Description
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
- Research Design 30
- Population Study 31
- 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 sex Table data 38
- Sample Age Table data 39
- 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
- Summary, 50
- Conclusion 52
- Recommendations 53
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.
- What are the saving services of the banks and their operation?
- 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?
- How does cash manager meet the demand of the deposit and the shareholder?
- What is the policy of bank on the shortage or surplus declared by the central banks?
- 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.
1.7 ORGANIZATION AND PLAN OF THE STUDY
Plan of the study to this project is divides into five (5) chapters; that it: –
Chapter one of this project focus on or comprises the introduction background of the study, statement of the problem, purpose of the study, untative research question, definition of term, scope and limitation of the study and also the significant of the study.
Chapter two laid emphasis on the literature review that is what other author, newspaper, magazine involved and also to verify the interest figure that have said about objective, course and preventing of banking industry and the principle of effectiveness and reliability of the internal control system in bank industry.
Chapter Three deals with research methodology, historical background of guarantee trust bank, modification of the research question and hypothesis, research design and population study, sampling design procedure and pilot study validity and reliability, procedure for processing and analysing collection of data, Administration of the data collection schedule and limitation of methodology.
Chapter Four contains on the presentation and analysis, respondent characteristic and classification, occupation table data, sample sex, age, department and level of education data, comparison of statement reflection whether internal control are in place and how can this be improve the effective and reliable internal control to prevent business failure in an economy.
Finally chapter five formed the summary of the whole study, conclusion, recommendation and bibliography of the study.
1.8 DEFINITION OF TERMS
1.7.1 AUDIT:- In modern sense, an audit is an process (carried out by suitable qualified auditor) whereby the account of business enterprises including limited comprises, charities, trust and professional firms are subjected to scrutiny to form an opinion as their accuracy, truth and fairness. This opinion is imbedded in an “audit profit” addressed to those interested parties who commissioned the audit, or to whom the auditors are responsible undertake.
1.7.2 AUDIT TEST: – Test is carried out in the process of auditing to determining the trueness and failure of the transaction.
1.7.3 AUDIT EVIDENCE: – This is obtained by carrying out audit tests.
1.7.4 COMPLIANCE TEST: – These are those test which seek to provide, Audit evidence that internal control procedures are being applied as prescribed.
1.7.5 EFFECTIVENESS: – This is the degree to which predetermined objective of target is meet.
1.7.6 ENQUIRYS:- Seeking relevant information from knowledgeable persons inside the enterprises whether formally or informally.
1.7.7 COMPUTATION: Checking the arithmetical accuracy of the accounting records or seeking independent calculations.
1.7.8 INTERNAL AUDIT: This is an independent appraisal function within an organization for the review of system and the quality of performance as a services to the organization. It objective is to examine adequacy and internal control as contribution of the proper economic efficient and effective use of resources.
1.7.9 INTERNAL CHECK:- This is an aspect of internal control which is exclusively concerned with the prevention and detection or errors this involve the arrangement of book keeping and other clerical duties in such away as to ensure (1) that no signal fraud is encountered from its beginning to its conclusion by only one person (2) that the work of each clerk engaged upon a task is subject to an independent check in the source of another duties.
1.7.10 INTERNAL EVALUATION QUESTIONNAIRES:- This is list of question designed to get specific information about a particular item.
1.7.11 ORGANIZATION CHART: – This is pictorial presentation of level of authority and such that no person is responsible for the recording the processing of a complete transaction.
1.7.12 SUBTANTIVES TESTS: – These are the test of review, which seek to provide evidence as to the competence accuracy and validity of information in the accounting records in the financial statement.
CHAPTER TWO
- LITERATURE REVIEW
2.1 REVIEW OF RELATED LITERATURE
There are various school of thought which discussed the views of internal control system as a measure of perverting business failure and other related sector, financial service sectors building societies, credit consumers, business ventures e.t.c bank represent probably the most important financial sector, this are not just in terms of profit and employment of labour, turnover but also in it paramount impacts on the sphare of the economy.
The need for the internal control system on the organizations, especially banks cannot be undermined due to the fact that the banking sector which has a crucial role to play in the economic development of the nation as now being characterized by macro economic instability, show growth in real economic activities, corruption and the risk of fraud.
Fraud, which is the major reason for setting up on internal control system has become a great pain in the neck of many banking sector managers, it has also becomes an information staple in Nigeria’s international reputation. Fraud is really eating deep into the Nigerian banking system and that any banks with a week internal control system is dangerously exposed to bank fraud.
- DEFINITION OF INTERNAL CONTROL
Implemented to provide reasonable assurance than an organization’s business objectives will be achieved and undesired role events will be prevented or detected and corrected based on either compliance or management initiated concerns (Awe, 2005)
The institute of chartered Accountant of English and Wales (ICAEW) defineds internal control as the whole system of controls financial or otherwise, established by management in order to carry on the business of an enterprise in an orderly and efficient manner, ensure adherence is management policies, safeguard the assets and secure as far as possible, the completeness and accuracy of the records.
