The Impact Of Internal Measure In An Organization Financial Management

Project and Seminar Material for Accountancy / Accounting

The Impact Of Internal Measure In An Organization Financial Management


Chapter One


Introduction

1.1 Background of the Study

Every organization both profit and no- profit organization has its objective and goal in mind to achieve.
For the non-profit making organization their goal is to satisfy the social need of the citizen and in the effort to achieve these purpose supervision more often than not play a vital role. The size and scope of these organizations have sometimes made it hard for the executors of operations.

It is in this light that internal control established n=by management is initiated. For an organization to carry out is business there must be some factor put in peace for the smooth running of the organization like materials, machines, money e.t.c

These need to be well co-ordinate in order for the success of the organization to be achieved. These factors are used by a group of person know as management. Neither can management exist without organizations both are inseparable.

The systems of internal control provides assurance to management of the depend ability of the accounting data used in the decision making of the organization.

It has been discovered that due to lack of internal control several banks have been discovered to have defrauded its customers mostly foreign investors, having clearing a cheque because of rampant incident of fraud and ferries which have placed bank loss on average of n1m each working.

Management used internal control as a tool to check its staff due to the fact that managers are not able to monitor the activities of the organization. It therefore adopt the internal control in such a way that the system check itself and any irregularity within the system is been detected and corrected.

To ensure that the system checks itself, management could be device such as segregation supervision of work and acknowledgement of performance. The effective arrangement and implementation of this control system would ensure proper management.


1.2 Statement of Problem

We might not really understand the impact of internal control in an organization until probability we run an organization void of internal control system the absence of adequate internal control measure exposes the financial management of an organization to certain threat schwa as

  1. Incorrect financial statement and loss of the company’s assets
  2. Stealing and mismanagement of organization vital document which may be done by an employee to take undue advantage
  3. Incorrect and unreliable financial, record which may lead to loss or organization integrity.
  4. Non implementation of accounting policies in consistency with the applicable legislation appropriate in presentation of financial statement.

1.3 Research Question

The following research will be used to form the research hypothesis and they are:

  1. To what extent does the internal control measure impact on appropriation of organization assets and funds.
  2. To what extent dues perpetration of frauds and losses of revenue in an organization are as to result of weakness in the internal control system.
  3. To what exte4nt does the internal control enhance a true reflection of organization activities as presented in the financial statement?
  4. To what extent does the relationship exists between internal control and proper keeping of accounting records.

1.4 Objective of the Study

The overall purpose of this research work is to evaluate and determine the impact of internal measure in an organization financial management. A well defined organizational structural help management to run the business in an orderly manner. This enhance operational and efficiency, which is the important feature of internal control.

Specifically, this research work stands to achieve the following objective:

  1. To determine the impact of internal control to proper use to organization funds and assets.
  2. To ascertain whether perpetration of fraud and losses of revenue in an organization are as a result of weakness in internal control system.
  3. To ensure whether a true reflection of organizational activities are presented in financial statement where there is an active observation of internal control measure.
  4. To determine the relationship between the internal control measure and proper keeping of accounting records.

1.5 Statement of Hypothesis

This research is undertaken on the basis of the following hypothesis

Hypothesis One
  • HO: Internal control measure does not ensure proper use of organization funds and assets
  • Hi: internal control measure ensures proper use of organization funs and assets.
Hypothesis Two
  • Ho: Fraud perpetration and losses of revenue in an organization are not as a result of weakness in the internal control system
  • Hi: Fraud perpetration and losses of revenue in an organization are as a result of weakness in the internal control system.
Hypothesis Three
  • Ho: Internal control does not ensure a true reflection of organization activities as presented in a financial statement.
  • Hi: Internal control ensures a true reflection of organization activities as presented in financial statement.

1.6 Significance of the Study

There is no controversy that this research works have been conducted on the internal control system, however much emphasis has been placed on the impact of a good internal control system on financial management of organization
This research work will go a long way in helping an organization discover the impact of weakness in internal control and suggest measure in correcting them. It will also reveal the problem caused by bad internal control system and be useful to student, scholar, lecturer, and other thirds parties as it shell open new of further research work and at the same time advance challenges o up-coming researchers.


1.7 Scope of Study

The impact of a good internal control aids management effectiveness in Ho organization. This research will specifically focus attention on the activities of organization in Nigeria and due to the logical point that not every organization can studies, this research is therefore limited to the Nigeria bottling company Enugu, the focus of this research shows the impact of a good internal control system in the performance of organization financial management.


1.8 Limitation of the Study

The major constraint in the study include the conservation nature of organization and their toward providing information especially with respect to their internal operation policies.

Human error and other limited factors of this study. This is because someday were obtained through discussion and interview therefore there is a probability of human error of omitting some vital information. Respondent may also exaggerate important information. In order to give their organization a positive credit for fear of what seem an invasion into the organization privacy. Time and finance is also a limited factor.


1.9 Definition of Terms

The following term have been used in the course of this research work and as such need to be explained.
They were as stated below:

Internal control

It has been defined by the auditing planning committee (APC) in UK as the whole system of control financial and otherwise established by management in order to carry out the business of the enterprises in an orderly and efficient manner to safeguard of assets and secure as far as possible, the competence and accuracy of records the prevention and detention of errors and fraud in accordance with the final preparation of financial statement.

Control

Is an exercise performed in the present to achieve a plan draw up for the future?

Management

It is defined as the process of planning, organizing, coordinating and controlling the activities of an organization. It is seen as a group of people who monitor and control the organization activities toward the achievement of the organization objectives.

Audit

This comes from the Latin word “AUDIRE” meaning to hear in other words. It means official examination of account and records


Chapter Five


5.0 Summary of Findings. Recommendation and Conclusion

5.1 Summary of Findings

Based on the data collected, analyzed and tested in chapter four, the following findings were made as summarized below:

  1. Internal control measure ensures proper use of organization fund and assets.
  2. Preparation of fraud and loses of revenue in an organization as a weakness in the internal control system.
  3. A true reflection of organizational activities is presented in financial statement through the performance of internal control in accordance with the findings; recommendation and conclusion are made to ensure the effectiveness of internal control to management functions.

5.2 Conclusion

The financial management of any organization by the measure by the standard or the effectiveness of the internal control system and as well as the policies implemented by the management.

A well managed business entity will not only attract interest of outsiders but will also retain the zeal of the existing owners and users of the financial information. Therefore, in conclusion, it will be said that the financial management of any organization cannot do without internal control as true and fair presentation of financial statement may never be possible if the board and senior management are not committed to providing a well planned internal control system.


5.3 Recommendation

The role responsibilities and procedure to be adopted by the management, internal audit department as well as the account department to the overall management of an organization should be focused on ensuring the safety of the assets and soundness of their operations.

  1. Management should ensure that there are adequate organizational controls and that each staff known his duties and equally ensures effective segregation of duties.
  2. The internal control system should be remolded and strengthened to position the staff in carrying out their duties efficiently and effectively and all the same time evaluated periodically to strengthen its weakness in the organization
  3. Finally, the management of the organization should be reviewed periodically so as to cope with modern trends in organization fraud prevention.

The Impact Of Internal Measure In An Organization Financial Management


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The Impact Of Internal Measure In An Organization Financial Management


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