Internal Control As A Reliable Tool in The Profitability of A Microfinance Institution.

UNIVERSITY INSTITUTE OF THE GULF OF GUINEA
HIGHER NATIONAL DIPLOMA

(HND) 2020 SESSION
INTERNAL CONTROL AS A RELIABLE

TOOL IN THE PROFITABILITY OF A
MICROFINANCE INSTITUTION - CASE OF
CamCCUL AKWA
A REPORT ON AN INTERNSHIP CARRIED OUT FROM THE 1ST OF JULY 2019 TO THE
31ST OF AUGUST 2019 SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIRMENTS
TO OBTAIN THE HIGHER NATIONAL DIPLOMA (HND)
Written and presented by

KOWSI TINGUME
LEVEL II STUDENT
Specialty: ACCOUNTANCY
Under the supervision of:
PROFESSIONAL SUPERVISOR ACADEMIC SUPERVISOR

MRS. MIRABEL CHULEPAKONG MR. FONGE THEODORE
Coordinator of Credit Union LECTURER & CONSULTANT
Branch Offices - Douala IUG Douala
2019/2020
ACADEMIC YEAR
A
CERTIFICATION
This is to certify that this report, titled ‘INTERNAL CONTROL AS A

RELIABLE TOOL IN THE PROFITABILITY OF A MICROFINANCE
INSTITUTION - CASE OF CAMCCUL’ is the original work of KOWSI
TINGUME of the ACCOUNTING department after a two-month internship at
Cameroon Cooperative Credit Union League (CamCCUL) Akwa, Douala as a
partial requirement for the award of the Higher National Diploma (HND) 2020
at L’INSTITUT UNIVERSITAIRE DU GOLFE DE GUINEE DOUALA.
Under the supervision of:
PROFESSIONAL SUPERVISOR ACADEMIC SUPERVISOR

Ms. MIRABEL CHULEPAKONG Mr. fONGE THEODORE
SIGNATURE: ………………………....... SIGNATURE: ……………………….
DATE: …………………………………… DATE: ……………………………….

INTERNAL CONTROL AS A RELIABLE TOOL IN THE PROFITABILITY OF A MICROFINANCE
INSTITUTION - CASE OF CamCCUL
DEDICATION
TO
MY LOVELY PARENTS
PETER NYUIBI TINGUME
&
VICTORINE YEMBI TEH
WRITTEN AND PRESENTED BY KOWSI TINGUME Page ii

ACKNOWLEDGEMENTS
A piece of work of this nature could not be realized without the help of friends
and family. To begin,
 I wish to express my heartfelt gratitude to my academic supervisor, Mr.

FONGE THEODORE for his constructive criticism and suggestions towards
the realization of this work.
 My appreciation goes to the entire CamCCUL staff for giving me the
opportunity to be one of them and to my professional supervisor Mrs. Mirabel
Chulepakong for her encouragement throughout this internship program.
 I wish to equally thank the proprietor of University Institute of the Gulf of
Guinea and the teaching staff of the Accounting Department for nurturing me
throughout my studies in this institution up to this moment.
 My sincere gratitude also goes to my parents; PETER TINGUME and TEH
VICTORINE for their financial assistance and for giving me the opportunity
to study in one of the best universities in the country.
 I equally thank Mrs. Yenchi Gobeh, Mr. Dia Godsabi and Mr. Mbuh John for
their professional contributions towards my accomplishment of this work.
 I wish to equally thank all my course mates for their collaboration and
contribution towards the realization of this work.
 Above all, I thank the Almighty God for good health, strength and the ability
to keep track with my studies up to this level.
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PREFACE
Due to an increasing demand for professionals in Cameroon, and in order

to meet the various challenges of the 21 st century, the government encourages
and supports public and private schools in the training of youths in vocational
fields. It is in this regard that the ministerial order number 08/0/03 and
08/0111/MINESUP was signed facilitating the creation of state universities and
higher institution amongst which existed L’institut Universitaire du Golfe de
Guinee (IUG).
Ecole Superieure de Gestion (ESG) also known in English as The

Advanced School of Management was created as one of the three schools under
the IUG by the ministerial order number 05/002 and 05/0038 of January 2008.
IUG has as objective to train youths to acquire the Higher National Diploma in
the following field of study;
 Accountancy
 Banking and Finance
 Management
 Marketing
 Executive Secretarial Studies
 Corporate Communication
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 Computer Engineering
 Midwifery
 Logistics and transport Management
 Hardware Maintenance
 Software Engineering
The Higher National Diploma examination requires a minimum preparation
period of two years during which an academic internship is undertaken and
subsequently defended before a jury. It is in this light that I undertook an
internship for a period of two months from the 1st of July to the 31st of August
2019.
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ABSTRACT
The globalization process, the complexity of banking transactions and the

increase in fraudulent activities have recently prompted scholars, experts, and
authorities to divert their attention to internal control systems in the finance
industry. Internal control systems are primarily established to enhance the
reliability of financial performance directly or indirectly by increasing
accountability among information providers in an organization. CamCCUL,
since its creation on the 4th of September 1968 has evolved throughout the past
years and there have been significant variations in the activities of credit Unions
affiliated to it, precisely in financial services which subsequently affect their
performances. Hence, this work analyses a systematic approach used in the
internal control system in view of policies and procedures within the CamCCUL
network and brings out its importance as far as a microfinance institution is
concerned.
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RESUME
Le processus de mondialisation, la complexité des transactions bancaires et

l'augmentation des activités frauduleuses ont récemment incité les universitaires,
les experts et les autorités à détourner leur attention sur les systèmes de contrôle
interne dans le secteur financier. Les systèmes de contrôle interne sont
principalement mis en place pour améliorer la fiabilité des performances
financières directement ou indirectement en augmentant la responsabilité des
fournisseurs d'informations dans une organisation. CamCCUL, depuis sa création
le 4 septembre 1968 a évolué au cours des dernières années et il y a eu des
variations importantes dans les activités des coopératives de crédit qui lui sont
affiliées, précisément dans les services financiers qui affectent par la suite leurs
performances. Ainsi, ce travail analyse une approche systématique utilisée dans
le système de contrôle interne au regard des politiques et procédures au sein du
réseau CamCCUL et fait ressortir son importance pour une institution de
microfinance.
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IDENTIFICATION
FORM
Name Cameroon Cooperative Credit

