Internal control as defined by the committee of sponsoring organization of the trade way commission (COSO) is a process effected by an entity's board of directors, management and other personal, designed to provide reasonable assurance regarding the achievement of objective in the following categories: effectiveness and efficiency of operation, reliability of financial reporting and compliance with applicable law and regulations.
All of us share the responsibility of ensuring our working environment is safe and effective. One important way we can help to achieve this goal is to establish and follow appropriate policies and procedures on internal control.
The purpose of understanding internal control is to provide employees with internal control guidelines that will help identify their method and measure adopted by the system administration to promote the truthful and effect used by the state resources.
Given that controls depends on the participation of all employees into every level, every employee should be aware of the university's goal and their role in attaining the goals. Employee competence and professional integrity are essential components of a sound internal control programmed. By knowing what our responsibilities are, we can help provide reasonable assurance that our internal control system are adequate and operating in an efficient manner.
System administration's internal control programmed, in conjunction with understanding internal control is designed to provide reasonable assurance that;
- System Administration assets are protected and safeguarded against loss,
- Records are reliable and accurate
- Policies and procedures establish what should be done, how it should be done by whom.
A successful internal control environment's commitment and support management goal is not to make each person an expert in internal controls, but to increase awareness and understanding of why we need them and how we use them.
Executive management is committed to system administration's internal control program and strongly encouraged adherence to the program for the betterment of the university.
The office of the university is assigned the responsibility to oversee and coordinate system administrations internal control program. The university controller has been designated the internal control officer and is responsible for implementation of this program. Although management is primarily responsible for implementing internal controls, every employee participates in establishing, properly documenting and maintaining internal controls.
Employees Are Responsible For Complying With Internal Controls
- Successfully fulfilling the duties and responsibilities established in their job description.
- Monitoring work to ensure this done properly and that errors are corrected promptly.
- Meeting applicable performance standards; taking steps to safeguard assets against waste, loss, unauthorized use and misappropriation;
- Adhering to all applicable policies and procedures; attending education and training program to increase awareness and understanding; and
- Reporting breakdowns in internal control systems to their supervisor or manager.
Manager And Supervisor Are Responsible For Executing Control Policies And Procedures Within Their Departments By;
- Maintaining a positive office environment that encourage internal controls.
- Identifying the control objectives for each function and implementing cost effective control designed to meet those objectives and
- Regularly testing the controls to verify they are performing as intended
Internal Control System
Internal control systems are basic management practices that usually involve two elements; a policy establishing what should be done and procedures used to support he policy. Internal control system typically come from senior managements interpretation of the university strategic initiative, strategic initiatives laws and regulations, or industry standard and practices.
University policies and procedures are used to:
- Ensure management directives are carried out,
- Set university standards and
- Communicate regulations that apply to all personnel.
Each employee is expected to adhere to establishment internal control and all applicable management policies and standards used by the state of New York, the state university and system administration.
1.1 Background of the study
The world is filled with the technology advancements that modernize the homes and businesses today. The telephones, automatic teller machines, satellites, computers and many other technologies are no longer serving as window dressing, but one actually being used to harness information.
In recent times, the Nigeria economy has influenced a number of technological evolutions. Computer technology is one of such evolutions. While the greater number of users enjoys the favours of these life made easy trends, audit and security practitioners are constantly being challenged by their applications.
Dependence on computers today in the business circle is not by choice. The computer is becoming the standard of communication among organizations; various types of computers have been introduced to substantially enhance human efforts in industrial, commercial, official and domestic activities. Data are captured, stored, processed, analyzed, transmitted and reported with computers.
Accountancy which is generally known as the language of business is no exception and has been affected by these changes in technology. The manual book keeping process is giving way to computerization in both private and public sectors of the Nigerian Economy. All organizations, both manually operated or computerized, whether profit oriented or not, operates within conditions of resource Constraints. This mass embrace is not without its attendants problems. As a result, various steps are taken and procedures established to ensure that the use of these resources are maximized in achieving organizational goals and objectives.
Apart from the problem of scarce resources, organizations run a high risk of fraud and errors. Steps are required therefore to minimize this risk by establishing operating rules and regulations. Internal control represents all such techniques, policies, rules and procedures which the management of an organization has developed for its day to day operations. An evaluation therefore involves considering carefully how good the system in use is to the needs of the organization.
Adeniji A.A (2001) says “Internal Control comprises all the coordinate methods and measures adopted within a business to promote operational efficiency and encourage adherence to prescribed management policies”.
Statement of auditing defines Internal Control thus, “Internal Control includes not only Internal checks and Internal audit, but the whole system of controls, financial and efficient manner, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and accuracy of the records.
