Effective Internal Control As An Aid To Management Efficiency: A Case Study Of Nigeria Bottling Company (N.B.C) Owerri

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Effective Internal Control As An Aid To Management Efficiency: A Case Study Of Nigeria Bottling Company (N.B.C) Owerri


Abstract


Effective Internal Control as an aid to management efficiency is critical review of this research work.
From the analysis also, it was found that a number of managerial problems such as inadequate account records, inefficient accounting procedures, unqualified personnel fraud etc are faced due to lack of effective internal control. Over 80% do not have a well designed internal control system and these limits the success and growth of a business enterprise.

Most recommended to these problems is the need to be enlightened about the importance efficiency- check and internal audit but the whole system of control, financial and otherwise established by management in order to carry on the business on the business a company in an orderly manner, safeguard accuracy and reliability of its records. Awoyemi E. O (1990).

The study also sought to know the effect of not having internal control in the management decision and profit level that though the lasting of hypothesis with use of satisfied data.


Chapter One


Introduction

1.1 Background of the Study

The need for study in this area comes from the fact that internal control is a very important management function, however not much has been done to view its impact on business. It has to be understood that without effective internal control, there can be no successful business. This may explain why some business enterprises are higher than those of a similar enterprise and to a larger extent, why many public enterprise and parastatals fail.

The purpose of internal control is to help to ensure that operations and performance conform to the plans. It follows therefore that effective control is not possible without planning and planning without a complementary control system is pointless. In organizational system, control is exercised by the use of information frequently of a financial nature.

Internal control is beginning to find more dept in the subject of management accounting, especially as part of the theory of control in Accounting. Since control system are established by management to assists in achieving the orderly and efficient conduct of business and improve the negative effects on the health of the business. It can then be argued that effective internal control is a key to organizational performance.


1.2. Scope of the Study

Accounting as far back as 4500 BC was practiced as stewardship accounting where land owners would appoint people known as stewards to manage their land for them. This form of recording remained primitive until in recent times when stewardship accounting gave way for financial accounting during the industrial revolutions.
Management Accounting is another aspect of accounting that got its impetus from Industrial Revolution and analysis to emphasizing detailed information for decision making. Today most enterprise is operating by limited companies which are owned by their shareholders and managed by directors appointed by the shareholders.
The entire purpose of internal control therefore is to establish a system where by though ownership is separated from management; owner will be left in no doubt that their resources are effectively managed.


1.3 Statement of the Problem

Having seen that there are currently an increase in the fraud were embezzlement, errors and other irregularities and that there are strong need for organizations to have a strong internal control system that can minimize the acts, it then becomes necessary to carry out this research.


1.4 Purpose of the Study

The purpose or goals of the study are outlined below:

  1. To examine and analyze the existing internal control system of the Organization.
  2. To determine if internal control is existing and the effect of the system on the organization’s performance.
  3. To go further in determining whether the existing system of control is adequate.
  4. To outline the benefits to the organization if it uses standard internal control system.

1.5 Research Question

  1. What is the meaning of internal control?
  2. Of what purpose is it to a company’s growth?
  3. What are the features of a good internal control?
  4. Is there any aids of internal control to management accounting?

1.6 Hypothesis

Hypothesis 1
  • HO: The internal control system in Nigeria Bottling Company is not an aid to management efficiency.
  • H1: The internal control system in Nigeria Bottling Company is an aid to management efficiency.

1.7 Objectives of the Study

According to feral (1998) the major objective of the study are outlined below:

  1. Safeguard the assets of the enterprise from all forms of misuse fraud and errors by workers and managers who convert it for personal use.
  2. Establish and maintain the accuracy and reliability of accounting data, information an d records, to minimize embezzlement of funds and other forms of fraud.
  3. Promote operational efficiency and effectiveness as a key to profit making.
  4. Seek, encourage and obtain adherence to prescribed management policies and methods, good internal control system goes a long way to achieve this purpose.

1.8 Limitation of the Study

This study focus on the effect of effective internal control on management efficiency, the company being Nigeria Bottling Company Ltd (N B C) Owerri. It is hope that this study would provide a useful link between the quality of internal control that exist the company and performance of the company with regard to profit making which for the purpose of the study is assumed to be the primary motive of an enterprise. Attempt should be made where possible to extend the analysis to other companies where this would result in a more balanced deduction.