Union League (CamCCUL)
P.O Box 211 Bamenda
Telephone 233361377
Website camccul@camccul.org
Head Office Bamenda
Date of Creation 4th September 1968
MINFI Registration Number 00353/MINEFI of 27/07/2001
National Credit Council EMF/2011/016 of 22/02/2011

Registration Number
Activity - Supervision and Control
and Auditing
- Saving and loans
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LIST OF ABBREVIATIONS
AGM Annual General Meeting

BOD Board Of Directors
CamCCUL Cameroon Cooperative Credit
Union League
COBAC Commission Bancaire de
l’Afrique Central (Banking
Commission for Central Africa)
EGM Education General Meeting
FTA Field Technical Assistant
GA General Assembly
HND Higher National Diploma
IT Information Technology
MFI Microfinance Institution
OHADA Organization for the
Harmonization of Business Law
in Africa
PAR Portfolio At Risk
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CONTENTS
Certification ............................................................................................... i
Dedication ................................................................................................ ii
Acknowledgements .................................................................................iii
Preface ................................................................................................... iv
Abstract ................................................................................................... vi
Resume ..................................................................................................vii
Identification Form ................................................................................. viii
List Of Abbreviations .............................................................................. ix
GENERAL INTRODUCTION ........................................................................ 1
Background .............................................................................................. 1
Problem statement .................................................................................. 1
Objectives of the study ............................................................................ 2
General objectives: .................................................................................. 2
Specific objectives: .................................................................................. 2
Methodology ............................................................................................ 2
Structure in parts ..................................................................................... 3
PART ONE: INTERNSHIP ENVIRONMENT ................................................ 4
CHAPTER ONE: GENERAL PRESENTATION OF CamCCUL.................. 5
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Section One: The Creation and Evolution of CamCCUL ........................ 5
Section Two: Organizational structure .................................................... 7
CHAPTER TWO: INTERNSHIP ACTIVITIES ............................................ 11
Section One: Reception......................................................................... 11
section Two: Justification of the topic .................................................... 14
PART TWO: THE PRACTICAL PHASE OF THE INTERNSHIP ............... 15
CHAPTER THREE: PRACTICAL PHASE ................................................. 16
Section One: Job Placement ................................................................. 16
3.1.1 Definition of Internal Control ......................................................... 16
3.1.2 Internal Control as a tool for Effective Performance .................. 18
3.1.3 Steps of the Control Process........................................................ 18
3.1.4 Importance of Control ................................................................... 20
Section Two: Means (Tools Used) and Outcome ................................. 21
3..2.1 Means .......................................................................................... 21
3.2.2. Outcome ...................................................................................... 23
CHAPTER FOUR: CRITICAL APPROACH ............................................... 24
Section One: Difficulties and Insufficiences .......................................... 24
4.1.1 On The Side of the Company ....................................................... 24
4.1.2 On The Side of the Intern ............................................................. 26
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Section Two: Recommendations........................................................... 26
4.2.1 On The Side of the Company ....................................................... 26
4.2.2 On The Side of the Intern ............................................................. 27
GENERAL CONCLUSION ......................................................................... 28
APPENDICES ............................................................................................. 30
Appendix 1: Orgarnizational Chart ........................................................ 30
Appendix 2: The Manual Environment .................................................. 31
Appendix 3: Phases of Internal Control ................................................. 32
Appendix 4: The Questionnaire ............................................................. 33
Appendix 5: The Automated Environment ............................................ 37
Bibliography ........................................................................................... 38
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GENERAL INTRODUCTION
BACKGROUND
A credit Union is a financial Institution owned and controlled by people
with a common name usually “members” who pull their resources together in the
form of shares and savings and give out loans to its members at lower interest
rates. The birth of a credit union can be as a result of professional affiliation,
cultural affiliation, or even religious affiliation. Due to the existence of many
Credit Unions in today’s society, there became a need for the establishment of
various umbrella organs to supervise and control these microfinances in order to
ensure good management and internal growth. To that effect, CamCCUL was one
of those umbrella organs established with the main aim of supervising and
controlling the credit Unions affiliated to it.
PROBLEM STATEMENT
During my internship at CamCCUL, I noticed that control systems were
established but the decisions of the controllers or FTA’s were not effectively
implemented if not neglected by the credit union in question. As a result, these
credit unions may not be able to attain its objective. This then prompted me to
write on Internal control as a necessary tool in the profitability of a microfinance
institution so the organization can place strong emphasis on the control processes
which were neglected or are partially implemented.
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OBJECTIVES OF THE STUDY

GENERAL OBJECTIVES:
Generally, this report seeks to;
 Describe internal control as a tool for effective performance in an

organization.
 Show the impact of internal control in an organization.
SPECIFIC OBJECTIVES:
This work is established with the intension to;
 Show the importance of internal control in a microfinance institution.

 Show how control can be used to attain organizational goals and objectives
in a microfinance institution.
METHODOLOGY
The data for this report was collected using a mixture of both the quantitative and
qualitative method.
 The qualitative method
This method is a primarily exploratory method used to gain an understanding of

underlying reasons, opinions and motivations. Some qualitative data collecting
methods we used includes; Discussion groups, individual interview and
questionnaires

 The quantitative method
On the other hand, this method is made up of more structured data usually
transformed from statistics. We collected some data through textbooks and
company manuals and of course from the internet.
STRUCTURE IN PARTS
This work starts with a general introduction. Thereafter, it is divided into

two parts of two chapters each. Part one explains the internship environment-
Chapter one of part one shows the general presentation of the enterprise in two
sections; Section one explains the creation and evolution of the enterprise and
section two shows the organization and means of operation of the enterprise. Part
two is made up of the practical phase of the program. It contains chapter three
and chapter four. Section one of chapter three deals with issues relating to the job
placement while section two deals with the means and the result. The last chapter
is also divided into two sections; Section one states the difficulties and
insufficiencies experienced during the internship while section two enumerates
suggestions and recommendations. The work ends with a general conclusion.

