ORGANIZATIONS (A CASE STUDY OF
SELECTED MINISTRIES)
ABSTRACT
This research is designed to examine
the prospect of internal control system on public sector organization a case
study of selected ministries (Ministry of Education, Ministry of Finance,
Ministry of Justice and Ministry of Health). The use of 100 structured
questionnaires was administered to the selected ministries which were based on
a five point likert scale to measure respondent’s knowledge and perception of
internal control system in the organization. Where “agree” is represented by
(A), “strongly agree” represented as (SA), “not sure” represented as (NS),
“disagree” is represented as (DA) and “strongly disagree” as (SD). In which 80
was taken for the purpose of this research. Chi-square as a statistical tool
was used to analyze the data obtained using a statistical package called SPSS
(Statistical Package for Social Sciences). From the findings, it can be
established that the internal control system of a ministry affects its
operations, the achievement of its goals, and the prevention and detection of
frauds, errors and material misstatements. This research recommends that there
should be a system of internal control in place in government ministries and
agencies, the task of internal controls should be ingrained in the core duties
of the management at government ministries and when government policies are
being created, there should be appropriate inclusion of internal control
systems so that they do not contradict.
CHAPTER ONE
INRODUCTION
1.1 BACKGROUND INFORMATION
An effective and efficient internal
control system should be established in every be it banking industry,
manufacturing company, small scale business, large scale business or government
establishment irrespective of their size or mode of operation so as to protect
it from possible losses, organizationalresources, frauds, errors or material
misstatement. Misappriopriation of funds, misuse and vandalization of company
property and errors made by inefficient personnels could result to losses. To
avoid all these losses, misuse, vandalization of company property, errors
e.t.c. in an organization it is perceived that an effective internal control
system will lead to the achievement of the organizational goals. The collapse
of internal control will certainly lead to the extinction of business of
organization. Therefore, adequate internal control should encompass proper
accountability for assets, reporting and proper documentation of all tasks and
procedures must be maintained.
Internal control system according to
the operational standard (guideline) is defined as‖ The whole system of
controls, financial and otherwise, established by the management in order to
carry on the business enterprise, in an orderly and efficient manner, ensure
adherence to management policies, safeguard assets and secure as far as
possible the completeness and accuracy of records. This definition points to
the fact that internal controls create a basis of amount of work to be done by
the professionals charged with the function, as they are expected to ensure the
safeguard of the organization‘s funds, ensure that there is efficient and
effective management of assets and that financial statements are accurate all
the time. According to COSO (1992) ―Theinternal control is an executive process
of an entity‘s board of directors, authorities and other employees to achieve
purposes in these categories: efficiency and effectiveness of operations,
reliability of financial accountability and obeying laws and legal act.
Internal control system according to
International Organization of Supreme Audit Institutions (INTOSAI, 2004) is
defined ―as an integral process that is effected by an entity‘s management and
personnel and is designed to address risks and to provide reasonable assurance
that in pursuit of the entity‘s mission, the following general objectives are
being achieved: executing orderly, ethical, economical, efficient and effective
operations, fulfilling accountability obligations,complying with applicable
laws and regulations and safeguarding resources against loss, misuse and
damage‖.
Internal control is broadly set
process needed to establish wise guarantees that (effectiveness and economic
performance, reliability of financial accounting and obeying laws and rules)
these goals will be accomplished ―M.R. Simmons 1995‖.
According to Thomas, P.D. (2007) the
term internal control is the integration of the activities, plans, attitudes,
policies and efforts of the people of an organization working together to
provide reasonable assurance that the organization will achieve its objectives
and mission. It ensure that all recorded transactions are real, properly
valued, related to the correct period, properly classified, correctly
authorized and posted. It is the responsibility of the board of directors and
its audit committee to ensure that the internal control system within the
organization is adequate which includes determining the extent to which
internal controls are evaluated and the parties involved in the evaluations
(internal and external auditors). Internal control is the integration of the
activities, plans, attitudes, policies and efforts of the employees of a
department working together to provide reasonable assurance that the department
will achieve its mission.
For systems based auditing to work
effectively, the auditor will like to rely on internal controls to reduce the
volume of substantive testing. Auditing is therefore defined as the
processcarried out by an appointed qualified person or body, whereby the
records and financial statements of an entity are subjected to independent
examination in such detail as will enable the auditor form an opinion as to
their truth and fairness of the financial statements. It is therefore important
for the auditor to examine the internal control practice and procedures that
are in place in the organization. Where weaknesses are revealed, the auditor
recommends ways of improving the systems. Internal control system should
therefore be viewed as a dynamic process that is continuously shaped by the
interactions among the factors such as internal audit quality, management
support and organization setting. Therefore it‘s now recognized that a sound
internal control process is critical to an entity‘s ability to meet its
established goals and maintain its financial viability.
