Evaluation Of Internal Control System In Public Sector

This research work has been able to assess the type of internal control system in public sector and how they operate bringing to light their strength and weakness. It was revealed that internal control is the back bone of a sound system of control in every organization. Application of internal control has help to prevent the level of fraud and falsification of documents. It also shows that internal control is an effective tool for management of organizational resources. The researcher shows that organization have a good system for safeguarding its assists for them to ensure that my arithmetic and accounting accuracy of transaction are always confirmed in as much as they carryout supervision of staff to comply with the well designed organizational chart is established by the management. For the purpose of this research work, the researcher made use of questionnaires, interview and research assumption of collect relevant information. Having concluded this research work to its logical conclusion, the management should ensure that only qualified and competent staff are employed and to ensure that they are placed on their right jobs. There should be a well defined and easy to understand organizational chart to show areas of responsibilities and protocols for operation.

Introduction

1.1 Background of the Study

The federal capital development authority has a parastatals and self accounting unit under the territory and controls various votes under head and sub-head due to the fact that there is a huge financial involvement for the provision of infrastructure, social amenities and other various activities in the city.

It is pertinent to note that such a financial project needs to be maintained through the organization of internal control system. Some of their financial function is centralized purely on the department on financial and economic development of federal capital development authority. In the middle, great land owners would not manage their own land but would appoint persons to manage the land for them. Similarly, today limited companies which are owned by their shareholder would not be managed by them by director appointed by shareholders. So, also the public own central government resources, including the nationalized industries are managed by the government and person appointed by government.

The role of internal control in an organization cannot be over emphasized because it explain organizational system or procedures which provide s reasonable assurance that error and irregularities are prevented or detected in appropriate time, effective internal control will induce external auditors to rely on the financial data of an organization the purpose of internal control is to help safeguard, prevent waste and fraud.

1.2 Statement of the Problem

In spite of the advantage of internal control system in government parastatals, internal control system is likely to face the following problems.

Internal control system through established by the assets and management policy to safeguard the assets and secure the completeness and accuracy of records, how true is this in public sector particularly the federal capital development authority.

Abiye in view of human and financial resources committed to what internal control can measure are in place to ensure there safety.

1.3 Objective of the Study

The following seeks to achieve the following objectives

To identified the type of internal control in the federal capital development authority.

To find out the extent of which internal control is applied in the public sector with particular reference to the federal capital development authority.

To prevent fraud and embezzlement in the public sector through effective internal control.

To make suggestion and recommendation on how to improve its application.

1.4 Research Questions

The study with the series of analysis has brought the following question.

How will staff of the federal capital development authority be able to state the type of internal control in the organization?

Does the staff have any idea on evaluating the extent at which internal control is being applied in the day to day activities?

Can internal control be an instrument for detection and prevention of fraud in the public sector?

Are they ready and determined to change to new method that will be identified by the researcher or static to their old ways of doing things?

1.5 Statement of Hypothesis

Before formulating the hypothesis, we need to consider some likely problem to be encountered during the course of the study.

The hypothesis is an assumption that may or may not be true, in effect there is need to verify the correctness of such assumption. The test can be either be accepted or rejected, thus a population under review or consideration.

Hypothesis must be tested.

HO: is the null hypothesis
HI: is the alternative hypothesis

HO: is the correlation that the evaluation of internal control system does not prevent fraud in the public sector.

HI: is the correlation that the evaluations of internal control system prevent fraud and update the internal control officers" knowledge in the management of organization.

1.6 Significance of the Study

The following constitute the significance of the study:

The study will help to improve operation of the capital development authority and other similar organization.

The significance of the help to reveal the relevant of internal control in organization with particular references to federal capital development authority, Abuja.

These studies will also b of help to the federal capital development authority and other related organization as to show errors and fraud and other irregularities that could be easily detected and prevented.

To assist the researchers to satisfy the requirement for the award of advance diploma in accounting.

1.7 Scope of the Study

This study covers the internal control system of the federal capital development authority. The essence of these projects is to evaluate and ascertain the effective of internal control on the operation of the public sector.

The scope of the study is mainly to focus attention on how organization operates their internal control system and the impact of internal control system to public sector.