PART ONE
THE FRAMEWORK OF THE TRAINING
COURSE AND INTERNSHIP ENVIRONMENT
This part is divided into two chapters of two sections each; Chapter one deals
with the general presentation of CamCCUL and its organizational structure while
chapter two deals with the training course and the various activities carried out
during the internship.

CHAPTER ONE
GENERAL PRESENTATION OF
CamCCUL
This chapter will have to do with the history of CamCCUL, its year of
creation and its legal and fiscal form of operation. It will further explain
CamCCUL’s objectives and how the organization was developed. It also contains
the institutions activities and organizational structure and the means of action that
facilitates the running of the organization.
SECTION ONE: THE CREATION AND EVOLUTION OF CamCCUL
1.1.1 THE CREATION OF CamCCUL
Reverend Father Anthony Jansen worked in Njinikom a small village in the

North West in the 1960’s. He noticed that the people of Njinikom were being
exploited by money lenders. He also noticed that these people were faced with
difficulties in saving and paying school fees and that they needed guidance in
managing their finances. Father Anthony then used the credit Union Model by
gathering indigenous resources and starting up the St Anthony Discussion Group
with 7 members in 1963. This group was registered as the first credit union in 1964.
1.1.2 THE EVOLUTION OF CamCCUL
Later, the Njinikom cooperative Credit Union started with 16 members and
a total savings of 2100frs. A year later, Father Anthony noticed the same problem

in Kikaikelaki another village in the North West of Cameroon. He decided to team

up with the head master of the Catholic School there and commenced plans to
start a Credit Union there.
With the help of other reverend gentlemen, graduates from the Coady Institute in
Canada and officers of the West Cameroon Cooperative Department, weekly
education meetings were held and the credit Union idea was spread to other
neighboring villages.
As these small credit Union groups kept on growing, their management became
a major call for concern for Father Banicle, a close collaborator to Fr Anthony.
This then led to the formation of an Umbrella organ for credit Unions in January
1967.
By 1968, there were already 34 Credit Unions with a total of;
 400 members
 Savings amounting to over 14 million FCFA
 Loans to members of over 11 million FCFA
Reverend Fr Banicle then convened a meeting of all the credit Unions and formed
a coordinating committee made up of elected credit Union representatives. On
September 4th 1968, the league was registered officially The West Cameroon
Cooperative Credit Union League Limited (WCCUL).

SECTION TWO: ORGANIZATIONAL STRUCTURE

1.2.1 ORGANISATIONAL STRUCTURE
The organizational structure of CamCCUL is a system of roles and
responsibilities that are directed towards achieving the cooperatives objectives.
CamCCUL is structured as below;
THE GENERAL ASSEMBLY

The GA is the main body of the union where elective ideas are established.
The general assembly is made up of all the credit unions affiliated to CamCCUL.
These credit unions make up the unions shareholders. They build up their ideas
in an AGM usually organized at least once every year.
THE BOARD MEMBERS

The BOD’s are elected by the general assembly to ensure the smooth
running of the cooperative. Their key purpose is to ensure the company’s
prosperity by collectively directing the company’s affairs, whilst meeting the
appropriate interests of its stakeholders.
THE SUPERVISORY BOARD

The members of the supervisory board perform the following functions;
 Making sure the cooperative policies, rules and regulations are effectively
respected and implemented.
 Making sure that there is no loop hole in the effectiveness of the union.

THE GENERAL MANAGER

The general manager has the duty to coordinate the activities of the union
and also make sure that decisions of the BOD’s are implemented. The general
manager is appointed or employed by the board of directors.
THE ASSISTANT GENERAL MANAGER

The assistant general manager as the name implies, is an employee in the
credit union who assist the general manager in implementing decisions made
by the board members.
THE CHAPTER COORDINATOR

The chapter coordinator acts as the manager of the CamCCUL branch
office. He supervises the activities of the CamCCUL network in that chapter
or region. Hence he or she has an obligation to report to the general manager
at CamCCUL’s head office.
THE BRANCH OFFICE COORDINATOR
The branch office coordinator is in charge of supervising the affiliated
external branch offices credit unions located out of the region where
CamCCUL’s headquarter is located.
THE FIELD TECHNICAL ASSISTANTS
The field technical assistants (FITA’s) are responsible for routine checks in
the affiliated credit unions. They are expected to advice the credit unions they
visit on how to manage their resources and to report any case of fraud or

violation of any rule regarding the unions daily or specific operations. They
also take part in compiling audit reports of affiliated credit unions.
THE AUDIT DEPARTMENT
The audit department is headed by an auditor who is in charge of signing
all audit reports. These audit reports go a long way to compare the variances
of results realized in the unions for the previous years and the current year and
in decision making.
THE FINANCE DEPARTMENT

The finance department as the name implies is in charge of the financial
aspects of the cooperative. Members of this department are responsible for
establishing classic accounting operations, the treatment of financial reports
and the establishment of balances. They are also in charge of the enterprises
treasury and the management of worker’s pay. To this department is attached
the legal department in charge of all judicial issues concerned with the
company. This department also plans the budget and takes part in managing
the cooperative resources.
THE HUMAN RESOURCE, TRAINING AND PROJECTS DEPARTMENT

This department is headed by a human resource officer. Members of this
department take part in training interns, organizing seminars and training the
staff in EGM’s. They are in charge of making sure that there is a great level of
evaluation and development of all personnel. Their main mission is to acquire

and conserve talents that will bring in new ideas to the company to contribute
to its growth vis-à-vis its competitors. They also take part in employing new
staff and implementing transfers where need be.
THE ICT DEPARTMENT
The Information and Communication Technology (ICT) department is
headed by an Information technology (IT) technician. Members of this
department assist the affiliated credit unions to install the accounting software.
They also take part in modifying the network topology of affiliated credit
unions. The ensure that the cooperative is easily connected to the public
through the internet and other information technology schemes while incurring
the lowest possible cost.
THE NETWORK OPERATION DEPARTMENT

The network operation department takes charge of internal affairs of the
cooperative such as employee remunerations, employee benefits. The head of
the network department may carryout monthly checks in the unions branch
offices to ensure that the staff are effectively performing their various tasks.
Their main aim is to manage the internal communication of the company and
see to it that there is clear communication between personnel. They make sure
that there is a fair day-to-day administration of the personnel and also make
sure that all employees are in good health. A conducive and social atmosphere
in the company is the duty of the Head of network operations.

