CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Internal control system is the strength of every organization, has become of paramount important today in manufacturing firms. The reason being that the control systems in any organization is a pillar for an efficient accounting system.

        The need for the internal control systems in the organizations, especially manufacturing firm like Champion Breweries Plc, cannot be undermined, due to the fact that the organizations which has a crucial role to play n the economic development of a nation is now being characterized by macro economic instability, slow growth in real economic activities, corruption and risk of fraud.

        Fraud, which is the major reason for setting up an internal control system, has become a great pain in the neck of many manufacturing firm managers. It has also become an unfortunate staple in Nigeria’s international reputation. Fraud is really eating deep into the Nigerian firm (manufacturing) system and that any organization with weak internal control system, is dangerously exposed (Colbert and Bowen, 1996).

1.2   STATEMENT OF THE PROBLEM

Every organization needs the strength and effective in the organization, therefore, before the firms like Champion Breweries Plc strive effectiveness they need an internal control system to enable them build-up strong internal control. The problem of this study is how internal control can be used to prevent and detect fraud (embezzlement) in an organization.

        According to the Sarbanes-Oxley Act of 2002, it increases the amount of internal control systems that the company needs to use. Internal control system helps relieve ethical dilemmas, increase accountability, deter fraud and improve the quality of financial information used by creditors and investors, however, an internal control system is only as good as its designs.

1.3   OBJECTIVES OF THE STUDY 

The objective of the study is to find out the following:

(1)    To examine the impact of internal control system in Champion Breweries Plc.

(2)    To examine the effect of internal control system on   goals achievement of an organization.

(3)    To determine the problems associated with internal control system in Champion Breweries Plc, Uyo.

(4)    To make useful recommendation based on the findings.

1.4   SIGNIFICANCE OF THE STUDY

The ultimate goal of every manufacturing firm is to prevent fraud, embezzlement of money and increase accountability in any organization and this is achieve through internal control system in Champion Breweries Plc, Uyo.

        This study is necessary because it would enable the employer and employee of Champion Breweries Plc, Uyo to improve the ethical behaviours in the management of the company.

        Finally, it would be of immense benefit to investors who might want to invest in the company and the shareholders of the company to earn more profit. It will also serve as a reference source to other researchers who might want to further studies in the similar topic.

1.5   SCOPE OF THE STUDY

The study is limited to Champion Breweries Plc, Uyo and the research topic, which is centered on the impact of internal control on goals achievement of a manufacturing.

1.6   RESEARCH QUESTIONS

1.          Does internal control have any impact on Champion Breweries Plc?

2.          What are the effects of internal control system in an organization?

3.          What are identified problems of internal control system in Champion Breweries Plc, Uyo?

1.7   RESEARCH HYPOTHESIS 

The following hypotheses were formulated to guide this study:

HYPOTHESIS 1

H0:   There is no significant relationship between internal         control and impact in Champion Breweries Plc, Uyo,

H1:   There is a significant relationship between internal control and impact in Champion Breweries Plc, Uyo.

HYPOTHESIS 2

H0:   There are no problems confronting Champion Breweries Plc, Uyo.

H1:   There are problems confronting Champion Breweries Plc, Uyo.

1.8   LIMITATION OF THE STUDY

The limitation of this study was inability of management to divulge certain information which the considered sensitive and fear of publication which might be detrimental to their operation.

        Also, the researcher observed the non-cooperative attitude of some workers of the company to make information available for the researcher.

1.9   DEFINITION OF TERMS

a)           Internal Control: Internal controls are policies procedures, practices and organizational structures implemented to provide reasonable assurance that an organization’s business objectives will be achieved and undesired risk events will be prevented or detected and connected based on wither compliance or management initiated concerns (Awe, 2005).

b)           System: System can be an organized set of ideas or theories or particular way of doing something or a group of things, pieces of equipment that are connected or work together (Horngren, Harrison and Bamber, 1999).

c)           Efficiency: This is very important to the achievement of competitive advantage and the maximization of profitability (Roth, 1997).

d)          Manufacturing: This is the process of converting raw materials, components, or parts into finished goods that meet a customer’s expectations or specifications (Brewer & William 2004).

e)           Organization: A social unit of people, systematically structured and managed to meet a need or a pursue collective goals on a continuing basis. All organizations have a management structure that determines relationship between functions and positions, and subdivides and delegates roles, responsibilities, and authority to carryout defined tasks (Simmon, 1997).

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