EFFECTIVE INTERNAL CONTROL SYSTEM AS A MEANS OF DETECTING AND MINIMIZING FRAUD IN A MANUFACTURING COMPANY
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It is the primary responsibility in the management of business organization to prevent and detect errors, irregularities and frauds. The responsibility arises because of direction and other managers owe a contractual duty of care and must act in a stewardship capacity with regards to the property entrusted to them by the share holder or other owners.
They exercise this duty of care is a matter for them, be generally they discharge their duties by maintaining an effective internal control system.
In fact, internal control system mean “the whole system control financial and otherwise established by the management in order to carry in the business of a company in an orderly manner, safeguard its asset and secure as far as possible the accuracy and reliability of its record”.
In other words, it is a complex series of continuous and interrelated activities design by the management to direct and monitor the affair of the organization.
- BACKGROUND OF THE STUDY
The main motive for internal control is to prevent and minimize fraud can be define as an international misrepresentation financial information by or more individual among the management, employees or third party it is a special cause of criminal description to obtain and undue advantage.
More over, the internal control system various one organization of another as regards the activities of individual. However, there is a frame work every internal control system and these are usually in the form of measure of performance against the objective, analysis and appraisal of the actual deviation and appropriate action including the re-appraisal of the objective.
- STATEMENT OF THE PROBLEM
This study intends to ascertain the importance, impact and effects of internal control system as a mean of detecting and minimizing fraud in a manufacturing company often fair to take proper records of their accounts which has always caused such company into present or future failure.
The failure of business recognition within the manufacturing company has brought up the motivations of this project work, effective internal control system in the case study, Nigeria Bottling Company, Ilorin Plant, the question if how to appraise the effects and importance of effective internal control system.
Conclusively, with the problem discussed above, the researcher will proffer solutions to the problems during the course of the study.
- AIMS AND OBJECTIVE OF THE STUDY
This study aims at conducting a research in the operational activities of the company (Nigeria Bottling Company, Ilorin). Therefore offers were made to review and evaluate its internal control system and make suggestion for correction or improvement where there are loopholes in the existing system.
The immediate purpose of this study is to establish.
- To identify internal control system that would detect and minimize fraud in order to facilitate attainment of organization objective.
- That there is proper functioning of the organization.
- That all receipt is duly accounted for
- That the work dine by junior officers are checked by their supervisor, department heads to ensure conformity with established standard.
- That purchases and sales of goods are properly carried out necessary books and record are kept.
- SIGNIFICANCE OF THE STUDY
The ultimate significance of this study is to enable the leaders managers handle the crime of counterfeiting handwriting documents materials in order to minimize fraud to its lowest possible so as effect primary aim of business organization which is profit making. Likewise to let the management see the need to main use of effective internal control system, in order to map out strategy to eradicate fraud entirely if possible.
An organization with ineffective internal control system adversely effect its progress therefore, it is in this context that the researcher wishes to analyze and emphasize the need for internal control system in an organization and suggest way by which effective control could be established in an organization.
- SCOPE AND LIMITATION OF THE STUDY
This research work covers some strategic area, such as effectiveness of internal control system of the manufacturing company with particular attention on staffing, knowledge, stall, discipline and supervision.
It is also covers the role of an auditor with respect of effectiveness of internal control system.
However, the problem encountered in the course of this study is the attitude of some respondents answered just few questions leaving majority of the question unanswered.
More so, the analysis of the study are based on responses of the respondents as well as the result of the interview conducted since there is no way testing the degree of reliance of their responses, do data collection. However, limited to the Nigeria Bottling Company, Ilorin Plant alone/due to materials and time constraints. The study may not be a good reflection of the system and it may result is not applicable to true situation in totality.
- ORGANIZATION AND PLANT OF THE STUDY
This shall comprise of five chapters. The first chapter will contain the Introduction, Background of the Study, Statement of the Study, Significance and Scope of the Study and the Definition of Terms, while
The Second Chapter consst of the Literature Review Internal Control and its Relevance, Internal checks, Internal Audit and Contribution of Scholars and Authors textbooks relevant to the research work and other sub-headings.
The third chapter shall consist of the Research Methodlogy, The History of the Research Study, Method of data Collection, data Analysis and technique and Source of data Collected.
The four contains the data Presentation and Analysis Data Presentation, data Analysis and Data Summary “while the last Chapter (5) Five state the Summary, Conclusion and recommendation, putting the following into consideration.
Bibliography, Questionnaire and Appendix of the project work.
- DEFINITION OF KEY TERMS
ERRORS: Errors are generally in auditing as unintentional mistake in the financial records. It make clients amount unreliable, misinterpretation of facts.
FRAUDS: Frauds can be interpreted as an attempts to deceive by falsification. It is intention misrepresentation of financial information by one or more individual between management employee or third party.
Frauds can also refers to as stating stock value higher than obtainable, in a deceptive manner to be able to declare profit. Fraud can also be interpreted as international deceit.
IRREGULARITIES: This refers to as intentional distortion of financial statement for whatever purpose or not accompanied by distortion of financial statement (such as payment disputes, imbalance figure e.t.c). irregularities give due for fraud.
- PLAN OF STUDY
The structure of this research work is divided into five chapters:
Chapter One: Introduction containing general background of the study such as statement of the problems, its significant scope, objective and limitation of the study research.
Chapter Two: Literature Review shadding light of different authors (scholars), researchers, in related field and review journals, bullions and relevant literature.
Chapter Three: Historical Backgrounf of the Study, Methodology of data, data Analysis and Techniques, Source of data Analysis.
Chapter Four: data Presentation and Analysis, data Presentation, data Analysis and Summary.
Chapter Five: Contain of Summary, Conclusion and some Recommendation will be made.