CHAPTER TWO
INTERNSHIP ACTIVITIES
The training course was carried out through out a 2 Months period. Section
one of this chapter will explain the chronogram of the internship activities and
section two will contain the justification of this topic.
SECTION ONE: RECEPTION
We began this internship program on the 1 st of July 2019. And taking into
consideration the mode of operation of CamCCUL, we spent more time in
affiliated credit Unions than in the CamCCUL branch office. Before we began
the program, we were inducted by the human resource department at the
CamCCUL head office in Bamenda. In this process I was told what was expected
of us and enlightened on the tasks that lies ahead of us as far as professionalism
is concerned.
2.1.1 CHRONOGRAM OF INTERNSHIP ACTIVITIES
WEEK 1
During the first week of the internship we were welcomed by the branch office
coordinator who later introduced us to the other staff. we received lectures on
aspects relating to cooperative societies and we were given some documents to

go through in order to prepare our minds to begin the internship proper. Some of
these documents were;
 Text relating to the exercise of microfinance activities in Cameroon.

 OHADA Uniform acts relating to the law of cooperative societies.
 The history of CamCCUL.
 The by-laws of CamCCUL.
In addition, we were told about the functions and activities of Micro finance
institutions and the content of the internship course.
WEEK 2
In the second week of the program, we learnt how to control the individual ledger
card and the membership application form. We were told about the various
reasons why the membership application form must be filled completely and the
reasons why the individual ledger card is kept aside from the member’s passbook.
WEEK 3
In the third week of the program, we learnt how to control expenses and the
cooperatives passbooks. We were given tasks to ensure that each expense
effectuated was approved by the required hierarchy and that all expenses were
backed by supporting documents. We also learnt different techniques of tracking
fraudulent transactions. And we learnt how Budget analysis was done with the
use of Microsoft office Excel.

WEEK 4
In the fourth week of this program, we were given the ‘Guide for field technical
assistants’ to guide us in the control process. We took part in the cash count
exercise and it was interesting for us to know why a cash count was necessary at
the end of every accounting day.
We were also involved in a loan recovery exercise for one of the affiliated credit
unions and we noticed that though it was a stressful exercise it is very necessary.
WEEK 5
In week five of the internship, we were trained to match up what we had learnt in
class with what we could find on the field without the use of an accounting
software. we were given the trial balance of some credit unions to derive the
Balance sheet and the income statement. We learnt how to calculate PAR
manually. We also experienced the preparation of financial statements in a
manual credit union. And we learnt how to verify if a credit union was correctly
implementing the COBAC norms or not.
WEEK 6
In the sixth week, we learnt about the importance of an accounting software and
its advantages and disadvantages. We were told about many different accounting
software apart from Alpha microfinance used by CamCCUL. We learnt about the
importance of a passwords in the software and how to record transactions of

deposits and withdrawals. We were chanced to also learn why backup was to be
made at the end of an accounting day.
WEEK 7
In week seven of the program, we learnt how to control bank and liaison
reconciliations. We studied both the horizontal and vertical formats of preparing
a reconciliation statement we also took part in counting and reconciliation stock
of stationary.
WEEK 8
Throughout this week. we worked with the secretary. We were told the
importance of Filing system and the reasons why documents are kept in a
particular order. During this period, I was told why documents could be disposed
only after a minimum period of ten years.
SECTION TWO: JUSTIFICATION OF THE TOPIC

In recent times, there have been recorded liquidity problems in many Credit
Unions like the Njinikom Cooperative Credit Union. Some of these Credit Unions
were revived by CamCCUL but others simply went out of existence. Members of
the CamCCUL network have recently opted out to join other umbrella organs like
RECCUCAM. Least to mention, there are also threats from COBAC to close
other malfunctioning credit unions affiliated to CamCCUL.
All of these then justifies that there is a problem that needs to be solved in other
that wrong decision making is avoided.

PART TWO
THE PRACTICAL PHASE OF THE
INTERNSHIP WORK
This part describes the implementation of the mission including the difficulties
and insufficiencies experienced during the period and also suggestions to solve
the problems identified.

CHAPTER THREE
PRACTICAL PHASE
This chapter will focus on job placement (context and objectives) and the means
deployed by CamCCUL.
SECTION ONE: JOB PLACEMENT
When we got to the Field Technical Department of CamCCUL Akwa, we

discovered that some recommendations of the FITA’s were not implemented –
the main reason which prompted us to write on the topic being examined in this
work. Certain concepts need to be explained and illuminated upon for a better
understanding of what we did.
2.3.1 DEFINITION OF INTERNAL CONTROL

Internal control is an organization’s plan and all its coordinated methods
and measures adopted to protect the assets of the organization, check the accuracy
and reliability of accounted data, promote operational efficiency of the machinery
and human resource and adherence to prescribed managerial policies. This
definition of internal control can be divided into two; financial and non-financial
(administrative) internal control respectively. Financial internal control involves
financial activities including controls over company’s cash receipts and payments
financing operations and company’s management of receipts and payments. Non-

financial internal control on the other hand deals with activities that are indirectly
financial in nature that is, controls over organization’s personnel and operations,
control of fixed assets controls and controls of laid down procedures.
According to the Turnbull report of ACCA, first published in 1999, defined
internal control and its scope as follows:
‘The policies, processes, tasks, behaviors and other aspects of an organization that
taken together;
 Facilitates effective operation by enabling it to respond in an appropriate
manner to significant business, operational financial, compliance and other
risks to achieve its objectives. This includes safe guarding of assets and
ensuring that liabilities are identified and managed.
 Ensure the quality of internal and external reporting, which in turn requires the
maintenance of proper records and processes that generate a flow of timely,
relevant and reliable information from both internal and external sources.
 Ensure compliance with applicable laws and regulations and also with internal
policies’.
Internal controls are policies, practices, procedures, and organizational structures
undertaken to provide assurance that an organization’s business objectives will
be achieved and undesired risk events prevented, detected and corrected, based
on either compliance or management initiated concerns. Research was carried out
on this topic to show how internal control being a management tool can yield
significantly positive results with regards to company objectives and profitability
and what negative effects can be acquired if neglected.

