THE EFFECT OF INTERNAL CONTROL ON ORGANIZATION - PERFORMANCE OF LOCAL GOVERNMENT

THE EFFECT OF INTERNAL CONTROL ON ORGANIZATION - PERFORMANCE OF LOCAL GOVERNMENT

ABSTRACT

The research work is based on the effect of internal control on organizational performance of local government.

The major objective of this study is to assess the effect of internal control on organizational performance of local government  in which Ojo Local Government was used as a case study. Various literatures, textbooks, journals and materials from the internet were used for the study.

Survey research design was used and both Primary and secondary source of data were also used. Eighty three (83) Questionnaires were administered as the sample size of the study using a Simple random sampling technique.

The data collected were analyzed using simple percentage method.

 Two (2) hypotheses were formulated and tested using chi-square. The test revealed that internal control system aids adequate financial reporting and internal control system helps in preventing and detecting errors, frauds and material misstatement.

Therefore it is recommended that,  recruitment of staff must not be based on sentiments or favouritism but rather on the skill and competence of the applicants with reference from people with integrity.

TABLE OF CONTENT

                                                                                                PAGES

Title page                                                                                         i

Certification                                                                                     ii

Dedication                                                                                         iii

Acknowledgement                                                                           iv

Abstract                                                                                            v

Table of contents                                                                             vi – viii

 CHAPTER ONE

1.0    Introduction                                                                            1 – 3

1.1    Brief History of Ojo Local Government                                 4 – 5

1.2    Statement of the  problems                                                   6

1.3    Purpose of  the study                                                             6

1.5    Research hypothesis                                                             7      

1.6    Significance of the study                                                       8

1.7    Delimitation of study                                                               8

1.8    Definition of terms                                                                  9

References                                                                             10

CHAPTER TWO

LITERATURE REVIEW

2.1    Meaning of Internal control system                                       11 – 14

2.2    Describing internal controls                                                   14 – 18

2.1.1 Internal Control as defined by the auditing guideline          18  – 19

2.1.2 Fundamental concepts  in COSO report internal                 20 – 23

control definition     

2.2    Important of internal control                                                  23 – 25

2.3    Components of internal control                                             25 

2.3.2 Risk assessment process                                                     27 – 30

2.3.3 Information system                                                                30  - 31

2.3.4 Control activities                                                                     31 – 34

2.3.5 Monitoring                                                                              34 – 35

2.4    Features of Internal controls                                                 35

2.4.1 Organization                                                                          36

2.4.2 Segregation of duties                                                             36 – 37

2.4.3 Physical control                                                                      37

2.4.4 Authorization and approval                                                   37

2.4.5 Supervision                                                                            38

2.4.6 Arithmetical and Accounting controls                                   38

2.4.7 Personal Control                                                                    38

2.4.8 Management Controls                                                          39 

2.5    Controls in computer information system                             39 – 40

2.6    Management versus auditor responsibility                           40   

2.7    Internal Audit as an element of internal control                    41

2.7.1 Scope and objectives of internal audit                                  41 – 42

2.8    The system of internal control as an aid to the auditor        43

2.9    Powers of the auditor-general for local governments          43 – 47

2.10  Limitation of controls                                                             47

           References                                                                           48 

CHAPTER THREE

RESEARCH METHODOLOGY

3.1    Research design                                                                   49

3.1.1 Survey design                                                                        50 

3.1.2 Experimental design                                                              50 – 51

3.2    Area of the study                                                                    51

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