THE IMPACT OF INTERNAL CONTROL SYSTEM ON THE PERFORMANCE OF ESSIEN UDIM LOCAL GOVERNMENT COUNCIL

CHAPTER ONE
INTRODUCTION

Background to the Study
The essence of public accountability in the present dispensation demands a great attention of which the promptitude of producing accurate and comprehensive financial statement cannot be dispensed with. Government accounting system particularly those found in ministries have been designed primarily to achieve accountability and control, for instance, to ensure that expenditure conforms with authorization and that financial transactions are conducted in accordance with established rules, such arrangement satisfy some of the basic control needs of the executives and the legislature, but they do not themselves guarantee efficient operation.
Obviously, the aim of creating local government is to make sure that grass root development (villages) are properly taking care of with their available financial and material support from federal government. The objective of the 1976 reforms was to create a local government system with complete and self-contained budget that would be effective and effectual.  Before the reforms, Nigeria local government councils from their inception had suffered serious problem of improper accounting and internal control system (Wawhoop, 2009).
One of the commonest methods of measuring performance and result in organization is accounting system.  If local government account is not properly checked through internal control, grass root development will be hindered.  This is because it provides information to the management to enhance proper administration.  The America Association of Accountants, defines accounting as the process of identifying, measuring and communicating of economic information to permit information judgment and decision by users of the information.

Statement of the Problem
In Nigeria, the oil boom of the early 1970’s increased the funds available to the public sector, hence the local government system in Nigeria as a third tier government is expected to perform more crucial role(s)for the citizenry at the grassroots level. Regrettably however, the Nigerian Local Government has encountered serious internal problems which handicap the achievement of its goal(s). Mismanagement, misappropriation, fraud, etc. have become more conspicuous as some of the factors which limit the normal processes of the system. Apart from the notable problems above, the local government system has been characterized of late with prerenal politics: The system has been used by the politicians as a means of enriching themselves and as such has not been able to meet its basic objective of provision(s) of social amenities to the people at the grassroots level.  
The    Essien Udim local government accounting system is being complicated by several problems.  These problems hinder the effective accounting system.  Some of these problems are discussed below.
The local government accounting does not allow the publication of local government account.  This is a problem to the Essien Udim local government accounting system because there will be no object of comparison between two local governments and thus see how it stands.  There is a lack of competition between local governments as provision of services and revenue generation.  This prevents local government indigenes of improved services, and the state and local government lack sound criteria for allocating funds to local government.
The record keeping is seriously limited to mere clerical staff.  Even the senior staffs of the local government are being restricted from the records of the local government. The clerical staff find it difficult to point out the areas, that need adequate attention.  The implication of this is that the strategic aspect of managing local government funds such as alternative source or revenue, performance appraisal, future development project, staff straining do not get the adequate managerial attention they deserve.
Staff are frequently accused of mismanagement of funds.  Due to lack of published account by the local government, staffs are being accused of living above their means.  These and other related problems motivated the study.

Objectives of the Study
The main objective of this study is to examine the impact of internal control system on the performance of Essien Udim Local Government Council. Specifically, the primary objectives sought to
Establish the need for internal control system in Essien Udim Local Government Council.
Identify the types of internal control systems available in Essien Udim Local Government Council.
To examine the effects of sound internal control system in Essien Udim Local Government Council.
To suggest measures that will enhance effective use of internal control system in Essien Udim Local Government Council.
1.3 Research Questions
Following the research objectives, the following specific research questions were formulated to guide the study.
What are the need for internal control system in Essien Udim Local Government Council
What are the types of internal control system available in Essien Udim Local Government Council?
What are the effects of sound internal control system in Essien Udim Local Government Council?
What measures could be adopted to enhance effective use of internal control system in Essien Udim Local Government Council?
Statement of Research Hypotheses
Ho: preventive, detective and corrective control are not the types of internal control system available in Essien Udim Local Government Council.
Ho: proper documentation, prevention of unauthorized personnel from accessing valuable company assets, and fraud reduction are not the effects of sound internal control system in Essien Udim Local Government Council?
Significance of the Study
The results of the study will help identify gaps within the systems of internal control in Essien Udim Local Government council. There appears to be a large gap between the public expectation that accounting system and internal control should be implemented in local government.  It is hoped that the study will solve the issues at the completion of this study.
In view of the increased funds available to the local government and its expected role(s) to the citizenry at the grassroots level which remain a far cry, it is important, therefore, that a study of this nature be carried out with a view to making useful discoveries concerning the process of improving internal control and financial control in the local government system. The study will also add to the existing knowledge regarding internal controls systems by the Essien Udin Local Government Council. Scholars and researchers who would like to carry out more studies on internal Controls and
performance in Essien Udin Local Government Council will find the study beneficial.
1.6 Scope of the Study
The scope mainly covers the accounting system and method of internal control in local government with particular reference to Essien Udim Local Government Council in Akwa Ibom State.
1.7 Limitations of the study
In the process of undertaking this study the research was faced with some challenges that posed limitations to the study. Some of them include:
Time constraint: The period of time allotted for the research work brief and coincided with lecture periods thereby dividing the researchers’ attention between lectures and research work.
Financial constraint: The nature of the economy has left the individual with little or no money. So, this affected the extent of the research work.
Research materials: The school library ward had no stock of previous research work which could which could have assisted the research to a large extent. So the researcher made use of the material available.