ASSESSMENT OF EFFECTIVENESS OF INTERNAL CONTROL IN
GOVERNMENT MINISTRIES: A STUDY OF BENUE STATE MINISTRY OF FINANCE.
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ABSTRACT This study tackles the importance of evaluating the effectiveness of internal control system in government ministries (units). With particular reference to Benue State ministry of finance, the study sought to find out the impact of internal control system on the performance of Benue State ministry of finance. The sample of the study consists of eighty staff of the ministry selected from the ministry using a stratified random sampling. The instrument used in collecting data is questionnaire and personal interview while simple percentages are used to analyze the data. Chi- square was used to test the hypothesis. The study found out that Benue State ministry of finance do prepare annual budget promptly and also have adequate expenditure tracking to prevent financial recklessness. The researcher recommended that, in preparation of budget, the Benue State ministry of finance should adhere strictly to the principles and procedures to ensure that slack are built into the budget and also oil expenditure should properly authorize and recorded by appropriate personnel to enhance monitoring.
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CHAPTER ONE: INTRODUCTION 1.1 Background to the study1 1.2 Statement of the problem...2 1.3 Objectives of the study...3 1.4 Research questions.4 1.5 Research hypothesis...4 1.6 Significance of the study5 1.7 Scope of the study...5
CHAPTER TWO: LITERATURE REVIEW 2.1. Introduction...6 2.2. Conceptual Framework6 2.2.1 Internal Control System6 2.2.2 Types of Internal Control Systems...8 2.2.3 Components of Internal Coltrol Systems11 2.2.4 The Essential Characteristics of Internal Control Systems...15 2.2.5 Documentation And Report On The Assessment Of Internal Control System..18 iv
2.2.6 Benefits of Effective Internal Control System19 2.2.8 Effects of Absence of Reliable Internal Control System21 2.2.9 Evaluating the Internal Control System...22 2.3. Review of Empirical Studies.26 2.4. Summary of the Review.28
CHAPTER THREE: RESEARCH METHODOLOGY 3.1. Introduction29 3.2. Research Design..29 3.2.1 Population of the Study..29 3.2.2 Sample Size and Sampling Technique30 3.3 Sources of data30 3.4. Instrument of Data Collection.31 3.5 method of data collection....32 3.6 Data Analysis Technique32 CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA v
4.1. Introduction34 4.2. Presentation and Analysis of Data.34 4.3. Test of Hypothesis/ interpretation of findings..43 4.4 Result of findings and interpretation.51 CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION 5.1. Introduction...52 5.2. Summary52 5.3. Conclusion.....54 5.4. Recommendation..56 5.5. Suggestion for further study.....56 Bibliography58 Appendix.61
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1.1. INTRODUCTION In every organization, business or government establishment, size notwithstanding, they must have effective and efficient internal control system so as to protect it from possible losses or organizational resources. Losses could erupt as a result of misappriopriation of funds, misuse and vandalization of company property and errors made by inefficient personnels. To avoid all these losses, misuse, vandalization of company property, errors e.t.c. in an organization Kola (2007) view that any form of control is imperature for an organization to succeed. 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 from organization of finance transaction to reporting and proper documentation of all tasks and procedures must be maintained. According to the International Standard on Auditing (ISA 40), the term internal control system means that all the policies and procedures adopted by the management of an entity to assist in achieving management objectives of insuring as far as practicable, the orderly and efficient conduct ot its business including adherence to management policies. The accuracy and completeness of accounting records of timely preparations of reliable financial information. It can be fathomed vii
from these defination that the internal control system extends beyound those matters which relate directly to the function of the accounting system. 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. The project study seek to examine the preparation and implementation of budget, the level of transparency and accountability and the extent fiscal discipline in Benue state ministry of finance.
1.2 STATEMENT OF PROBLEM It has been established that public sector organisation form an important part of the economy, Setana (2009). Currently, there is a general fall in the operational performance of these organisations forcing the government to achieve less than its target objectives. Research conducted to find out the causes of ministries failure to achieve their objectives point to ineffective internal control system. Adepoju (2011), found that internal control was primary to the achievement of objectives in public organisations and the indications of effective internal control system that enhance performance. The problem here is to find out whether there are effective viii
control mechanisms with regards to the budgeting, expenditure, tracking, transparency and accountability, risk management, fraud prevention and detection in the benue state ministry of finance. 1.3 OBJECTIVES OF THE STUDY The study is aimed at examining the impact of internal control system on the performances of the Benue state ministry of finance. The study has the following specific objectives: 1. To determine whether budget are promptly prepared by Benue state ministry of finance. 2. To examine whether adequate expenditure tracking exist to ensure fiscal discipline. 3. To determine the level of transparency, accountability in the ministry 4. To investigate whether internal control system minimize embezzlement and fraudulent practices. 1.4 RESEARCH QUESTIONS The following are the research questions this study intends to address 1. Are annual budget promptly prepared by the Benue state ministry of finance? 2. Does Benue state ministry of finance have adequate expenditure tracking and authorisation procedure for fiscal discipline? ix
3. What is the level of transparency and accountability in the Benue state ministry of finance? 4. Does effective internal control system minimizes fraudulent practices in the ministry of finance?
1.5 RESEARCH HYPOTHESES The main objective of this study is Assessment of the effectiveness of internal control system in government ministries: The case of Benue state ministry of finance. To address the issues raised, the following null hypotheses will be tested to validate or reject the research questions. Ho 1 :Benue state ministry of finance does not promptly prepare annual budget Ho 2 : Benue state ministry of finance does not have adequate expenditure tracking to prevent financial recklessness. Ho 3 : The level transparency and accountability in benue state ministry of finance is not adequately to check fraud and embezzlement 1.6 SIGNIFICANCE OF THE STUDY Internal control system promotes efficiency, reduce risk of assets loss and help ensure the reliability of financial statements and compliance with rules and regulations. x
This study will bring the awareness to the need for effective internal control system in public sector in general and the ministry of finance in particular. Beside designing the study show the importance of a proper and effective internal control system in government ministries. It will be of imense benefit to academics, researchers, and students who are interested in internal control and financial management. The study therefore provides informative reference materia as well as add to existing body of literature.
1.7 SCOPE OF STUDY This study is limited to the internal control system in the ministry of finance of Benue State. Therefore, the research will cover all units and sections of the ministry of finance and all relevant components and variebles of internal control system. PLEASE, print the following instructions and information if you will like to order/buy our complete written material(s). HOW TO RECEIVE PROJECT MATERIAL(S) After paying the appropriate amount (#2500) into our bank Account below, send the following information to 08064034407,08070584596 (1) Your project topics (2) Email Address (3) Payment Name (4) Teller Number We will send your material(s) immediately we receive bank alert BANK ACCOUNTS xi
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