2.3.2 INTERNAL CONTROL AS A TOOL FOR EFFECTIVE

PERFORMANCE
Among all other tools used by management, internal control is significantly
very important and it should not be neglected no matter the business sector. For
internal control to be effective, the objective of the organization should be stated
clearly so that the organizations members including the corporate management
can understand for efficiency. All activities are usually based at achieving
planned standards. These standards are derived from stated objectives and have
many characteristics. Standards are targets which must be achieved and for it to
be effective, they must be stated clearly and related logically to the various
departments in the organization.
Control will be effective when clear standards are established for the variables
which are to be controlled, when information is available to measure the
established objectives and when management can take corrective actions
whenever the variables deviates from its desired results.
2.3.3 STEPS OF THE CONTROL PROCESS

Control is made up of several essential elements as follows;
a. Setting standards and methods for measuring performance.
The standards must be specific in meaningful terms by the cooperate
management or control manager and described to the employees who are to carry
out the control. When clear standards are set and methods employed to carry out
the control, performance will be easily measured because deviations would be
easily noticed during activity.

b. Measuring the performance

This is an ongoing or repetitive process which is carried out by the control
team to ensure that deviations are avoided. Performance must be measured in all
aspects to ensure effectiveness and efficiency. Most of the times, performance is
measured in terms of the quality and quantity of output generally or individually.
c. Determining whether performance matches with standards
It is one of the easiest steps in the process. It is when results are compared to
the established targets previously set. If performance matches with the target,
management will assume that ‘everything is under control’ but if performance
does not match with the targets, management will take corrective actions to
strengthen the process.
d. Taking corrective actions
This step is carried out in case where performance falls short of the standards
and the analysis indicate that corrective measures are required. This corrective
actions may involve a change in one or more activities of the organizations
operations or change in the standards originally set.
The control function in an organization is being broken down into three types
namely;
 Preliminary control
 Concurrent control
 Feedback control (appendix 3)

2.3.4 IMPORTANCE OF CONTROL

Control is a tool for accountability for good performance and is very
important as it concerns the organizations survival. Some of these importance are;
It enables management to detect changes that may affect the organizations
services or products. They are able to manage the threats or the opportunities
created by these threats.
In this case, If CamCCUL notices at a certain point in time that, a credit Union is
situated in an area with very frequent electricity cuts, that hinder the credit union
from correctly recording their transactions and subsequently reducing effective
performance, it may be recommended that a generator be bought.
Also, control can help top management to manage the increasing
complexity of management. This is because today’s vast organization requires a
much more formal and careful approach. Such increasing complexities include,
competition, many different departments, variety of services etc. To solve such a
problem CamCCUL may advise the credit union in question to organize a board
meeting to plan for marketing strategies, diversified product lines and services
must be watched very closely to ensure quality and quantity output.
Another importance of internal control in the case of CamCCUL is that it
helps the organization to verify if their affiliates are correctly performing their
delegated tasks like respecting COBAC norms and implementing correct ratios
in their financial statements. With such a system, CamCCUL can easily perform
its role of supervision.

The control functions involve the implementation of the methods that

provide answers to the three basic questions of what are the plans and expected
results. By what means can the actual results be compared to the planned results?
And what corrective actions is appropriate from which authorized person? In
answering this questions, CamCCUL will be able to take corrective answers to
the questions and hence good output and achieve their objectives.
2.3.5 OBJECTIVES TO BE ACHIEVED BY CamCCUL DURING CONTROL
SESSIONS
The objectives of control in the case of CamCCUL are to;
 Ensure that planned performance conform to planned results.
 To check performance and detect any deviation that may occur and take
corrective actions to solve the problem.
 To ensure that affiliated credit unions respect COBAC norms.
 To ensure that affiliated credit unions minimize cost and maximize income.
SECTION TWO: MEANS (TOOLS USED) AND OUTCOME
3.2.2.1 MEANS
This section will explain the various means we used to carry out my research
in this topic and the outcomes of the research. The organizations mean we used
included;

HUMAN MEANS
While I carried out this internship, I was given chances to access all the
CamCCUL workers. I was opportune to ask questions to other employees aside
from those who were appointed to supervise my stay in CamCCUL. This went a
long way to helping me to gather information that was useful in writing this
report. Through this means I could obtain information concerning the history,
functioning, and the evolution of CamCCUL easily.
QUESTIONNAIRES
These were forms we prepared to be used for the acquisition of extra information
especially for affiliated credit unions. Though not all credit unions filled the form,
it was quite an interesting means for us to acquire knowledge. See appendix.
MATERIAL MEANS
During the internship I was granted permission frequently to use computers. It
was an important means for me to process all the information I had gathered.
THE INTERNET
Most of my definitions and methods of research were derived and applied with
the help of the internet. Some vital information about CamCCUL was gotten from
the internet too.
CLASS ROOM NOTES AND TEXTBOOKS

Notes from class lectures also played a significant role in the establishment of this
report. Some textbooks were of great help to me to achieve this internship report.
(see bibliography)
3.2.2.2 OUTCOME
My key Findings indicated that;
 Credit unions affiliated to CamCCUL have structured control environment
which include policies that guide work processes and roles and
responsibilities that highlights each employee’s responsibility but some
credit unions do not always respect certain aspects of these policies. This has
a positive effect on financial performance of the credit unions that respect
these policies since employees work in line of their duties under a control
policy and practice this also promotes effective delivery of employee
performance and thus a positive result in the financial performance of the
credit union in the long run. and a negative effect on the credit unions that
neglect CamCCUL’s advice
 There is the presence of risk assessment processes used by credit unions to
monitor and evaluate the risks involved in the line of work. Some of the credit
unions affiliated to CamCCUL have adequate capacity to manage risk,
review risks as and when it occurs, communicates risk effectively and
evaluates the consequences of the risk on work process.
This leads to a reduction of risks in work process and its long term effect on
financial risks and losses thereby promoting a good financial
performance of the credit union.