MAYO and BPP (1988) defines it as the measure 8taken by an organization for the purpose of protecting its resource against wastes, fraud, inefficiency ensuring accuracy and reliability in accounting and operating data, securing compliance with organization policies data, securing compliance with organization policies and evaluating the level of performances in all division of the organization.
From these definitions, it can be deduced that internal control comprises the plan of an organization and all of the coordinate methods and measure adopted within it, to safeguard it assets, check the accuracy and reliability of its accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies.
- OBJECTIVE OF INTERNAL CONTROL SYSTEM IN BANKING INDUSTRY
Internal control objectives are channeled towards ensuring adherence to managerial policies.
The central bank of Nigeria reported that the background development in Nigeria was attributable to weaknesses in the internal control system of the banks. This has clearly pointed out the picture of how Nigeria banks in a nut-shell, the damage which this menace called fraud has done to the banks in innumerable and needs urgent attention. Therefore the attempt to put and end to this economics degradation gave rise to the topic of this research study the impact of internal control in the banking sector in Nigeria with guarantee trust bank plc as a case study. However, this study is aimed at verifying the conception that and effective and reliable of internal control system is the best control measure for preventing and detecting fraud especially in the banking sector.
- CAUSES AND PREVENTION OF BANK FRAUD
Economic, social psychological, legal and even infrastructural causes. The immediate causative agents of frauds in general as provided by Ogbunka (2002) are as follows.
- Availability of opportunities to perpetrate frauds and forgeries
- Human greed, alliance, instability
- Poverty and the ulidering gap between the rich and the poor
- Preaching misplaced social values moral and spiritual decadence
- Increasing incidences of unemployment
- Increasing financial borden on individual
- Misapplied intelligence-say for adventure
- Job insecurity
- Social misconception that bank’ money nobody’s money property and therefore can be defrauded
- Societal expectation
- Inadequate training of personnel
- Unhealthy comparison and competition
- Revenge
- Peer group pressure
- Non adherence to ethnical standed
- Leadership by bad example
- Poor/weak recruitment policies
- Over ambition/frustration of stuff
- Increasing and changing sophistication in technological equipment
- Inadequate training of manpower
- Societal indiscipline especially with money
PREVENTION
- Effective control mechanism to check negative deflation
- Consistent government policies will get a way to help business organization
- Planning for today as well as tomorrow
- Good management and effective control of the organization
- Management should provide effective leadership in such a matters probity
- The management should study the environment in detail and understand its strength and weakness
- THE PRINCIPLE OF EFFECTIVE AND RELIABILITY OF INTRANAL CONTROL IN BANKING SECTOR
There are certain principle as rules that govern the achievement of effective and reliability of internal control in the banking industry. In order to achieved the effective and reliability of internal control, the following steps must he follows.
- The information given to the decision making must be accurate and relevant.
- The information given to the decision makers must be current.
- The management has to establish a standard that specify the expected performance.
- The management should take measurement of actual performance.
- The management should compare the standard performance with the actual performance of find the variance between them.
- The outcome is spent to the control unit, which is needed by a manager.
- Then the manager need to exchange the performance in according with the already project with the influx of banks in the wake of deregulation it became apparent that existing level of trained bank personae was inadequate to serve existing and emerging new one’s.
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
This chapter is to highlight and reliability of internal control system in the banking industry such as guarantee trust bank Nigeria Plc Ilorin for simplicity and dear understanding a descripture methods of analysis is adopted.
More so, data are colleted from both primary and secondary sources, Primary source based on composition of questionnaire and personal interview of both the staff of guarantee trust ban PLC and their customer which yield full explanation study of the operation of guarantee trust bank Nigeria PLC (public Limited company).
The personal interview was conducted with the objective of gathering effective data on internal control system of the organization and possible opinion seeking and how problem of the system an he solved.
- INTRODUCTION
Internal control like auditing procedure has grown with the passage of time from simple steps taken by properties of business to safeguard cash and to check the accuracy of the book keeping.
Therefore, in the concept of wage the operating of internal control covers all department and every activities of a business concern including:-
- Method of internal check
- Internal audit
- Financial and cost accounting control functions
- Methods of delegate authority and responsibility for certain functions such as purchasing selling or marketing production research
- Use of budgeting techniques, time and method, training and personal programs e.t.c.
- Preparation of is satisfied analysis financial statement including operation summaries and reports.
- HISTORICAL BACKGROUND OF GUARANTEE TRUST BANK
Guarantee trust bank Plc was incorporated in July 1990 as a private limited liability company wholly owned by Nigeria individual and institutions. They where Licensed as a commercial bank in August 1990 and concerned operation in February 1991.
