ABSTRACT
This research work has set out to determine “Evaluation of the internal Control System in the Nigeria Banking Industry (A study of Eco Bank Plc, Onisha, Anambra state), In actual fact, a problem was identified in some situation, management have constantly claimed effective internal measures adopted but financial management has not improve accordingly. The researcher made use of both primary and secondary data, structured questionnaires were the methods used for the collection of primary data, and secondary data were also collected from textbook and various research materials. The researcher used population of 60 selected randomly. But in sample size the same 60 was still used because the population is small. In chapter four table and Chi-square was used as a statistical tool for analyzing the data. In which the researcher concluded that management policies are effective and the bank have good authorization recording and adequate guideline for custody items. The research is concerned that there is effective use of internal control system in the bank and system laid down are practiced and recommended that Internal control can help in custody procedures for custody items and keeping authorization records without militating.
TABLE OF CONTENTS
Title Page i
Approval Page ii
Dedication iii
Acknowledgement iv
Abstract ix
Table of Contents x
CHAPTER ONE: INTRODUCTION
- Background of the study 1
- Statement of the Problem 3
- Objective of the study 5
- Research Questions 8
- Formulation of Hypotheses 6
- Significance of the Study 8
- Definition of Terms 9
Reference
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Review of Related Literature 12
2.2 Historical Background of Internal Control 12
2.3 The Narrative Description And Audit 27
2.4 Means of Achieving Adequate Internal Accounting Control System 29
2.5 Internal Check 39
References
CHAPTER THREE: METHODOLOGY
3.1 Research Design 52
3.2 Source of Data 52
- Population of the study 53
- Sample and sampling Procedure 53
3.5 Data Presentation and Analysis 55
3.6 Method of Data Analysis 55
3.7 Percentage Frequency Distribution 56
References
CHAPTER FOUR: DATAPRESENTATION AND RESULT
4.1 Data Presentation and findings 58
4.2 Test of Hypothesis 63
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.1 Summary of Findings 75
5.2 Conclusion 77
5.3 Recommendation 78
Bibliography
Appendix
CHAPTER ONE
INTRODUCTION
- Background Of The Study
ECO Bank Plc, Onitsha is a bank owned by group of people. It can be seen as those who are united by common objective. They are shareholders of the bank. ECO Bank is a bank with many branches and head office at Lagos State. The bank is divided into units of department with their operators (those who work in each of the department). Internal control the department is one the department that exists in a bank. As the internal control is a measure or guidelines are being stated from the central bank of Nigeria like CBN, They have units including internal control units. They do not call it internal control but CBN to guild other banks in Nigeria.
The inspectors normally come down to check if the policies like monetary policies and fiscal policies being stated by CBN are carried out by the banks head office, for instance, the central bank of Nigeria CBN are carried out by the head office. For instance, the central bank of Nigeria CBN said that the interest rate on lending should be 25%, the inspector will investigate to know if banks maintains the policy.
In Eco Bank Plc Onitsha, they have units or department like cash department and internal control. These internal controls are called resident auditors. They are permanently in the banks and at the branches. They also have the visiting ones (external auditors) must examine them and make a report to branch account book record whether they are compliance with the statutory guideline. The management is responsible to appoint the internal auditor while the shareholders appoint the external auditor in banks.
They audit the account of the bank annually.
Eco Bank Plc Onitsha (The bank office). The resident auditors visit the branch to check the record of their account. They normally spend between one and two weeks or at time two months
The inspector also checks if the customers are politely attended to by the staff of the bank (Bofid 1991). In fact, all areas of internal control are by the inspectors on their specialized areas are probate, trustee and share.
- Statement of the Problem
Ogwuma (2002:90) stated all problems confronting the Nigerian banking industry today, irregularities are easily the most intractable. This is the major problem confronting banking industries today. Since the main function of bank is to buy and sell money and become a warehouse where people store their money for safe-keeping.
