Effect Of Internal Control System On The Financial Management Of An Organisation (A Study Of Nigeria Bottling Company Plc, Enugu)

ABSTRACT

This study investigated the impact of internal system on the financial management of an organization. The main problem can be identified as lack of internal control on the financial management of the organization that affect profitability and service quality of a firm. The major objective of this study is to determine the effect of internal control to proper use of organizational funds and asset, to ascertain whether perpetration of fraud and losses of revenue in an organization are as a result of weakness in the internal control, to ensure whether a true and fair reflection of organizational activities are presented in the financial statement whether there is an active observation of internal control measures and to determine the relationship between internal control measure and proper keeping of accounting records. A survey research design was adopted for this research study and a sample size was selected using Yaro Yamane sampling technique as data used were obtained from both primary and secondary sources. Research questions were formulated out of which three hypothesis were formulated using analysis of variance(ANOVA) method at 5% level of significance and the P- value  was also used for comparison between calculated value of significance of the two groups. The finding from the analysis indicates that internal control measure enhances true reflection of organizational activities as presented in the financial statement, Internal control measures ensures proper use of organizational assets and fund, Perpetration of fund and losses of revenue in organization are as a result of weakness in the internal control system. It also recommends that the management, internal audit department as well as the account department to the overall management of the organization should be focused on insuring the safety of assets and soundness of their operation.

TABLE OF CONTENTS

Cover page                                                                                                                  i

Tittle page                                                                                                                   ii

Declaration                                                                                                                  iii

Certification                                                                                                                iv

Dedication                                                                                                                  v

Acknowledgement                                                                                                      vi

Abstract                                                                                                                      x

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study                                                                               1

1.2       Statement of Problem                                                                                     3

1.3       Objectives of the study                                                                                   4

1.4       Research Questions                                                                                         4

1.5      Research Hypothesis                                                                                        5

1.6       Significance of the Study                                                                               5

1.7       Scope of Study                                                                                               6

1.8       Definition of terms                                                                                        6

CHAPTER TWO

REVIEW OF LITERATURE

2.1 Conceptual Framework                                                                                         8

2.1.1 Concept of Internal Control                                                                              8

2.1.2   Internal Control                                                                                               9

 2.1.3 Roles and Purpose of Internal Control                                                             10

2.1.4 Types of internal control                                                                                    11

2.1.5 Essential Features of Internal Control in Financial Management                      13

2.1.6 Internal Control in Financial Institute and Statutory Guideline as a Tool

Against Fraud and Distress                                                                                        15

2.1.7 Bearers of Internal Control Responsibility                                                        15

2.1.8 Key Success Factors of a Financial Institution                                                  16

2.1.9 Element of a Good Internal Control                                                                  17

2.1.10 Internal Check                                                                                                 18

2.11 Relationship Between Internal Auditing and Internal                                       18

2.12 Management and Control System                                                                      19

 2.2 Theoretical framework                                                                                         20

2.2.1 Stewardship Theory                                                                                           20

2.2.2 Social Control Theory                                                                                        21

2.3 Empirical review                                                                                                   22

2.4 Limitations                                                                                                            23

CHAPTER THREE

RESEARCH METHODOLOGY

3.1       Research design                                                                                              25

3.2       Study area                                                                                                       25

3.3 Population of the Study                                                                                        26

3.4 Sample Size and Sampling Technique                                                                  26

3.5       Sources of Data                                                                                              27

3.5.1    Primary source                                                                                                27

3.5.2    Secondary Source                                                                                           27

3.6       Data collection instrument and procedure                                                      27

3.6.1    Personal interviews                                                                                         27

3.6.2    Questionnaire                                                                                                  27

3.6.3    Validation and reliability of the instrument                                                    28

3.7  Data analysis techniques                                                                                      28

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS

4.1 Data Presentation                                                                                                  29

4.2  Testing of Hypothesis                                                                                          39

4.2.1  Hypothesis One                                                                                                            39

4.2.2   Hypothesis Two                                                                                               40

4.2.3      Hypothesis Three                                                                                          40

4.3   Discussion of Findings                                                                                       41

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION

5.1 Summary of findings                                                                                            43

5. 2  Conclusion                                                                                                          43

5.3 Recommendations                                                                                                44

REFERENCE

APPENDIX 

APPENDIX 1