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(A Case Study of Nigerian Bottling Company Plc, Ibadan)




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For the smooth running of an organizations business, certain factors must be put
in place, such as manpower, materials, money and machine. These resources need to be
well coordinated in order for the organization to achieve its objectives (an organization
can have all the resources required for its success but if they are not properly utilized
when and where needed, the organization will not achieve its objective). The above
mentioned resources are made use of by a group of persons known as management. An
organization cannot exist without management, neither can management exist without an
organization; the two are inseparable twins. The success of failure of an organization is
more or less dependent on its management.
Good management weaves together the various parts of the organization so that all
sections function as a system. Management refers to members of the executive or
administration of an organization or business. According to Beneish (2008:65)
management can be defined as the design or creation and maintenance of an internal
environment in which people working together in groups can perform efficiently and
effectively towards the attainment of group goals.
Effective management leads to purposeful, well coordinated and goal oriented
activities. Management ensures that organization are run in ways that ensure continuity
and survival that is, they ensure that the organization doesnt go bankrupt, or fail in its
ability to meet its responsibilities as at when due. They (management) must ensure the
safety of the organizations assets and they should be able to do this by instituting a
system of control, a system which is strong enough to both safeguard the organizations
assets and ensure the accuracy and reliability of records. This system is what is known as
the internal control system (Doyle, 2007:14).
According to the Doyle and McVay (2007:19), internal control system can be
defined as the whole system of control, financial or otherwise, established by the
management in order to carry on the business of the enterprise in an orderly and efficient
manner, ensure adherence to managements policies, safeguard the assets and secure as
far possible the completeness and accuracy of the records.
The individual components of an internal system are known as controls or
internal controls. Internal control, according to Christine (2010:26), is defined as a
process affected by an organization, people and information technology (I.T) system
designed to help the organization accomplish specific goals or objectives. It is a means by
which organizations resources are directed, monitored and measured. It plays an
important role in preventing and detecting fraud and protecting the organizations
resources. At the organizational level, internal control objectives relates to the reliability
of financial reporting, timely feedback on the achievements of goals, compliance with
laws and regulations and the prevention and detection of fraud. At the specific transaction
level, internal control refers to the actions taken to achieve a specific objective such as
the procedure for payment of money for services rendered.
Internal control system is an all-embracing term. It includes all measures and
devises whereby management regulates and controls the overall affairs of a business
towards a defined objective by safeguarding its assets against fraud and waste, ensuring
the accuracy and reliability of its records and promoting coherence, efficiency and
orderliness of its duties in compliance with the business policy (Ogneva, 2007:25). The
individual components of an internal control system are known as control or internal
control. Internal control comprises the whole system of control, financial or otherwise,
established and operated within a business, including internal check, internal audit and all
other forms of control. Internal control sees to the segregation of duties in which case,
separation of those responsibilities and identifying lines of reporting for all aspects of the
enterprises operations involving the controls. The separation of the activity from another
prevents fraud, and where it cannot be completely prevented, detection of such is done as
soon as possible (Ogneva, 2007:25). The system of internal control therefore, should be
under continuing supervision by management to ensure that it is functioning as prescribed
and, is modified as appropriate for change in condition.
Nigerian Bottling Company (Coca-cola plc) is a subvented organization and as
such, profit making organization, a comprehensive system of internal control is therefore
needed to enable the management to have the responsibility for adopting sound
accounting policies, for maintaining an adequate and effective system of accounting, for
safeguarding assets and for devising controls that will among others things help to assure
the production of proper financial statement.

Internal controls are said to be weak when they are neither effective nor adequate.
Policy effectiveness means the procedure is properly dealing with a specified risk or
group of exposures. Internal control breakdowns have diverse financial consequences.
Depending on the control, a company may suffer losses that originate from technology
operations to finance work streams.
Specifically, the problem that the researcher is going to examine in this research
work, are the weaknesses, if any, that exist in the internal control system of Nigerian
Bottling Company, Ibadan and its effect in the organizations growth and survival.

The main objective of this study is to evaluate the effectiveness of internal control
system as a means of preventing and minimizing fraud in Nigerian Bottling Company.
The specific objectives are to:
1. Examine how internal control systems play a significant part in the orderly and
efficient running of an organization.
2. Examine how internal controls can minimize the possibility of frauds by making it
more difficult to perpetrate.
3. Examine how internal control can facilitates the early detection of frauds before
much harm is done to the finance of the business.

1. Does effective internal Control system can be used in preventing fraud in
business organizations in Nigeria?
2. Does internal Control system is an effective means to minimize fraud in business
organizations in Nigeria?
3. Does there significant relationships between internal control and the orderly and
efficient running of an organization?

This study is significant for the following reasons:
1. It will help government owned establishments and private organizations to assess
their internal control measures and make amends where necessary
2. This study could arouse further research by students and/or other interested parties
into some other functional areas in the company.

All the information, facts and figures contained in this research work were
obtained only from the Ibadan experimental plant, which is expected to be a
representative of the entire plants of the organization without any visit whatsoever to any
of its sub-stations. Although some of the officers in charge came around the plant for
their monthly and/or quarterly returns during the preparation of this research work, and
were thus interviewed on the relevant information to the research problem. This research
work is also limited to the information obtained from returned questionnaire and other
instruments, such as internet, journals, and magazines.

The researcher will encounter problems while conducting the research work. Some
of it is that, he may be faced with hostility from the respondents. The respondents might
refuse to grant the researcher all the require attention needed to gather enough data for
the study due to security reasons. Other forms of limitations are:
- Time constraint is one of the factors that might hinder the completion of this research
work. The time given for the completion of the project may be very short, so the
researcher will have to make use of the available data.
- Lastly, lack of adequate finance is another issue that may limits how widespread the
data can be collected, as more data would have been necessary to have a better
assessment of respondents.

Audit: This is an independent appraisal and/or examination on financial statements by
independent personnel, known as an auditor, in order to assess the truth and fairness of
financial statements of an enterprise.
Internal Check: This is an element of internal control that involves all sets of procedures
put in place in an organization by the management through which all business
transactions would undergo.
Internal Control: This refers to the whole system of control, financial or otherwise,
established by the management to run the business of an organization in an efficient and
orderly manner, safeguard the assets, and ensure as much as possible the completeness,
accuracy and validity of records.
Error: This, unlike fraud, involves all forms of unintentional mistakes and/or
irregularities on financial statements or records of an organization.
Fraud: This is an intentional mistake or misrepresentation in financial information. It
involves the use of criminal deception to obtain an unjust or illegal financial advantage.
Business Organisation: This includes all business houses set up usually primarily for
profit motive.
Policy: A plan of action adopted or pursued by an individual, government, party,
business etc.

Beneish, M. 2008. Internal control weaknesses and information uncertainty. The
Accounting Review 83(3): 65-70.

Doyle, J. and S. McVay. 2007. Determinants of weaknesses in internal control over
financial reporting. Journal of Accounting and Economics 44(1-2): 19-23.

Doyle, J., 2007. Accruals quality and internal control over financial reporting. The
Accounting Review 82(5): 14-17.

Ogneva, M., 2007. Internal control weakness and cost of equity: evidence from SOX
section 404 disclosures. The Accounting Review 82(5): 25-29.

Christine, P., (2010). The Causes and Consequences of Internal Control Problems in
Nonprofit Organizations. Journal of Accounting and Economics 23(4):26-39