IMPACT OF INTERNAL CONTROL TO AN ORGANIZATION

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF STUDY

The survival of any organisation depends on the effective and efficient utilisation of resources (financial and non-financial)at the disposal of the organisation. Hence, to optimize the utilisation of resources entrusted to all employees in an organisation, various form of control are put in place by management of the organisation, among these major controls are internal control and internal audit to mention a few. According to Kirsch,(2002)Internal control can be defined as a set of mechanism designed to motivate an individual or a group towards achievement of a desired objectives while, Ouchi (1979) stated that internal control must be able to achieve the objective of bringing about cooperation among people with divergent objectives in an organisation. Similarly, International Standard on Auditing (ISA 400) defines internal control as all policies and procedure adopted by the management of an entity to assist in achieving the primary objectives of the management by make sure the business is conducted in the most possible efficient way and also ensuring strict adherence to management policies, safeguarding of asset, prevention and detection of fraud and timely preparation of reliable account. On the other hand, Financial Performance of an organization can be described in various form, such as; return on assets, return on sales, return on equity, return on investment, return on capital employed and sales growth (Gerrit&Abdolmohammadi, 2010). It is also a measure of the excess value a company has provided to its shareholders over the total amount of their investments. According to Donald &Delno (2009), appropriate performance measures are those which enable organizations to direct their actions towards achieving their strategic objectives.

According to Oxford Learners Dictionary, Organization can be said to be a group of people who form a business, club etc. together in order to achieve a particular aim. It can also mean two or more people getting together for a purpose. In getting together, they decide to interact with one another to achieve the objectives of the organization (Unamka & Ewurum, 1995:1) When we discuss organization, we have variclasses among which are service organization and social organization etc. All these organizations have in mind the aim of continuing if not for eternity, a given period of time. (Unamka & Ewurum, 1995 1, 2, 3). For an organization to carry on its business there must be some factors put in place for the smooth running of the organization management, man-power, materials, money and machines. These need to be well coordinated in order for the success of the organization to be achieved. They are used by a group of persons known as management; neither can management exist without organization- the two are inseparable twin. (Unamka &Ewurum, 1995:65).

TOPIC: IMPACT OF INTERNAL CONTROL TO AN ORGANIZATION

Format: MS Word

Chapters: 1 - 5, Abstract, References, Questionnaire.
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Number of Pages: 75

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