Internal Control System In Nigeria Deposit Money Banks Prospects And Problem (A Case Study Of Union Bank Plc)

Project and Seminar Topics with material for Banking and Finance

Internal Control System In Nigeria Deposit Money Banks Prospects And Problem (A Case Study Of Union Bank Plc)

Table of Content

Chapter One


  • 1.1 Background of the study
  • 1.2 Statement of the problems
  • 1.3 Research questions
  • 1.4 Objectives of the study
  • 1.5 Research hypothesis
  • 1.6 Significance / justification of the study
  • 1.7 Scope and limitation of the study
  • 1.8 Definition of key terms.
  • 1.9 Organization plan

Chapter Two

Literature Review

  • 2.1 Concept of internal control system
  • 2.2 Classification of internal control system
  • 2.3 Types of internal control
  • 2.4 Reliance on internal control system
  • 2.5 Axes on internal control system
  • 2.6 Objectives of internal control system
  • 2.7 Environment of internal control system
  • 2.8 Requirements for effective internal control system
  • 2.9 Application of internal control system
  • 2.10 Limitation of internal control system

Chapter Three

Research Methodology

  • 3.1 Historical of the case study
  • 3.2 Types of Data
  • 3.3 Research design
  • 3.4 Sample procedure
  • 3.5 Method of Data Collection

Chapter Four

Presentation Analysis of Data

  • 4.1 Data presentation
  • 4.2 Data analysis
  • 4.3 Findings

Chapter Five

Summary, Conclusion and Recommendations

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References

Chapter One


1.1 Background of the Study

Banks are very important in nation; they are the backbone of the nationโ€™s economy. Functions of the bank according to ezeuiji (1997), including money creation, acceptance of deposit from the customers, provision of facilities for domestic and foreign remittance, help government in implementing monetary policies etc.

According to the operational standard (guideline). Internal control is defined as the whole system of controls,, financial and otherwise, established by the management in order and efficient manner, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and accuracy of the records.

The function of internal control system include, the detection or safeguarding of business asset but despite the fact a that all bank have internal control system, there have been a lot of problem in the banking sector. Ranging from bank liquidating to defrauding the banks, many banks have been liquidated example of such bank include savannah bank plc, national bank plc (although it is now being resuscitated) merchant bank Nigeria limited Nigeria internal bank limited mention few.

According to central bank of Nigeria (CBN) annual report over (N16 billion) sixteen billion naira was defrauded from the banking sector, also recently a bank was suspended from the clearing system by the central bank of Nigeria (CBN) because of mismanagement of banks resources expert have given reason as to what causes banks distress. According to ezeudiji (1997) one of the causes of bank distress is the internal control system problems include poor or lack of proper authorization of loan and contract, poor loan recovery, failure to collect proper collateral security, management override the control e.t.c.

According to koroye (1989), it bank internal (detective in any significant way) that audit should be decline outright opinion must be qualified as strictly as possible. It is because of two main reason.

1.2 Statement of Problems

Internal control system many organization, including bank is very important because it ensure orderliness, in the organization, advance to management polices, early detection of error and fraud, protection of assets e.t.c.
Internal control system problem have led to closure of many banks in Nigeria, ezudiji (1997) thereby making depositors customer to shareholder of such bank to loss his or her shares. It is inimical to nations economy because provide 90% of the capital employed in Nigeria. Due to the following problem it leads to the following question.
Does bank operation carried out in any orderly manner and follow the procedure laid down. Does transaction recorded accurately and correctly.

1.3 Research Question

This project has been able to provide answers to the following research questions.

  1. What is internal system?
  2. How does banks operations can be carried out in internal control system?
  3. What are the functions of the internal control system?
  4. What are the benefits of internal control system to the government, public, students and researchers?
  5. Does transactions recorded accurately and correctly?
  6. What cause banks distress?
  7. What are the problems facing by internal control system?
  8. What are the aims and objectives of internal control system to banks?
  9. What is a bank and functions of a bank?
  10. What is a fraud?
  11. How to control fraud in banking sector

1.4 Objectives of the Study

The objectives of the study are:

  1. To find out if there is internal control in union bank plc.
  2. To investigate the effectiveness of internal control system in union bank plc.
  3. To find out factors that affects internal control system in union bank plc.
  4. To suggest way to improve internal control system effectiveness in union bank plc.

1.5 Research Hypothesis

  • Ho: The internal control system is not significantly effective on deposit money bank
  • H1: The internal control system is significantly effective on deposit money bank.

