ABSTRACT
This research work was embarked upon with a view of providing an insight into the “Internal Control System, How Effective as a Means of Reducing the Incidence of Fraud in an Organisation”, for this purpose Nigerian Bottling Company Plc, Agidigbin Road Opposite LTV, Lagos State has been chosen as a case study.
This research work was divided into five (5) chapters for easy comprehension and as is it for this kind of work.
The first chapter, which serves as an introduction, start by explaining why the research was been carried out, it usefulness and the area of problem statement.
The second chapter, which is review of literature defined “Internal Control System, brief history of the case study, meaning of fraud, types of fraud, causes of fraud, control of fraud and etc was considered in this chapter.
The third chapter, tells us what research methodology is, method of data collection, the research design, the approach to the research work and the strategies. The used of questionnaire and brief interview served as the primary data while the used of textbooks and journals served as the secondary data collection.
The fourth chapter, the hypothesis was tested using the data collected in chapter 3 above, issued out to the sample selected thereby formed the observation of frequency.
The fifth chapter which was the last chapter which also served as conclusion part formed the summary, conclusion, recommendation and also provided suggestion for further research. The result of our effort would be laid before you, it must be stressed that our discussion was based on mostly what is practicable on the field and every detail of Internal Control System.
CHAPTER ONE
1.0 INTRODUCTION
There is barely any organisation in our society today that cannot be associated with one type of fraud or the other. Manufacturing industries, banking industries etc have all experienced a high propensity of fraud in recent time. In fact, activities of fraudsters in our organisations are highly unpredictable and their methods of operations keep changing.
The case and issue of fraud in Nigerian economy has taken a different dimension, which if not attended to would cause a wreck in the total economic potentials. Fraud is not only found in the private sector of the Nigerian economy but also the public sector. As a matter of fact, the motive (for almost all aspirants) behind serving in a public office is to go and fraud to enrich themselves.
If this end is not properly monitored, then the future of the Nigerian economy would be in shamble. There is therefore he need to give a serious attention to the design of internal control measures that would help to curb the activities of fraudsters.
From a more professional perspective and according to auditing guidelines published by the institute of chartered accountancy (England and Wales).Internal Control System is defined as “the whole system of control, financial and otherwise, established by the management of an enterprise in an orderly and efficient operations to secure it assets, ensure compliance with management polices and secure as far as possible the completeness, and accuracy of the records.
Conclusively, Internal Control System are prescribed practices which the management of an enterprises develop, and adopted in order to facilitate the smooth and efficient running of an enterprises of order and mainly to the present in all the operations of the enterprise and for security of its assets.
The types of controls available as contained in the appendix to the operation auditing guideline on internal control, with reference to the appendix are ten (10) types of control management could use in controlling its organisations. They are as follow:
i. Organisation control
ii. Authorization and approval
iii. Segregation of duties
iv. Arithmetic and accounting control
v. Supervision control
vi. Personal control
vii. Management control
viii. Acknowledgement of performance and
ix. Budgeting control
The beauty of any control is for it to actually work efficiently and effectively in practice. So, it is not enough to design a control but to make sure that it functions as planned.
The meaning of each would be explained and it area of application are explained below:
1. Organisation Controls
This is a control set up by the management which involves having a plan of organisation which should defined and allocate responsibility where a specified person is in charge of a particular function who might be called the responsible who is their responsible and automatically answerable for that function.
This control also ensure that line of reporting are known meaning that an employee should the precious powers delegated to him, the extent of his authority and to whom he should report. Example the correct operation of internal control may be delegated by the board of specific management personnel and to internal audit department.