CHAPTER FOUR
CRITICAL APPROACH
This chapter presents a summary of major findings of this study, it sets
out the relevant conclusions and makes recommendations for practice and
suggestions.
SECTION ONE: DIFFICULTIES AND INSUFFICIENCES
4.1.1 ON THE SIDE OF THE COMPANY

CamCCUL does not have branch offices that are close to all credit union.
FITA’s would sometimes have to travel over long distances for control sessions
to perform their responsibilities.
Maintaining adequate supporting documents is one problem the internal
auditor faces. The filing systems in some credit unions are poor in such a way that
it takes so much time for the correspondent to locate and give to the controller
when need be. As a remedy the controller should emphasize on the maintenance
of proper evidence.
In some credit unions, loans where granted without following the normal
procedures.
Also in most cases, the actual expenditures did not portray what was meant
to be in the initial budget.

During cash counts and reconciliations, it was frequently noticed that there
were IOU balances (I Owe You). This kind of balance occurs when cash enters
the credit union without passing through a cash receipt.
CamCCUL faces a lot of problems after compiling mid-year audit report.
When this reports are resent to Douala, some arrive destroyed and shattered.
Some Credit Unions ignore some of the COBAC norms. Hence operating
against the policy established by COBAC.
Some credit unions are very large in size that some aspects of control
cannot be fully implemented considering that all aspects of the credit union have
to be examined and controlled.
During some control sessions, it is realized that some staff are on leave
meanwhile they are needed to answer questions with regards to the control. As a
remedy, Control sessions should be programmed in a way that it won’t occur in
the absence of any employee in the credit union in question.
Some credit unions lack generators hence depriving the controllers from
performing their duties as financial reports cannot be printed for analysis during
control sessions when there is no electricity. This slows down the control process.
Transactions are unable to be recorded when there is no electricity and hence
credit unions are unable to record transactions when they occur in the systems.
This makes the job more tedious for controllers.
Some credit unions do not follow risk management procedures especially
in the area of loan management. Sometimes the loan application forms are not
filled correctly or some vital information like the location plan is neglected. In

the case were this debt becomes delinquent it is the CamCCUL FITAs who bears
the stress of finding the delinquent member and trying to recover the loan.
4.1.2 ON THE SIDE OF THE INTERN

The internship was carried out from July to September during the rainy
season. From time to time I had to go to work late and soaked in rain most of the
time because of the heavy rains.
Some credit unions were difficult to locate because they lacked sign boards.
We had to stress several times to locate such credit unions in the days when I had
to work there.
SECTION TWO: RECOMMENDATIONS
Due to the difficulties faced in the organization, we decided to propose

some remedies to solving some problems. Our proposals are;
4.2.1 ON THE SIDE OF THE COMPANY

We think control sessions should be organized in a way that it wouldn’t
occur in the absence of any staff of the credit union in question. This will help the
FITA’s to obtain any information they want from any staff during any control
session.
CamCCUL should emphasize on the importance of filing systems. In the
credit unions concerned a good filling system with the use of files should be
established. By this the FITA will not have to stress or waste time waiting for
documents to be searched for.

CamCCUL should insist on the necessity of a generator in the credit union

premises. This will help assure the FITA that the financial documents needed for
the control are already available for him to use for his analysis.
We think CamCCUL should carry out feasibility studies in an area before
a credit union branch Is established. So that areas with frequent electricity cuts be
avoided.
CamCCUL should open more branch offices that will serve the purpose of
controlling those credit unions that exist in the suburbs. This will save the FITA’s
the risks and extra stress of travelling long distances for control sessions.
Audit reports to be sent to any other branch should be transported through
a private means than through a public means so that they cannot be trampled upon.
CamCCUL should consider merging those credit unions who are bankrupt
rather than allowing them close down and tarnish the reputation of CamCCUL.
4.2.2 ON THE SIDE OF THE INTERN

CamCCUL should ensure that all credit unions have a board with its name,
registration number and motto on it. This will help members locate the union
easily and it will serve as a means for advert.
We think CamCCUL should extend the internship and education service to
all its branches. As of now it exists only in Bamenda. And interns have to travel
to Bamenda for inductions and certifications
We also recommended that the management or board of directors of credit
unions should exert collective and effective efforts in identifying the problems
stated in the controller’s end report and yield to his/ her suggestions.

GENERAL
CONCLUSION
The study sought to assess the effects of internal control systems on the financial
performance of some credit unions affiliated to CamCCUL. Specifically the study
was guided by the following objectives;
 To assess the internal control environment in credit unions.
 Analyze control activities within credit unions.
 Examine the implementation of decisions made by the field technical
assistants. The study adopted descriptive research design using both
quantitative and qualitative approach and some data was collected by use
of a structured questionnaire.
Conclusions
The findings of this study suggests that the internal control system is one
significant area credit unions should give attention to in order to enhance their
financial performance. It can be further concluded that effective internal control
systems affect positively the financial performance of credit unions because
through recent times, affiliated credit unions who yielded to CamCCUL’s
suggestions have exceedingly progressed. Therefore, credit unions have to invest
in establishing strong internal control systems to realize better financial
performance. The model can be used by organizations management to focus on

key aspects of internal control environment and activities that could result in
improved financial performance. Risk management also plays a significant role
in financial performance and hence managers of credit unions should entrench
risk management to better financial performances of their unions. From the above
conclusion, strong emphasis must be made on internal control decisions because
these decisions are made after thorough examination of activities and financial
analysis. This control measures must be entrenched in all levels of the
organization by the managers to enhance organization’s financial performance.
Due to reasons beyond my control, I could not study risk management procedures
considering that it is a tool that works in hand with internal control procedures.

