INTERNAL CONTROL AS AN AID TO ACCOUNTABILITY IN THE PUBLIC SECTOR. (A STUDY OF BIASE LOCAL GOVERNMENT AREA, CROSS RIVER STATE)

INTERNAL CONTROL AS AN AID TO ACCOUNTABILITY IN THE PUBLIC SECTOR. (A STUDY OF BIASE LOCAL GOVERNMENT AREA, CROSS RIVER STATE)

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CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Internal control according to Okezie (1999:43) could be likened to the heart”, which regulates the business blood”. No business could succeed without an effective control system. Internal control can also be likened to the brake and steering in a vehicle, which, if there are not there, the business “train” will cash. It can be likened to the laboratory or quality control machinery, which controls the quality of products produced by an organization. It is the centre hob of all financial activities of an establishment.

Internal control is one of the essential means of establishing and maintaining management control of a business. It involves the entire basic element of management control and is itself the main element of the appraisal, measurement and evaluation control.

Effective system of control is a prerequisite for the attainment of organizational goals, but it has remained one of the biggest problems facing modern day business. It is an extremely broad topic and of course is not restricted to the accounting field but embraces all activities of the organization.

Generally, all aspect of humans endeavor need control. For instance, the business is controlled by the manger or director, the church by the pastor, the


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school by the head teacher or vice chancellor as the case may be. All these are aimed at satisfaction, maximizing gains, ethical requirement, minimizing cost or losses. But these requirements cannot be met if there is no efficient and organized internal control.

The consultative committee of accounting bodies in the United Kingdom (auditing guidelines {1985:5} defined internal control as “the whole system of controls, financial or otherwise, established by the management in other to carry on the business of the enterprise in an orderly and efficient manner, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and accuracy of the records”.

Internal control system is divided into two main aspects – Accounting controls and Administrative controls. However, for the purpose of this research project, effort is concentrated mainly on the accounting control aspect.

In government accounting system, internal control is important because the essence of representative government is the existence of a system of checks and balances to safeguard the interest of taxpayers and other citizens. It may be described briefly as a disposition of operations and procedure whereby the accomplishment and recording of every transaction requires the participation of two or more persons. Supplementary of those conditions for constituting internal


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control is the additional requirement of an interrelationship of records so designed that the occurrence of another or others.

In recognition of the essential features of a good system of internal control, this research project will try to evaluate the basic element of an organized system of internal control as it applies to Biase local government area, cross river state. In view of this, the researcher will look at the various facet so the local government, and administrative policies of the local government, with special attention on how the local government records her transactions, system of authorization and approvals, segregation of duties as well as safeguarding of properties.

The management of the public sector affairs is totally responsible for the

establishment of the system it implores and internal control measures with that

system. The concept takes into consideration the fact that human beings are not

perfect. There is always the tendency for:

Honest and genuine mistakes.

Dishonest manipulation and deliberate distortion.

Biased judgment and reporting.

All these portray the overall weakness inherent in an organization. This therefore calls for a strong system of internal control, which is capable of producing the desired effects i.e. being accountable to the public.


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1.2       STATEMENT OF THE PROBLEM

Internal control in the recent years has being singled out for special emphasis. Most of the writers have written about the evaluation of the efficacy of internal control measures in public sectors and most often it has been treated as a problem. Some concentrate on the recording pattern, inventory control system, segregation of duties, authorization and approval procedures while some concern themselves with problems of physical checks.

Internal control is often cited as the root of most problems in public sectors. Problems of internal control are given as the explanation for failures and miss-management in public sectors.

Since internal control is the factor for the survival of public sectors, the researcher wants to evaluate the efficacy of internal control measures in public sectors. The researcher also wants to find the factors that contribute to achieving an effective system of internal control and the problems facing this. Some of these problems are duplication of functions and duties, embezzlement of funds, errors of omission and commission, over staffing, pilferage and stealing as well as wrong reporting of data. Why do these problems exist? And what is the extent of this problem on the overall performance of the establishment. More so, the researcher wants to identify the various criteria for measuring the efficiency and effectiveness of an internal control system. All these require investigations, and it is the aim of


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this researcher to find out solutions to the above mentioned problems with regards to public sectors.

1.3         STATEMENT OF THE OBJECTIVES

The local government has evolved into gigantic size and scope, including a great variety of specialized facilities and technical operations and numbering villages in tenth has made it impossible for the chief executive to exercise personal first-hand supervision of operations. He is no longer able to rely on personal observation as a means of appraising operational results, the chief executive has of necessity come to depend upon the units’ heads, head of departments, and a stream of accounting and statistical reports to control and direct the sector.

The information made available keeps management informed as to whether the sectors policy is being executed. It enables the management to know whether the governmental regulations are being observed and whether financial position is sound for accountability.

Therefore the objectives of this study include:

1.     To find out the rate of the application of a system of internal control in Biase local government area, cross river state.

2.     To advice the public sectors on the findings for improvement.


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