It must be noted that certain factors, which could have an impact on company’s performance, may not in any where be linked with the quality of controls that exist such factors as political environment in which the company exist and the impact of some government actions and policies are of few examples. This study must as matter of fact exclude these factors.


1.9 Significant of the Study

In the era of rapid expansion of the number of companies in the economy, there is an increase pressure for companies to perform. These pressures in turn create room for such practices that could tremendously expose companies to risk of failure even as they provide profit incentives. Such practice would of course over-ride controls which have previously been instituted by managements desire to make profit through practice that may in the long run create adverse control problems.

The need for strong management commitment to strong control environment now cannot be over emphasized and will in fact, increase as more companies spring up.


Chapter Five


Summary, Conclusion and Recommendations

5.1 Restatement of the Problem

In attempt to establish the internal control system and the impact on the management decision and profitably, and the find out if organization or management operating in Nigeria was effective internal control system. The researcher used a sample of forty organizations in Owerri.

During the investigation, questions were asked and hypothesis postulated. All the questions were answered using the information supplied from respondents and the results of the hypothesis tested showed that the first hypothesis, which states that:

There is a significant relationship between effectiveness of internal control and fraudulent staff was accepted but the second hypothesis, which states there is significant relationship between fraudulent staff undermine the effectiveness of internal control system. Again a information from the review of related literature level support to the contention that internal control in business organization are usually more successful in their operations than those who lack such internal control system.

In my investigation, it was discovered that 70% seventy percent of organization in owerri keep internal control system but however less than thirty person are still four from having well design internal control system.


5.2 Summary of Finding

The researcher found out among other things the followings:

  1. He found that although the company maintains an internal audit department it is not functioning every well.
  2. He found out also that some individuals are well relied upon to perform some important functions.
  3. Also among the findings is that most of the management staff either do not go on leave or study on working leave in the name of having pile of work to do.
  4. Some even when they go on leave do not hand over the official document are some vital properties in their possession to the next officer that is going to occupying the seats.

5.3 Implication of the Study

It is important to say that the extent in which internal control system are – kept by organization go a long way in enabling them to achieve their objectives there by enacting the success of the management. The implication of much success who do not have anybody who is solely charge with the responsibility of taking there would continuously be fraudulent activities in those organization thereby leading to the pit fall of that very organization to management. From the investigation, it was also discovered that only very few make use of internal control system to make decision i.e. analyzing worker effectiveness etc. This was confirmed from the seventy –five percent responses from organization that does have problem. Due to the lack of internal control function, which invariably affects the entire management growth?

Fraudulent activities in that organization thereby leading to the pit fall of that very organization to management. From the investigation. It was also discovered that only very few make use of internal control system to make decision i.e. analyzing worker effectiveness etc. This was confirmed from the seventy-five percentage responses from organization that does have problem, due to the lack of internal control function, which invariably affects the entire management growth.


5.4 Conclusion

From all the studies so far carried out, the following conclusions have been arrived at:

  1. That there exists a system of internal control in Nigeria bottling company limited administration owerri and is used both in accounting and administration.
  2. That the general use of concept has enhanced in the company
  3. For protections for its assets against waste, fraud and inefficiency.
  4. Operation efficiency of aspects of its activities
  5. Accuracy and reliability in its accounting and operating data
  6. That the internal control system in the company is not a perfect as it is deficient in some basic requirements for two efficient one effective operation of internal control system.
  7. That for strong reliance to be placed on the system of internal control currently in operation in the company. Further improvement need to be made.

5.5 Recommendation

The recommendations made here in are intended to help generally in minimizing the very ills that internal control seeks to prevent. The recommendations well start on the need of improvement on internal control.

  1. An internal audit function should well be maintained
  2. A weakness in the function of its complete absence is a mark of substantial weakness in an internal control system.
  3. Accurate and complete accounting and personnel records on employees should be properly maintained
  4. Consequence of violating the rules and punishment of any crime proprietors should not be kept secret.
  5. Finally, management should develop strong leadership and collusion work groups.

The suggestion above clearly illustrate how the management of Nigeria bottling company Limited Owerri in particular and other companies in general have the capacity to reduce crimes in the company by policies and procedures adopted corporate leaders should join the accounting and other professions in launching a company against while – collar crimes.


Effective Internal Control As An Aid To Management Efficiency: A Case Study Of Nigeria Bottling Company (N.B.C) Owerri


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