TABLE OF CONTENTS
Title
page i
Certification
ii
Dedication
iii
Acknowledgements iv
Table
of contents v
CHAPTER ONE: INTRODUCTION 1
- Background of the
Study 1
- Statement of the
Study
- Research
Questions 4
- Purpose of the
Study 5
- Scope and
Limitation 7
- The Significant
of the Study 8
- Organization and
Plan of the Study 9
- Definition of
Terms 11
CHAPTER TWO: LITERATURE REVIEW 15
- Literature review
15
- Review of Related
Control 16
- Objective of
internal Control system in
Banking Industry 18
- Causes and
Prevention of Banking Industry Failure.
- The Principle of
Effective and Reliability of Internal control in banking Industry. 23
CHAPTER THREE: RESEARCH METHODOLOGY 25
- Introduction 26
- Historical
background of Guarantee Trust Bank 27
- Modification of
the Research Question and Hypothesis 29
- Sampling design
and procedures 32
- Pilot study
validity and reliability 32
- Procedure for
processing and analyzing
collection data 33
- Administration of
the data collection schedule 34
- Limitation of
Methodology 35
CHAPTER FOUR: PRESENTATION AND ANALYSIS
OF DATA
- Respondents,
characteristics and classification
36
- Occupational
table Data 37
- Sample Department
data 40
- Sample level of
education table data 43
- Comparism of
statement reflecting whether internal controls are in place and how can the be
improved. 46
- Comparism of
statement reflecting whether effective and reliable internal control can help
to prevent business failure 48
CHAPTER FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATIONS
Bibliography 55
CHAPTER ONE
- INTRODUCTION
- BACKGROUNDS OF THE
STUDY
The term audit is derived from the Latin word “Audire which means to hear in the holding days. The origin of an audit dates back to the ancient times when the land owners allows tenants farmers to work on the land whilst the land owners themselves did not become involved to the business of farming. The Landlords relied upon an overseer who listened to the report of stewardship given by the tenants.
The account of the parties responsible for non
financial transaction is used to be called and hear the explanation needed by
the person who held the account know as an auditor.
Originally, the function of an auditor is to ascertain the fact, whether the accounting party has properly received the receipts and payment of cash on behalf of his principal and whether the financial statement prepared before him show true and fair view but the scope of audits today has been wide, because the modern auditing is a complex operation calling on a wide variety of skills varying from auditing and financial accounting knowledge to statistics, computing and communication skills.
This therefore become the most important part of the
auditors duties owning the enlargement of size and complexity of business
enterprises.
Today, the concept and scope of auditing has changed a comprehensive definition of auditing given has Roberts Eschlessors as quoted by Jagdish Drakash in his book. Adding, principle practice and problem (1990) says auditing is an examination of financial statements, records and related operation to determine adherence is generally accepted accounting principle, management policies restated requirement.
In this definition, emphasis laid on auditing being
related to operations and how far the adhere to management policies or stated
requirements, in other words we find out that we needs to introduce the
effectiveness and breakable control of the system.
What then is this internal control system? Internal
control system is the while system of control, financial or otherwise
established by the management in order to carry on the business of the
enterprise in an orderly and efficient manner ensuring adherence to management
policies, safe guarding the assets and securing as far as possible the
completeness and accuracy of records.
Millicham A.H (1990) In his institution manual for accounting also stated the auditor operational standard required that of an audit to be reliable on any internals control, he should ascertain and evaluate those control and perform compliance test on their control we therefore see that to have a sound reliable and effective control system in an organization we minimize the possibility failure of an enterprise.
1.2 THE
STATEMENT OF THE STUDY
With reference to what was mentioned is the
introduction that business failure could result to ineffective and unreliable
controls system in an organization. This research work therefore will look into
ineffective and unreliable control system in the banking industry, today, this
posses as a problem because it bring so many associated problems which could be
determinate of working capital, high debt equity ratio decline, profit decline,
high labour turnover, law capital utilization, low quality service and finally
focused which could be either sales fraud, purchases, wages of petty cash
fraud.
1.3 RESEARCH
QUESTIONS
This paper intends to find answer to these questions
so as to achieve it objective and for the purpose of this research work.
i. What
are the saving services of the banks and their operation?
ii. What
are the native of operation of the bank?
iii. What are the conditions to grant loan and on what type of collateral do you grant loan?
iv. How
does cash manager meet the demand of the deposit and the shareholder?
v. What
is the policy of bank on the shortage or surplus declared by the central banks?
vi. Does
your bank has any has investment in other bank or industry?
1.4 PURPOSE
OF THE STUDY
The Purpose of the study is to critically look at the
problems at land (Business failure) the associated problem bring an
interrelationship between those variable and how one lead to the other or its
effect and provide deterioration working capital. The amount available for
running the days today business if there is uncontrolled wastage writing off to
many debts e.g high debt equity, The ratio of outside investor to the share
holders is important for business gearing, but when the gearing ratio becomes
too high, there could by problems of insufficient profit to pay divided after
the deduction of increasing debenture, interest interference of debenture
holder in the affairs of a company in respect of non payment, irregularities
invading the used of deposit to obtain an illegal or unjust advantages, this
could either be cash or sales fraud, these type of fraud relate closely because
before a cash fraud may occur a sale must have occurred, purchase fraud could
be misuse of order form, creation of non-existing supplier, presentation of two
cheques for signature with the same supporting document e.t.c
Wages Frauds: This could occur by
including name on payrolls, leading ex-employees on the payroll or overcastting
gross and net columns in the wages sheet. Wages fraud can be effective and
reliable internal control which help to reduce business failure and other
relates problems.
1.5 SCOPE
AND LIMITATION OF THE STUDY
Internal control system being a very
large topic could therefore be said that it would be different to work at all
departments of internal control in an organization as a result of this the
researcher limits himself to accuracy and authorization of operation with
respect to cheques, cash receipts wages, salaries, petty cash and measuring the
reliability and effectiveness control in the banking industry.
Personal interviews and structured
questionnaire will be employed appropriately; also textbook, journals, and
annual report shall be consulted.
The limitation encountered were
those and willingness of respondents to answer important question.
1.6 THE
SIGNIFICANCE OF THE STUDY
The financial services sectors such as banking building society, consumer credit, purchase leading, factory business ventures e.t.c bank represent probably the most important sector, this is not just in term of turnover profit and employment of labour but also in its paramount impact on the other sphere of the economy. Any problem on the banking system would invariable have strong effect on the economy and that is why the research work tries in study the internal control on the banking sector with respect to guarantee trust bank and see how its effectiveness and reliability would be uses to prevent business failures.
This work will serve as a basis of broadening the
research knowledge on internal control, it the research knowledge on internal
control, the customer audits investors, their would be confidence control in
place that can be relied upon for safeguarding their depositor.
Management on the other hand will be able to reduce losses and improve on internal control system finally, the academic world will use this work as a basis for further study for the student.
THE EFFECT OF INTERNAL CONTROL SYSTEM IN BANKING INDUSTRY (Guarantee Trust Bank)