Therefore, internal control system
provides assurance to the management of the dependability of accounting data
used in making decision. Decisions made by management becomes company policies
and to be effective, these policies must be communicated throughout the
organisation and consistently followed. However policies are not adequately
followed in the public sector and to the extent that good governance is only
imagined in Nigeria.
Corporation, state-owned company,
state-owned enterprise, state-owned entity, state enterprise, publicly owned
corporation, government business enterprise, commercial government agency,
public sector undertaking or parastatal is a legal entity that undertakes
commercial activities on behalf of an owner government‘. Their legal status
varies from being a part of government to stock companies with a state as a
regular stockholder. There is no standard definition of a government-owned
corporation (GOC) or state-owned enterprise (SOE), although the two terms can
be used interchangeably. The defining characteristics are that they have a
distinct legal form and they are established to operate in commercial affairs
while they may also have public policy objectives.
Public sector management needs to be
clearly paid attention to, reason being that government constitutes the largest
single business entity and her pattern of expenditure through its various
parastatals, agencies and commissions stimulate lot of economic activities.
(Angus and Mohammed 2011) says that as a result of the government huge
involvement in economic activities, initiatives are being taken into all over
the world towards the improvement of the standards of accounting, auditing and
internal control departments in government. In the eye of Woolf (1986) the
public sector is primarily composed of not-profit making organizations.
In a general term Public sector is the
part of the economy concerned with providing various government services. The
composition of the public sector varies by country, but in most countries the
public sector includes such services as the military, police, public transit
and care of public roads, public education, along with healthcare and those
working for the government itself, such as elected officials. The public sector
might provide services that a non-payer cannot be excluded from (such as street
lighting), services which benefit all of society rather than just the
individual who uses the service.
Public sector consists of governments
and all publicly controlled or publicly funded agencies, enterprises and other
entities that deliver public programs, goods or services. The concept of public
sector is broader than simply that of core governments and may overlap with the
not-for-profit or private sectors. For the purpose of this guidance, the public
sector consists of an expanding ring of organizations, with core government at
the center, followed by agencies and public enterprises.
In conclusion, public sector is the
part of the economy that is owned and controlled by government and provides
basic services to the citizens. It is the means by which the government relates
and delivers amenities to the public. Such amenities include, but are not
limited to welfare, infrastructure, security, social justice, education and
health care and a means of regulating or deregulating the economy (Okotuwa,
2007).
Though internal controls cannot
eliminate all errors and irregularities faced in public sector organization, it
is expected that they can alert management to potential problems, which can be
controlled before they escalate to big problems. Nevertheless, the established
internal control system must be evaluated from time to time so as to provide
management with some assurance regarding its effectiveness.
1.2 STATEMENT OF THE PROBLEM
Internal control was primary to the
achievement of objectives in public organizations and the indications of
effective internal control system that enhance performance. Currently, there
has been a reported case of general fall in the operational performance of
organizations forcing the government to achieve less than its target objectives.
Due to lapses in the control system of organization, organizations have been
experiencing inefficiency, fraud, absenteeism and inability to adhere to
government policy.
The problem here is to find out if
whether there are effective control mechanisms with regards to the detection
and prevention of frauds, errors and material misstatement, budgeting,
safeguard of the asset of the organization, strict adherence to government
policies, absenteeism, vandalization of property, inefficiency, transparency
and accountability in public sector organization. The management of public
sector does not see the necessity to improve the internal controls though it
helps in the detection and prevention of frauds and errors. Hence they neglect
it and do not have risk awareness. From the research conducted on public sector
organizations have come to conclude that an effective internal control system
should be put in place in other to solve the problems faced by public sector
and it should be anticipated at all levels of management.
1.3 OBJECTIVES OF THE STUDY
i. This study will examine the
existence and effectiveness of internal control system on public sector
organization.
ii. To determine whether internal
control system will help in the detection and prevention of errors, frauds and
material misstatement.
iii. To determine the extent to which
internal controls ensure the adherence to government policy.
iv. To investigate whether internal
control system can reduce or minimize inefficiency
v. To determine the level of
transparency and accountability in public sector
TOPIC: INTERNAL CONTROL SYSTEM AND ITS PROSPECT ON PUBLIC SECTOR ORGANIZATIONS
Format: MS Word
Chapters: 1 - 5
Delivery: Email
Delivery: Email
Number of Pages: 90
Price: 3000 NGN
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