APPENDICES
Appendix 1: ORGARNIZATIONAL CHART
Source: CamCCUL Bamenda

Credit Union accounting flow chart;
APPENDIX 2: THE MANUAL ENVIRONMENT
Cash Deposit Cash Cash General

Ledger Balance Sheet
Slip Receipt Book in
Income
Cash Withdrawal Payment Cash Book Statement
Slip Voucher out
Letters, Advices,
Statements, etc. General Journal
Individual Ledgers
and passbooks Other reports,
Loan Portfolio,
coverage report
and cash flow etc.
Source: Guide for FITA’s CamCCUL Douala

APPENDIX 3: PHASES OF INTERNAL CONTROL
Source: www.hvaccomfort.com

APPENDIX 4: THE QUESTIONNAIRE

Internal Controls Questionnaire
I am Kowsi Tingume Marc, a student accountant at Institut Universitaire Du Golfe De Guinee (IUG) enrolled
under the Advanced School of Management (ESG) and currently undergoing an internship program with
Cameroon Cooperative Credit Union League (CamCCUL). I am conducting a research project to investigate
the impact of internal control on microfinance institutions operating under the CamCCUL network. For the
purpose of collecting the data, your collaboration is expected to fill the questionnaire below. The name of
your credit union will not appear in the final results and all information collected will be used only for the
purpose of the research. Thank you for your collaboration.
Questionnaire guide
A “Yes” indicates that good internal controls are put in place and/or practiced.
A “No” indicates those areas where improvements on internal control should be made.
An “NA” indicates the control is not applicable to this Credit Union.
An “NS” indicates you’re not sure about the status of the control in question.
Control Environment Yes No NA NS

1. Has management established a mission statement, set realistic and measurable
goals, and developed plans to meet its objectives?
2. Do you personally think there is any need for control sessions from the
unions umbrella organ?
3. Does management in your credit union exhibit high ethical values, personal and
professional integrity, and compliance with legal policies?
4. After control from the supervisory board, is a report usually submitted to the
board of directors?
5. Do all staff have the knowledge, training, and skills necessary to perform their
jobs competently?
6. Does the credit Union have the time, tools, and resources to effectively
accomplish its mission and objectives?
7. Are feedbacks of the supervisory board implemented?
8. Do board members intervene during daily operations?

General Operating Controls Yes No NA NS

1. Does the credit unions have documented policies and procedures for its primary
operational processes?
2. Are the credit union policies and procedures relevant, adequate, effective, and
current?
3. Is someone in the credit union responsible for performing a monthly
review/reconciliation of its accounts and reports for accuracy?
4. Are unreconciled or unrecognized financial transactions researched and corrected
in a reasonable period of time?
5. Is the staff performing the reconciliation separate from the staff initiating and
finalizing transactions?
6. If departmental fund deficits are anticipated, are appropriate levels of
management notified timely and appropriate corrective action taken?
7. Does the department have backup procedures for key processes?
Provide an explanation or comment about any “N”, “NA”, or “NS” responses above:
Cash Controls Yes No NA NS

1. If the credit union has petty cash funds, is one person assigned custodial
responsibility for that fund?
2. Are petty cash disbursements supported by original receipts which verify the
amount disbursed?
3. If the credit union has petty cash funds, are those funds counted, reconciled, and
replenished on a monthly basis by someone other than the custodian?
4. If the department has revenue-producing activities like Mobile money, western
union etc. are there procedures to establish accountability for cash and related
items immediately upon receipt? Examples: cash register, pre-numbered receipts
etc.
5. Are cash and related items physically safeguarded against theft and loss?

6. Is the employee who is responsible for preparing the cash receipts deposit
separate from the employee responsible for reconciling cash to department
accounts or recording sales in department records?
7. Are cash shortages identified, analyzed, recorded, and reported?
8. Do you deposit income within one day of receipt?
9. Does someone independent of the cash receipting process review and approve
voids and refund transactions?
Expenditure Controls Yes No NA NS

1. Are the unions funds used only for purchases of goods or services that support
the Credit Union’s mission?
2. Are the duties for authorizing purchases, receiving goods, approval of payments,
and reconciliation of the unions operating reports separated between two or
more employees?
3. Are all expenses correctly approved by hierarchy before effectuated as
appropriate?
4. Are purchase requisitions initiated and approved by employees specifically
authorized to perform this task?
5. Are the purchase requisitions initiated and approved prior to the actual
purchase?
6. Are purchase requisitions, travel authorizations, and other payment requests
compared to the unions budget balance to ensure the expenses are within the
budget limits?
7. Are telephone bills, photocopy machine logs, and other related stationary
controlled to ensure that personal use is kept to a minimum?
8. Do invoices receive appropriate supervisory approval before payment?

9. Are telephone bills, copy machine logs, and fax logs reviewed to ensure that
personal use is kept to a minimum?
10. Are the purchase, storage, and issuance of supplies properly controlled to prevent
over-purchasing, pilferage, deterioration, and damage?
Payroll Y N NA NS
1. Are time sheets approved by a supervisor who has direct supervisory
responsibilities over the person whose time is being approved?
2. Does the employee designated to collect the departmental time sheets and
complete the payroll recap sheet ensure that all time sheets are properly
completed, accurately totaled, and signed by the appropriate supervisor?

