ABSTRACT

The need for this research work is to extensively study on the benefit result in firms that evaluate their internal control system. This tends to reveal the negative effects of not continuously evaluating the working of the internal control system. Financial records and accountability which are very important to any company can only maintained as revealed by the study through the evaluation of internal control system. The study helps to find out how effective and efficient the evaluation internal control system result in the optimum use of resources. The result of the study will disclose the bad effects of not having an effective internal control system like lack of adherence to management policies, theft, fraud, and lack of reliability and accuracy of accounting record, lack of commitment of work, misappropriation and misapplication of fund. But and effective internal control system allows efficiency in all aspects of system control - internal control system allows efficiency in all aspects of system control - internal check, internal audit, accurate financial records safeguarding of assets and record, adherence to management policies, etc. Questionnaires covering specific areas of internal control system were prepared and administered. This study was conducted in modern ceramics industries Ltd, in Umuahia. A sample size of 60 was chosen on the basis of stratified random sampling method. The data derived from these questionnaires were analyzed with the aid of simple percentages. The hypotheses were tested with the aid of the chi - square table. About three hypotheses are formulated which were thereafter tested in order to establish authentic theories at the following were made. Ho 1. Effective internal control system does not significantly has impact on financial accountability in private sector organization. Ho2. The effectiveness of internal control system of a firm is not a prove of its financial accountability. Ho3. Effective internal control system does not significantly eliminate fraud in the private sector organization. From the questionnaires administered and data collected which were analyzed and interpreted, it has been concluded that the usefulness of efficient and working internal control system in our firm's can never be over - emphasized. Finally, recommendations are on the areas of adherence to management policies, Authorization, regular checks and supervision and segregation of duties.

TABLE OF CONTENTS

Title page

Project assessment

Dec 1 rat i on

Certification

Dedication  

Acknowledgement

Table of contents

List of tables and figures

Abstract

CHAPTER ONE

1.1 Background of the study 1-2

1.2 Statement of the problem 3

1.3 Objective of the study 3

1.4 Research questions 4

1.5 Research hypothesis 4-5

1.6 Justification of the study 5-8

1.7 The scope of the study 8

1.8 Limitation of the study 8

I .8 Limitation of' the study 8-9

CHAPTER TWO

2. 1 1fltR)duct)I1 I ()

2.1.1 Nature nonfinancial Accounting 10-16

2.2 System of internal control . I 6-1 7

2.3 Management Responsibility and Duty with Regard to internal

CONTROL . 17-19

2.3.1 Aims of' Establishing internal Control system 19-20

2.4 Subdivision of' internal control 20

2.4. Primary Sub-division 20-21

2.4.2 Secondary Sub-division .. 21-24

2.4.3 Internal checks and auditing Practices 24-26

2.4.4 Relationship between internal control and audit ...........26-27

2.5 Overview ol clicctzye internal control system 27-29

2.6 Limitation on the EFfectiveness of internal controls 29.30

2.7 The Auditor's use of Internal controls .....30.33

2.8 The work of' Internal Audit 30

2.8. 1 Liaison between internal and External Audit 34.35

2,82 Reliance-on Internal Audit .35.36

2.9 Responsibility sharing as a control measure 36.39

2.10 Examples oF Practical Application of internal control system.. .39

2. 10.1 Sales and Debtor

2.10.2 Receipts . 41 .43

2. 10.3 Purchase and Creditors . 43.45

2. 0.4 Payroll Operation 45.47.

2.10,5 Fixed Assets .47.50

CHAPTER THREE

3.0 Introduction . . 5 1

I 3. I. Research Design 5 I

3.2 Area oisRidy ... SI

3.3 Population oF the studs'.. . . . .51 .52

3.4 Sample and sampling techniques . 53

3.5 Sources ol data Selection .

3.5. I . Primary Data Source .53.5-I

3.5.2' Secondary Data Source . 54

3.6. Data Collection method

3.6.1. Personal interviews . 54.55

3.6,2. Questionnaire .55

3.6.3. Validity and reliability of instrument used ...55.56

3.6.4. Administration of Instrument

3.7. l Data analysis tcchniqucs .56

3.7.2. Aialysis techniques/Testing . 56.57

3.7.3. llypothcscs and l)ccisioii Rule .57

CHAPTER FOUR

4. 1 Presentation of Data .. 58

4.2 Data Analysis .. 58.59

4.2. 1 Demographic Profile of respondents . 59.72

4.2.2. Analysis of Research Questions 72.82

4.3 L15'pothcses l'csting 72.82

CHAPTER FIVE

5.1 Summary .. 83.84

5.2 Conclusion ... . 84.85

5.3 Recommendations .85.87

Bibliography

[Appendixes: A Introduction Letter

B Questionnaire

C Brief History of Modern Ceramics

Industries Limited, Urnuahi a,

Abia State.