1.1 BACKGROUND OF THE STUDY
Internal control is control within the company. In this type of control employees within the establishment can be useful sources which could be very helpful of more effectiveness of the desired goal. This means that it must be within the establishment’s restraints, authority or command. It involves a check within the banking industry to facilitate the effectiveness of its management.
The banking industry of every economy consists of all the activeness of financial institutions geared towards setting and maintaining a healthy cash flow and management policy in such economy.
Banking industry cannot perform their functions very well without maintaining a sound internal control. This is the reason for the study of internal control and its role in the effective management of the banking industry.
According to the Canadian institute of chartered accountants, exposure draft of proposed auditing recommendations, internal central comprise of the plan of an organization and all the co-ordinate systems established by the management of the enterprise to achieve management’s objective of ensuring as far as it is practical. The orderly and efficient conduct of its business including the preparation of reliable financial information.
E. Murphy in her text described internal control as the plan of organization and all of the co-ordinate methods and measures adopted within a business to safeguard its assets, check the accuracy and reliability of its accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies.
Internal control system could be viewed as a firms organization plan including all methods and measures the firm takes to:-
Safeguard it’s assets
Ensure the accuracy and reliability of its accounting data.
Promote operational efficiency and
To encourage compliance with organization policies.It is the responsibility of management to determine the internally control system which is appropriate to the organization. The nature and extent of controls will vary between organizations. That is, it differs from one organization to another. The control used will depend on the nature, size and volume of the activities and the degree of control which management are able to exercise personally, geographical distribution and many other factors.
1.2 STATEMENT OF PROBLEM:
Most business organizations in Nigeria of which banking industry is one of them are known for their inability to keep complete and accurate records, and quite often lose some of their assets both financial and others under their control to fraudulent workers, and other enemies of progress who adopt any strategy possible to satisfy their selfish interest at the detriment of the public interest.
The main problem of this research work are as follows:-
To identify the nature, weaknesses and limitations interest in the internal control system as regards the banking sector using the first Bank of Nigeria PLC, Enugu main as a case study.
In the real sense, the banking system suppose to reap its full benefits, but the system cannot work where there is management and operational inefficiency among the workers an this will result to a general unprofitability in the banking system. this can only be remedied through the corrective measures which will be provided as this study proceeds.
1.3 THE PURPOSE OF THE STUDY
A good internal control system is essentially indispensable to every organization that has portfolio of assets and bulky transaction to undertake. It is with due knowledge of this indispensable nature of good internal control system to organizations mostly of the banking industry that this research work have designed to base the research to :-
Evaluate how effectively the management has relied on internal control for decision making and corporate goal attainment.
Ensure that proper and accurate accounting system is maintained.
Appraise the cost-benefit of installation of internal control.
Create awareness of the importance of internal control.
Make recommendations where necessary.
1.4 SCOPE OF THE STUDY
This research work focuses on Banking industry, using the first Bank of Nigeria PLC, Enugu main as a case study. First Band of Nigeria Plc has its headquarters at Lagos and five zonal banking units which includes central, East, North, West and Lagos Banking operations.
This study will look into banking operations especially the following aspects of internal control of the selected areas as:-
The authorization custody and recording.
The nature of segregation of duties
The internal checks and internal audit in operation.
The aspects of supervisory
The other control measures being exercised and their adherent to management policies and guidelines
1.5 RESEARCH QUESTIONS
For the purpose of this research work to be achieved, the following hypothesis were formulated:-
HO: Effective management and accountability is not independent of the internal control system.
H1: Effective management and accountability is independent of the internal control system.
HO: The profitability and operational efficiency of a bank has no relationship with its internal control system.
H11: The profitability and operational efficiency of a bank has relationship with its internal control system.
HO: Adherence to laid down rules does not help effective management.
H111 Adherence to laid down rules helps effect management.
1.6 SIGNIFICANCE OF THE STUDY:-
This research work on “Internal control as an effective management tool in the banking industry” will be useful to bankers, insurers, Auditors, and other researchers.
(i) To the insurers, bankers and other financers:
The operators of the banking system whose sector is being threatened to winding up, may learn some useful reasons from the findings of the research.
(ii) To other Researchers:
People who may be carrying out research in this area will certainly find this work relevant. It can serve as a source of information to them. They can find it very useful during their research work.
(iii) To the External Auditors:
The findings of this study will be of a great help to the external auditors in determine the extent of work to be carried out by them since they rely on internal control system of their clients.
(iv) To the Students and the General Public:-
Students as well as the general public who want to acquire knowledge of internal control in the banking industry will equally benefit form this study.
Can't find what you are looking for? Hire An Eduproject Writer To Work On Your Topic or Call 0806-703-7559.
Proceed to Hire a Writer »