1.2 Statement of the Problem
It is true that many have responsibility in an organization, but the accountant is held liable or accountable for the financial irresponsibility of others as well as his own. This feature is a cause for concern because; control of this nature may not be an easy task as the accountant may not have all the time to check every transaction of financial of others.
With the advent of Computer technology to the accounting systems, fraud and mismanagement of funds were now on the increase due to the “loss of audit trial” by the auditors, which eventually lead to many business failures. Thus, a good Internal Control System that encompass the whole system of control both financial and otherwise, to carry on the business of the enterprise in an orderly manner has to be put in place to bring sanity to the entire organization.
1.3 Objectives of the Study
The purpose of this study, apart from being a condition for an award of the Bachelor of Science degree in Accounting is basically:
- To examine the Internal Control System in a Computerized Environment and see whether it provides records that will form a reliable base for the preparation of accounts and safeguard the assets and make recommendations for further improvement.
- To identify the strength and weakness of Internal Control System and make corrective recommendations where necessary.
- To find out the role of the computer in the accounting system of an enterprise.
1.4 Research Question
- Is your system computerized?
- Is the use of password enforced in the use of computer?
- Are the procedural controls effective?
- Who takes charge of the output? Clerks?
- Is the computer very effective in detecting errors?
- Does the computer aid / facilitate decision — marking?
- Do you think that decisions aided by the use of computer are more accurate than the normal system or one not aided?
1.5 Statement of Hypothesis
Alternative Hypothesis and Basis of Hypothesis
Alternative Hypothesis (H1)
- Internal Control system in a computerized accounting environment which provides a reliable bases for the auditor gives a true and fair view of the organization's financial and economic position.
- Internal Control System in a Computerized Environment does not allow one person to be responsible for the recording and processing of a complete transaction.
- Internal Control in a computerized environment help to prevent or detect errors and fraud.
Null Hypothesis (H0)
- Internal Control System in a computerized according environment does not provide a reliable base for the Auditor to give a true and fair view of the organization's financial and economic position.
- Internal Control in a computerized environment allows one person to be responsible for the recording and processing of a complete transaction.
- Internal Control System in a Computerized Environment does not help to prevent or detect errors and fraud.
1.6 Significance of the Study
It is an indisputable fact that business in a particular and the world at large have been greatly affected by the entry of computer. Almost everything is going computerized and the earlier all business organizations embrace the use of computer the better.
Also, it is efficient in providing accurate information, at a high speed, with minimum cost that the computer becomes useful accounting tools. It is a known fact that until the value of a thing is made known to people, they would hardly desire to associate with such a thing.
With this study, the principal involved in the internal control system in a computerized accounting environment will result in the efficient executing environment will result in the efficient execution of the business of the organization concerned. Even many business organizations which are complacement in their business without the use of computers could be triggered into actions with a view to computerizing the enterprises.
Finally, it is hoped that this study will serve as a reference book to both students of accounting and computer science and other researchers interested in a similar discourse to Guinness Nigeria Plc. and the economy as a whole.
1.7 Scope of the Study
The study focuses and has been limited to recording processing and financial control only to ensure the conformity of the rules and regulations relating to control process.
The sample size is small since Guinness Nigeria Plc. is only one of the companies in the country. Other companies like Nigeria Breweries Plc., Jos International breweries Plc. e.t.c. that are equally computerized were not checked.
1.8 Limitation of the Study
As a result of time, money and materials, the study could not cover all the geographical areas of the country where Guinness have depots with computerized accounting system for samples. Examples of such areas are Ibadan, Ondo, Abuja. There is no reason however, to believe that geographical location could have a significant differential impact on the major focus of the research.
The selection process of the companies for the study was not completely random although efforts were to administer the questioner to randomly selected departments in Guinness Nigeria Plc. concerned. It was also observed that some of the respondents were reluctant in giving out the information required. Most of them finally agreed after much persuasion and on the condition of anonymity.
1.9 Definition of Terms
Below are some terms that need to be defined as one progress in the course of this study.
Accounting system is a set of records, procedures and equipment that routinely deals with the events affecting the financial performance and position of the entity”. In other words, an accounting system comprises source documents, journals, ledgers and financial reports.
Accounting control “comprises the methods and procedures that are mainly concerned with the authorization of transactions, the safeguard of assets and the accuracy of the financial record”.
Management is a specific group of people who control and direct the resources of the organization towards achieving organizational objectives.
A responsible official is an employee of the company who at least a supervisor.
Manual: Human Labour.
To show satisfaction in one's own situation.
Replete: To be filled and completed.
Financial Irresponsibility: Means unwise spending.