives.

Accounting officer:

He is the officer who is responsible for controlling vote in a ministry or department.

Auditor:

An auditor is an independent expert who has sufficient expertise to asses the information on which he is asked to reports.

Auditor report:

This is the result of overall examination of accounting statements of an organization for a particular period using within a financial year. The auditors report is his findings as whether the statements examined represents true and fair view of the organizations affairs.

Government policy:

This policy concerns statements official or outline of governments intended action or program popularly called blue prints which are usually designed to achieve the goals of the public.

Government expenditure:

This refers to government spending governments’ money through various ways in order to keep the machinery of government in motion and to prove the much needed social and economic services to the populace.

Government revenue:

This refers to income generated by government through different sources such as tax, rates, court fines etc.

Accounting Control and Management:

This is the allocation of responsibility in the areas of checks or routine transaction by means of work of one person is complementary to that of another or the work of one’s person being independently proven right or wrong by another.

Internal Audit:

This has to do with the reviews of records and operations of organization aimed at ensuring reliability of records and efficiency of operations.

Accounting:

This is a discipline concerned with the recording, analyzing and recasting of income and wealth of business and other entities. Generally, it records in monetary terms the flow of economic values between or within the economic entities.


Chapter Five


Summary, Conclusion and Recommendation

5.1 Summary

In respect of this research work undertake to analyze the impact of internal control system on the effective financial management in government ministries involving the ministry of financial Kaduna state, the study is presented from chapter one to five for the entire stud for the purpose of good presentation, clarity and systematic understanding. Each chapter treats an aspect of Nigeria public sector.

Chapter one introduces the role of financial management and accountability in the public sector of the economy and its development over the years as well as the desire of its modern techniques in management.

Chapter two present review of known literature that is relevant to the problem of study undertaken, in the same field, its structure, functions and the management and control of public funds. The application of financial management techniques in decision making in the sector.

The third chapter presents the highlights of the methodology use in gathering and providing data analysis techniques, sampling techniques and method of data collection for the purpose of this research work.

While chapter four focuses on data collected for the purpose of internal control system on the effective financial management, for data presentation analysis and testing of hypothesis and presentation of the computed result for accuracy of this work.


5.2 Conclusion

Therefore, based on the findings, the research can be concluded that effective internal control system can help/has in the prevention and detection of fraud in the ministry of financial. In the course of this study it was also discovered that complex financial management techniques such as payment period not represented value approach, internal rate of return and average rate of return are used as basis for project evaluation in the ministry. Generally, public sector managers often contend that they are constrained by government regulations and policies. Therefore internal auditors whether in the public or private sector deserves a more general recognition from the public true situation that is apparent at the moment.


5.4 Limitation of the Study

It is tempting to think that all management decision would be easier if only there are more information and that the research is the key to better management decisions there are some limitations encountered among which militated against its scope such as:

  1. It was costly in obtaining the information on which to base better decision and producing a better research work i.e. financial constraint which affected the conduct of logistics and stationeries.
  2. Accessibility to data: The research could not have access to all the needed data from the organization due to the fact that most materials and documents are classified and confidential. Therefore, this hundred collection of adequate information
  3. Lack of books: there are not enough good books that could give sufficient information relating to the management of the ministry’s funds. The available books do not contain much information,
  4. It was time consuming and time is important in management decision as well all know, time is resource that can never be replaced, i.e. it require longer period of time than the time allowed for the study.
  5. There is lack of cooperation from the staff concerned. People or the staff deliberately refuse to give out require information out of ignorance and fear of revealing the secret pertaining financial data.

Despite the limitations, information generated for this study is undoubtedly useful and will go a long way in assisting management of the public sector to achieve effective internal control of financial management within the ministries.


5.4 Recommendation

In any organization set up, problems are individual and the Kaduna state ministry of finance is not an exception, based on this analysis, the following recommendations are hereby presented with the belief to help alleviate any problem or weakness raised and a recommendation will follow immediately for the purpose of clarity and understanding of weakness or problems. Here are some findings make during the course of these studies are as follows:

  1. It has been discovered that the account of the ministry has not been auditor for the past years. In order to overcome this shortcomings and auditing task force should be constituted to clear the areas.
  2. It was found that the systems of revenue collection procedures are weak. People in the market used their manipulated receipt instead of the approved one given to them by the government. To overcome this, a body showed be setup to constantly check on them. The bureaucracy in the ministry does not allow true flow of information as it is always concealed within the top management officials. The sectors need to be overhauled to remove the bureaucratic procedures to hasten efficiency and effectiveness for greater productivity in the public sector.
  3. It was also observed that the individual officer concerned with the collection of particulars, items or revenue is not specified in an appendix to each year published estimates. The accounting officer should draw up codes of instructions of the procedures to be followed in the organization to ensure the prompt and correct collection of revenue and receipts on due dates.
  4. There should be adequate provision for the training of the audit staff to enable them cope with more challenging assignment always being put therefore them, this will also acquaint them with the modern knowledge of audit.
  5. The services of trained accountants or professionals should be engaged in order to uplight the standard of both the system and personnel.
  6. Sentiments should be discouraged to enable ambitions staff to have the opportunity to progress.
  7. Workshops, seminars and training programmes should be designed to assist in improving the skills of the untrained staff.

In every organization, success depends on efficiency. This efficiency can be seen interms of management of personnel, materials, machines and money. The internal audit unit of the ministry should supervise all the sub-treasures in the state.


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