3. Are all payroll documents completed in ink so that any changes can be detected?
4. Does departmental management review, sign, and date the payroll recap sheets
to document that staff are paid according to wage contracts and terminated
employees are not being paid?
5. Do you notify the HR/payroll department immediately of employee terminations
– including student worker terminations?
6. Are departmental payroll expenditures reviewed by management for accuracy
and compared to budgeted amounts?
7. Are departmental procedures in place to ensure that overtime hours are planned
or controlled so as not to become excessive?
8. Are departmental procedures in place to ensure that leave taken is properly
approved and planned so as not to create a hardship on others’ workloads?
9. Are departmental procedures in place to ensure that student employees do not

average more than 20 work hours a week while enrolled in classes?
10. Are all staff members familiar with USI’s policies regarding time off, compensation
and payroll procedures in sections D and E in the USI Handbook?
Provide an explanation or comment about any “N”, “NA”, or “NS” responses above:
Information Technology Yes No NA NS

1. Are all staff members familiar with Information and Communication Technology
and the use of the accounting software used in the union?
2. Are passwords safeguarded from unauthorized access and changed every 60
days or less?
3. Are employees reminded to back up their current work often and to back up the
data on all directories on a regular basis?
4. Do employees log off of their computers, or lock the screen with a password
protected screen saver, when they will be away from their computers for any
extended amount of time?
5. Are all copies of software used by the department appropriately licensed?
6. Is there a process in place to authorize and control the use of laptops or other
data equipment of the premises?
Source: Student efforts

APPENDIX 5: THE AUTOMATED ENVIRONMENT
Cash Deposit Cash Cash in General

Receipt Ledgers Balance Sheet
Slip Journal
Income
Cash Withdrawal Payment Cash out Statement
Slip Voucher Journal
Letters, Advices,
Statements, etc. General Journal Individual Ledgers
cards and
passbooks Other reports,
Loan Portfolio,
coverage report
and cash flow etc.
Non Cash Journal
Source: Guide for FITA’s CamCCUL Douala

BIBLIOGRAPHY
PUBLISHED BOOKS;
 English/French dictionary by KLETT POCHE.
 Business organization and management by GP NUNVI, 4th edition 2008.
 Raid and Ashley 2012.
 Awe 2005.
 Text relating to the exercise of microfinance activities in Cameroon.
 OHADA Uniform acts relating to the law of cooperative societies.
 The history of CamCCUL by CamCCUL.
 The by-laws of CamCCUL by CamCCUL.
INTERNET
www.hvaccomfort.com
www.en.wikipedia.or/management.htm
www.Bookboon.com

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UNIVERSITY INSTITUTE OF THE GULF OF GUINEA

HIGHER NATIONAL DIPLOMA

INTERNAL CONTROL AS A RELIABLE

Written and presented by

PROFESSIONAL SUPERVISOR ACADEMIC SUPERVISOR

This is to certify that this report, titled ‘INTERNAL CONTROL AS A

Under the supervision of:

PROFESSIONAL SUPERVISOR ACADEMIC SUPERVISOR

SIGNATURE: ………………………....... SIGNATURE: ……………………….

DATE: …………………………………… DATE: ……………………………….

PETER NYUIBI TINGUME

VICTORINE YEMBI TEH

WRITTEN AND PRESENTED BY KOWSI TINGUME Page ii

 I wish to express my heartfelt gratitude to my academic supervisor, Mr.

WRITTEN AND PRESENTED BY KOWSI TINGUME Page iii

Due to an increasing demand for professionals in Cameroon, and in order

Ecole Superieure de Gestion (ESG) also known in English as The

WRITTEN AND PRESENTED BY KOWSI TINGUME Page iv

WRITTEN AND PRESENTED BY KOWSI TINGUME Page v

The globalization process, the complexity of banking transactions and the

WRITTEN AND PRESENTED BY KOWSI TINGUME Page vi

Le processus de mondialisation, la complexité des transactions bancaires et

WRITTEN AND PRESENTED BY KOWSI TINGUME Page vii

Name Cameroon Cooperative Credit

National Credit Council EMF/2011/016 of 22/02/2011

WRITTEN AND PRESENTED BY KOWSI TINGUME Page viii

AGM Annual General Meeting

WRITTEN AND PRESENTED BY KOWSI TINGUME Page ix

Identification Form ................................................................................. viii

List Of Abbreviations .............................................................................. ix

GENERAL INTRODUCTION ........................................................................ 1

Problem statement .................................................................................. 1

Objectives of the study ............................................................................ 2

General objectives: .................................................................................. 2

Specific objectives: .................................................................................. 2

Structure in parts ..................................................................................... 3

PART ONE: INTERNSHIP ENVIRONMENT ................................................ 4

CHAPTER ONE: GENERAL PRESENTATION OF CamCCUL.................. 5

WRITTEN AND PRESENTED BY KOWSI TINGUME Page x

Section One: The Creation and Evolution of CamCCUL ........................ 5

Section Two: Organizational structure .................................................... 7

CHAPTER TWO: INTERNSHIP ACTIVITIES ............................................ 11

Section One: Reception......................................................................... 11

section Two: Justification of the topic .................................................... 14

PART TWO: THE PRACTICAL PHASE OF THE INTERNSHIP ............... 15

CHAPTER THREE: PRACTICAL PHASE ................................................. 16

Section One: Job Placement ................................................................. 16

3.1.1 Definition of Internal Control ......................................................... 16

3.1.2 Internal Control as a tool for Effective Performance .................. 18

3.1.3 Steps of the Control Process........................................................ 18

3.1.4 Importance of Control ................................................................... 20

Section Two: Means (Tools Used) and Outcome ................................. 21

3..2.1 Means .......................................................................................... 21

3.2.2. Outcome ...................................................................................... 23

CHAPTER FOUR: CRITICAL APPROACH ............................................... 24

Section One: Difficulties and Insufficiences .......................................... 24

4.1.1 On The Side of the Company ....................................................... 24

4.1.2 On The Side of the Intern ............................................................. 26

WRITTEN AND PRESENTED BY KOWSI TINGUME Page xi

Section Two: Recommendations........................................................... 26

4.2.1 On The Side of the Company ....................................................... 26

4.2.2 On The Side of the Intern ............................................................. 27

GENERAL CONCLUSION ......................................................................... 28