ABSTRACT
The importance of internal control in the
administration of wages and salaries in ministry cannot be over emphasized. It
is the responsibility of management to establish and maintain an effective
internal control system that will enhance the attainment of organizational
goals.
Therefore, this study seeks to find out
what extent the effectiveness of internal control system in ministries in Imo State
can checkmate frauds. To carry out this assignment both the primary and
secondary sources of data were used. A descriptive design was adopted for the
study. One hundred and twenty questionnaire were distributed but only one
hundred were returned. All the two were testing using Chi-square at 0.05 level
of significance.
One accepted the null and rejected the
alternative indicating that gross payment in the ministry is not inflated while
the other one reject the null and accepted the alternative indicating that
there is a significant relationship between an effective internal control and
financial accountability.
The summary of the finding revealed that
1) There exists an internal control system in
ministry.
2) That there is a laid down procedure but the
problems lies in its operations
3) Those handling cash or near cash item are
properly checked but sometimes superiors may encourage those handling cash to
spend it inappropriately.
4) Importance is attached to the separation of
duties in the area of execution and custody of cash and bank reconciliation.
Based
on the findings the following recommendations were made.
1) It is suggested that all wages and salaries
irrespective of the amount should be paid by cheque as to allow the
authenticity of wages and salaries payment.
2) It is strongly recommended that workers
should be effectively motivated to attain organizational goal.
3) Young officer should be made aware of the
internal control measure in the environment in which they operate.
TABLE OF CONTENT
Title
page
Approval
page
Dedication
Acknowledgement
Abstract
Table
of contents
CHAPTER ONE
- Introduction
1.1 Background of the study
1.2 Statement of the problem
1.3 Objectives of the study
1.4 Research questions
1.5 Significance of the study
1.6 Scope of the study
1.7 Limitation of the study
1.8 Definition of terms
CHAPTER TWO
2.1 Definition of internal control
2.2 Principles of internal control
2.3 Importance of internal control
2.4 Objective of internal control
2.5 Internal control environment
2.5.1
A good account system
2.5.2
Personnel quality and welfare
2.5.3
Organization structure
2.5.4
Internal Audit
2.5.6
Characteristics of reliable
2.6 Component of internal control
2.6.1
Internal Audit
2.6.2
Internal check
2.6.3
Financial control
2.6.4
Moral control
2.7 Type of internal control
2.7.1
Organization
2.7.2
Segregation duties
2.7.3
Physical
2.7.4
Authorization and approval
2.7.5
Arithmetical and accounting
2.7.6
Personnel
2.7.7
Supervision
2.8 Management
2.9 Limitation of the effective
CHAPTER THREE
3.1 Introduction
3.2 Restatement of the research question
3.3 Research design
3.4 Sampling procedure
3.5 Data collection and allocation
3.6 Statistical tools
3.7 Questionnaire design
CHAPTER FOUR
- Presentation, analysis and interpretation
4.1 Questionnaire analysis
4.1 Analysis of questionnaire respondent
CHAPTER FIVE
5.1 Conclusion
5.2 Recommendation
5.3 Bibliography
5.4 Appendix
5.5 Questionnaires
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND
OF THE STUDY
Ministries faced and saddled with the
responsibility of administration of wages and salaries. The need for this
arises so as to eliminate the case of ghost workers, to ensure that standards
are maintained and adhered to, to ensure that workers are paid at the
appropriate rate and to detect fraud by managers or other persons. These
motives led to the introduction of an internal control system which has been
defined in statement on auditing (U.4) as being “not only internal check and
internal audit but the whole system of control, financial and otherwise,
established by management in order to carry on the business of the company in
an orderly manner, safeguard its assets and secure as far as possible the
accuracy and reliability of its records”.
It is known fact that management in all
ministries irrespective of their size and nature has financial statement as
their main vehicle for presenting accountability and stewardship to the
shareholders of their ministries.
Accounting to LYNN (1983) “The statistical data that must
be estimated and accumulated to plan and control virtually all operation of
ministries are best used in conjunction with financial data”. It can then be
deducted that accountability and stewardship are best rendered in form of
financial statement. Hence, management must device adequate means of promoting
efficiency in operations safe guarding resources from fraud and other forms of
mis-management and creating a reliable atmosphere over recorded transaction.
This necessitates the concept of internal controls system in any ministry. If a
financial statement is to present a true and view, then there must be effective
control at all facts of ministries.
Internal control includes internal
checks, internal audit and other forms of control like budgets, budgeting
control, variance analysis etc. internal control ensure the division of the
whole work of an organization such that the work of one person is complementary
to another or is proved independently so that fraud cannot be perpetrated
without being detected. Frauds are perpetrated and concealed because of the
weakness that exists in a control system established by management.
In
most case, wrong and effective procedure are exploited by unscrupulous members
of staff at all levels in the organization hierarchy. Thus a ministry that
ignore the importance of internal control mechanism against fraud and other
irregularities are highly susceptible to the risk of being defrauded
Taylor
(1982) stated that “ministries that use one payroll cheque require at least two
signatories before the cheque can be cashed in the bank to guard against the
unscrupulous employee who may want to defraud the company by signing the
cheque”. He opined that without control in an accounting system, it would be
very difficult for a ministry to protect its resources, rely on its records or
in the effect of the accounting. He further stated that the effect of the
accounting provision in the foreign corrupt practice Act (FCPA) is to require
public companies to maintain reasonable and effective financial records and an
adequate system of internal control.
To emphasize the concept of internal control system, further, in making up wages sheets, one operator may enters their time from their time cards. This ensures that no “dumming” workmen are paid wages. A proper internal control system ensure reliability of financial statement by ensuring that wages and salaries are paid correctly and in their true value so that frauds, errors be erase or detected.
The installation of an effective internal
control system is one step towards the achievement of true and fair financial
records and the implementation and adherence to the control system is another.
The benefits derived from maintaining effective internal control system by
ministry with respect of the administration of wage and salaries cannot be
over-emphasize. The study therefore is concerned with the effectiveness of the
internal control system in the administration of wages and salaries in
ministries in Imo Stat. the emphasis will be the factors affecting the
effectiveness of their internal system in the area of administration of wages
and salaries.
- STATEMENT OF THE PROBLEM
Internal control in some ministries dates back to the period when such ministries were established. The purpose of this study is to remedy the situation were people intentionally or unintentionally perpetrate frauds, act of mis-management and without being detected its purpose has been to guide, detect and print out lapses that made mismanagement and misappropriation a possible act.
INTERNAL CONTROL SYSTEM IN THE ADMINISTRATION OF WAGES AND SALARIES IN MINISTRIES A CASE STUDY OF SELECTED MINISTRIES IN IMO STATE