The scope is also to determine how internal control system prevent fraud in the public sector and to discover how internal control system check or control system and in determining their performance in terms of accountability and prudently so as to prevent distress of the institution in future.

1.8 Definition of Terms

For more clarification of those who are non-accountants who might find this project relevant in addressing none of their internal control measures the following.

Terminology is defined to broaden their knowledge inn the use of such words. Such words are accounting, system, management, auditing, fraud and internal audit.

Accounting:

Is an information processing system that provide quantitative information, primary financial in nature, about economic activities that are intended for rationalizing decision making. (Ekwere, 1997:1)

System:

Is defined as an entity (a body) having sets of elements or compounds joined together to performed specific functions, either individually or collectively.

Internal Control:

To produce the necessary accounting information there management of a business must establish an adequate accounting system. The system should be in corporately control, to ensure that the information produced is reliable, complete and objective is achieved by the management. This is referred to as the internal control system of the business (Mayo-Epp: Ais part 1-5)

Management:

Is the process of getting things done through people by supervision and also the process of organizing, planning, actualizing, directing, coordinating and controlling in order to achieve the organizational objectives?

Auditing:

Is the process of examining and reviewing the accounting transaction to give assurance that the financial statements at least to truthfulness and fairness (Ekwere 1994:01)

Fraud:

It is defined as the misrepresentation by a person of a material fact know by that person to be untrue or made with reckless attitude in difference as to whether the act is ture, with the intention of deceiving the other party and with the result that the party is endured (Ekwere 1994:22)

Internal Audit:

As defined by the institute of internal auditors Incan independent appraisal function established within an organization to examine and evaluate its activities as service to the organization (Ekwere 1994:19).

1.9 Organization of the Study

The study is divided into five chapters. Chapter one deals with the study"s introduction and gives a background to the study. Chapter two reviews related and relevant literature. The chapter three gives the research methodology while the chapter four gives the study"s analysis and interpretation of data. The study concludes with chapter five which deals on the summary, conclusion and recommendation.

Summary, Conclusion and Recommendation

5.1 Introduction

It is important to reiterate that the objective of this study was to evaluate the internal control system in public sector.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given.

In this chapter, certain recommendations are made which in the opinion of the researcher are drawn from the findings of the study.

5.2 Summary

The study opened with a background where the stating of the problem, study objectives and hypotheses were described. In the second chapter, the study reviewed the relevant and related literatures. The conceptual, and empirical studies were examined as well as the relationship which exists internal control system and fraud. The third chapter described the methodology employed in the study to gather data both primary and secondary data. It also described the statistical tool for testing the hypotheses. The fourth chapter analyzed and presented the data using simple percentages and chi-square statistical tool.

5.3 Conclusion

Based on findings, it can be concluded that Internal Control System at Federal Capital Development Authority has been effective and efficient. It effectiveness has had great positive impact on productivity and therefore the less concentration on them will cause the establishment to be less efficient. With Messier, et al.(2008),proper internal control does not only ensure that assets and records are safeguarded but also create an environment in which efficiency and effectiveness are encouraged and monitored.

Again, it can also be said that most Employee Satisfaction measures at the establishment have been put in place which is serving as a motivational factor to employees to give out their best to the benefit of the institution. Moreover, the backbone of employee satisfaction is respect for workers and the job they perform by recognizing their accomplishments as stated by Ernst & Young (2002).

In conclusion the researcher confirms that Internal Control System faces some challenges in its implementation as stated by Messier et al., (2008), that the effectiveness of internal control systems is subject to certain inherent challenges which make it implementation somehow difficult and these include poor record keeping, high illiteracy rate, inadequate funds ,lack of laid down procedures, ignorance and poor supervision in the public sector, therefore the management of the Hospital with the help of the government must assume the responsibility of addressing these challenges to operate effectively.

5.4 Recommendations

In light of the above, the researcher provides a set of recommendations:

Attention to the human element as one of the main components of the internal control system in terms of training and development, and keeping them up with scientific and practical progress.

Emphasize the need to reformulate some of the legislation and instructions for some of the financial aspects.

Work on the development of strategies and plans of financial control. Also, it should take into account the availability of experiance, skills and capabilities of the managers, and the employees of administrative government units.

The need for harmonization between the legislation and regulations with international professional standards especially the supreme control standards of what lends importance and effectiveness to financial control.

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