If banks clouded with cases of irregularities like fraud, perpetrated by both outside and inside the banks deposit would reduced
Many banks all over the world have been known to have wound up as a result of irregularities which materially affect the bank existence.
When this happens, a lot of people have to be laid off from their works resulting in financial hardship to the industry and economy in general.
Since banks lend money to those (customers) who use it for the purpose of investment, huge financial losses resulting from basic fraud drastically reduce the fund available for lending thus reducing the nation’s investment capital.
Suffice is to note that no system of internal control, no matter how elaborate it may be can guarantee a fraud-free organization. However, a well designated and implemented control system will go a long way to control the incident of irregularities in any organization.
1.3 Objectives of the Study
- To examine the effect of internal control system when it comes to fraud preventing and detecting in the banking industry.
- To determine to what extent it has helped in improving profitability of banks.
- To determine whether internal control helps in good management supervision and inspection.
1.4 Research Questions
- What is the impact of internal control in preventing and detecting fraud in the banking industry?
- What is the extent of the impact of internal control on improving profitability of bank?
- What is the impact of internal control in good management supervision and inspection?
1.5 Research Hypotheses
A statistical hypothesis is a statement or Assumption about an unknown population parameter (Nwabuoke 2001: 160). It is also a prediction or a conjunction stated well in advanced of observation about what can be expected to occur under stated conditions, (Asika 2001: 105). To achieve the objectives earlier stated the null and alternate hypothesis is formulated as shown.
H0: internal control has not significantly helped in preventing or detecting irregularities in the banking industry.
H1: Internal control has significantly help in preventing or detecting ingularities in the banking industry.
H0: Internal control has not significantly improved profitability to large extent.
H2: Internal control has significantly improved profitability in the banking industry.
H0: Internal control has not significantly helped in good management supervision and inspection method.
H3: Internal control has significantly helped in good management supervision method in the Nigeria’s banking industry.
1.6 Significance of the Study
The main purpose of this study is to reveal that internal control system is very important to both banking industry and organizations in order to reduce the frauders in the industries.
It will enable the banking industries maintain their credibility in the eyes of the public and at the same have effective and efficient control of their own assets and other people’s assets in their care.
1.7 Definition of Terms
Banking is a financial institution where money and other valuable items are been kept for safety purpose.
- Internal Control: This could be seen A plan of organization and all of the measures adopted within the enterprise to safeguard its assets, check accuracy and reliability of its accounting data and encourage adherence to prescribe managerial policies.
- Policies: The principle and objective which guide decision making on a particular matter and which express broad intension or attitude of the industries it can be plan of action, setting out terms of operation.
- Industry: It means a class of firms that are sufficient entry similar in their main activities of produced to be grouped together for the purpose of descriptions. It also means conglomerates of a firm.
- Fraud: It is an irregularity involving criminal deception to gain an unjust advantage. Obtaining trick by (OBT) it is an action or behavior by which a person intends to gain a dishonest advantage over another. Fraud is also an intentional perversion of truth (419) in other to induce someone to part with something of value or to surrender his legal right to another. Fraud can also be seen as a conscious or detriment of another person who is rightful owner of the fund.
Fraud generally refers to an act or gain advantage such deception is directed at the determent of another. It suggests unfair dealing which could perpetuate against the bank by its customers or by third parties or by bank officers or by other interest group.
REFERENCES
Horgrent T. Charles (1981), Introduction to management
Accounting 5th Education, London: Prentice Hall International, 90p.
Anthens A. T. (1993), Auditing and Taxation Finance,
India: Aldine Aldine House, 10-11p.
Bigg W.W and Daries F.E. (1988), Internal auditing 4th
Edition, London: Bpp Publishing and company
Meiges and mages (1982), Accounting planning and
Control, 3rd edition, London: Oxford press.
Ogwuma (2002), Nigerian Banking Problems, Onisha: Long man Publishers.
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