1.6 Significance / Justification of the Study

The study is very importance nowadays were federal government have hard to invest of in Nigeria. Since foreign investor will not invest in any country where there is no good banking sector. The study will be of immense benefit to banks determine the extent to which internal control system is effective. In addition the study would determine the factor problem militating against the to it. The study will be of immense help because most of the founds requires by Nigerian are provided by bank also that affect banking sector also affect many others sectors such as agriculture and economy sector of the nations.

1.7 Scope and Limitation of the Study

This study is limited to union bank plc Muritala Muhammed way branch Ilorin due to financial constraint and other problem. The study can only be generated to union bank plc branch all over the country.


Due to limitation funds at students disposal, the researcher has no accessibility of some area dues to cost of getting to every part of research areas.

Time Constrain:

Considering the time limit, the researcher do not have enough time to research and elaborate more on the work. Another factor worthy of mention was the difficult encounter in getting the right to do the research work at the right time place.

Insufficiency of Data Information:

Most of the information available to the researcher have out dated and the current ones are not easily obtained, therefore the researcher sees it as a constrain to this project work.

Problem of Souring:

some of the respondents regard some questions are secret such as the main target of a fraudster which they regard as confidential and feel reluctant to disclose.

1.8 Definition of Key Term

i. Bank:

Is a financial institution where money and other valuable items are been kept for safety purpose.

ii. Internal:

It is the affairs and activities within a country.

iii. Control:

Is the power to direct influence or limit something e.g. fraud, error, and to safeguard business

iv. System:

It is a set of things working together as a mechanism or network, the prevailing political or social order.

v. Internal Control System:

This whole of control, financial and otherwise established by the government in order to carry on business of the enterprises in an orderly manner, ensures stick firmly to management policies the completeness and accuracy of accounting records.

vi. Money:

It is anything which is generally acceptable for making payments or in the settlement of debt.

vii. Data:

Is a term used to describe basic โ€œFACTโ€ based on measurement and recording something knows or assumed as facts and made on basic reasoning or calculations. It can be said to be unprocessed information or raw facts.

viii. Fraud:

Is the act of deceiving somebody in order to get money or goods illegally or the use of deception to obtain unjust or illegal financial advantage.

1.9 Organisation Plan

This research work is divided into five (5) main chapters and each chapter has the following content:

  • Chapter one is the introduction consisting of the statement of problems, research question, objective of the study, research hypothesis, significance justification of the study, scope and limitation of the study, definition of key terms, and organization plan of the study.
  • Chapter two is the literature review consisting of the historical of the case study, concept of internal control system, classification of internal control system, reliance control, types of internal control system, objective of internal control system, environment of internal system, requirement for effective internal control system, application of internal control system.
  • Chapter three is research methodology consisting of the types of data, research design, sample procedure and method of data collection.
  • Chapter four is data presentation and data analysis and finding.
  • Chapter five is summary, conclusion, recommendation and references.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Summary

The study was designed to investigate the effectiveness of internal control system in union bank plc. Forty four (44) respondents all staff of union bank plc, Muritala Mohammed way Ilorin branch were randomly sample. The instrument used for the research was questionnaire which was designed to collect necessary informative require from the respondents.

The research enjoyed maximum corporation from the staffs of union bank plc. Sample percentage , average weighted response (AWR) and chi-square were employed in accepting the rejecting the hypothesis formulated by the research.

The study revealed that internal control system is significantly effective in union bank plc. The purported factors.
Significantly militating against internal control system in union bank plc. It was also found that there was no significant gender difference in the response on factors militating against internal control. It was however revealed that educational qualification and working experience of the control system in union bank plc also the study reveals that there is internal control system in union bank plc.

5.2 Conclusion

The study shows that internal control system will be more effective if fraud management override of control, abuse of responsibility e.t.c are talking into consideration where developing internal control system. The study also shows that education qualification and working experience of respondent have effect on respondent answer to factors militating against internal control.

Also level of management and gender have no effect at all on that, there is control system in union bank plc in a notshell, internal control system is very useful in solving.

The problem of bank liquidation and ensuring orderliness in banking operation

5.3 Recommendations

Based on the finding of this research study the following recommendation were made:

  1. The internal control system can be more effective in the factors militating against internal system like fraud management, override of control, abuse of responsibility etc
  2. Were dealt with by the management
  3. Appointment or assignment of a personal to a particular work or job in the banks operation should be based on the education qualification and working experience of that personnel.
  4. The bank should appoint right into the bank when they want to employ people
  5. There should be training of all personnel of the bank so that this will improve there skills.
  6. All internal control should review regularly, so that if there is problem it can be corrected.
  7. Internal control unit should be independent
  8. Strick adherence to the features of internal control.

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