The impact of internal control system on the financial management of an organization (a case study of the nigeria bottling company plc, enugu)

Thesis Overview

<p> 1.0 INTRODUCTION<br>1.1 BACKGROUND OF THE STUDY<br>Every organization both profit or non-profit organization has its<br>objectives and goals in mind to achieve. For the non-profit making<br>organization, their goal is to satisfy the social need of the citizens<br>and in the effort to achieve these purposes supervision more often<br>than not play a vital role.<br>The size and scope of these organizations have sometimes<br>made it hard for the executors to exercise personal and first hand<br>supervision of operation. It is in this light that internal control<br>established by management is initiated. For an organization to<br>carryout its business there must be some factors put in place for<br>the smooth running of the organization like materials, machines,<br>money etc.<br>These need to be well co-ordinated in order for the success of<br>the organization to be achieved. These factors are used by a group<br>of persons known as management. Neither can management exists<br>without an organization both are inseparable. The system of<br>12<br>internal control provides assurance to management of the<br>dependability of the accounting data used in the decision making of<br>the organization<br>It has been discovered that due to lack of internal control<br>several banks have been discovered to have defrauded its<br>customers mostly foreign investors, Having discovered this, banks<br>now take extra precaution before clearing a cheque because of<br>rampant incidence of fraud and forgeries which have placed bank.<br>Loss on average of N1m each working day of the year in Nigeria.<br>Due to this challenges, CBN issued a directive to banks to increase<br>its capital base to N25 billion.<br>Management use internal control as a tool to check it staff due<br>to the fact that managers are not able to monitor the activities of<br>the organization. It therefore adopts the internal control in such a<br>way that the system checks itself and any irregularity within the<br>system is been detected and corrected.<br>To ensure that the system checks itself, management could<br>use devices such as segregations, supervision of work and<br>acknowledgement of performance. The effective arrangement and<br>13<br>implementation of this control system would ensure proper<br>management.<br>1.2 STATEMENT OF PROBLEM<br>We might not really understand the impact of internal control<br>system in an organization until probably we run an organization<br>void of internal control system.<br>The absence of adequate internal control measures exposes the<br>financial management of an organization to certain threats such as:<br>– Incorrect financial statement and /loss of the<br>companys’assets.<br>– Stealing and mis-management of organizational vital<br>documents which may be done by an employee to take undue<br>advantage.<br>– Incorrect and unreliable financial records which may lead to<br>loss of organizational integrity.<br>– Non implementation of accounting policies in consistent<br>with the applicable legislation appropriate in presentation of<br>financial statement.<br>14<br>1.3 OBJECTIVE OF THE STUDY<br>The overall purpose of this research work is to evaluate and<br>determine the impart of internal measures in an organizational<br>financial management.<br>A well defined organizational structure helps management to<br>run the business in an orderly manner. This enhance operational<br>and efficiency, which is the important features of internal control.<br>Specifically, this research work stands to achieve the following<br>objective.<br>1. To determine the impact of internal control to proper use of<br>organizations funds and assets.<br>2. To ascertain whether perpetration of fraud and losses of<br>Revenue in an organization are as a result of weakness in internal<br>control system.<br>3. To ensure whether a true reflection of organizational activities<br>are presented in financial statement where there is an active<br>observation of internal control measures.<br>15<br>4. To determine the relationship between internal control<br>measures and proper keeping of accounting records. <br></p>