In September 1996. Guarantee trust bank Plc became a publicity quoted company and won the Nigerian stock exchange presidents micro award that same year and gain in the year 2002, 2003, 2005 and 2006 the bank also run-up for the quoted company of the year award in 2005. in February 2002. they obtained a universal banking license and were appointed a settlement bank by the central bank of Nigeria (CBN in 2003).
The bank maintains the culture of excellent and goes to great lengths to ensure that customers are satisfied at all the time their. Values are high upon professionalism integrity and superior service delivery
- MODIFICATION OF THE RESEARCH QUESTION AND HYPOTHESIS
For the purpose of this study the research questions can be restated as follows.
- Is the internal control system in place, in the bank industry? If not, how can it be improved.
- Can effective and reliable internal control help to reduce banking problem and other internal crisis?
- RESEARCH DESIGN
In carrying out this research work both primary and secondary method of collection data were used as said in the research methodology.
The primary method of collection data comprised basically of questionnaire and personal inter views which yield full exploratory study of the operation in guarantee trust bank Nig PLC. The personal interview was constructed with the objective of:
- Gathering data on the effectiveness of the system of internal control in the organization.
- Seeking possible opinion on how the problem of the system can be overcomed.
The internal control questionnaire are designed to indicate how good it’s the system control? If weakness are discovered, them following question can be asked.
- What errors or irregularities could be made possible by the weakness?
- Could such error or irregularly be material to the account?
- What substantive audit will enable such error or primary purpose of an internal control questionnaire to evaluate the system rather than to describe it. The question shill be drawn in such a way to produce “Yes” where control is good ‘No” is indicate a weakness.
The internal evaluate questionnaire are designed to asses whether specific errors or fraud are possible phases of the appropriate cycle.
- THE STUDY POPULATION
The population comprise of staff and customer of the guarantee trust bank nig PLC. Private individuals, corporate organization and business where interview as the come for business transaction.
- SAMPLING DESIGN AND PROCEDURES
In conducting this research, the researcher chooses the sampling technique for collection the data needed.
The reason for this is because the research believes that it would be more economical and time saving to conduct representation of the whole worker of the company.
According to Adam 5.0 and Johnson T (1985) in his books, they stated that “A sample is a part of population observed for the purpose of making scientific statement or taking decision about the population.
- PILOT STUDY VALIDITY AND RELIABILITY
To ensure viability the research instrument, an experienced researcher expert was asked to help verify the content therein. A protest survey was carried out on 5 respondents using the study order to test differently in the selected organization and also interviews was carried out for the same purpose.
- ADMINISTRATION OF DATA COLLECTION SCHEDULE
The method of gathering data and information being used purposely indicate primary data source, questionnaire and interview and of course secondary source that is reading through related book and literature.
The primary source is chosen because it will permit many, the opportunity of studying internal control system in the banking industry as well gathering necessary information from the employees there in.
The secondary source that is reading through the related literature would save time and cost or even the negligence of cooperation by the employees and can give right access to information than are not be gathered through interview and questionnaire.
- PROCEDURE FOR PROCESSING AND ANALYSIS DATA COLLECTED
After collecting the views and opinions expressed by the various respondents were organized and analyzed in scoring the questionnaire.
The total number of respondents in question consisting of 40 was considered.
Data were analyzed on the bases of frequencies and percentages while correlation co-efficient were calculated.
- LIMITATION OF METHODOLOGY
Although the question were simply constructed for easy filling and to ensure correct responses most of the respondent were co-operate in answering the question while some of the question were not answered adequately.
CHAPTER FOUR
4.1 PRESENTATION AND ANALYSIS
This chapter presents response obtained from bank officers and customer of the Guarantee Trust Bank Plc.
The result were discusses with particular reference to the research question and hypothesis that had been formulated for the purpose of this study.
The questionnaire were processed and the data presented and analysed in the table which include collecting the personal data of the respondents that is their sex, age, marital status, education qualification in the organization and department.
4.2 RESPONDENTS, CHARACTERISTICS AND CLASSIFICATION
TABLE 4.2.1
TOTAL SAMPLE OCCUPATIONAL DATA
| OCCUPATION | NUMBER | % |
| Accountant | 7 | 20 |
| Banking and Finance | 7 | 20 |
| Computer analysis | 9 | 25.7 |
| Secretary | 4 | 11.4 |
| Security | 5 | 14.3 |
| Cleaner | 3 | 8.6 |
| TOTAL | 35 | 100 |
Source: Sample Occupational Data 2012
From the above table it could be seen that 25.7 of the respondents are employees in computer department. The whole respondents whose employees are expected to know about the research topic.
TABLE 4.2.2
TOTAL SAMPLE “SEX” DATA
| SEX | NUMBER | % |
| Male | 24 | 68.6 |
| Female | 11 | 31.4 |
| TOTAL | 35 | 100 |
Source: Sample Occupational Data 2012
Table 2 shows that of which represent 68.6 of the respondent are Male of their staff while 31.4 where female reported marital status.
| MARITAL STATUS | NUMBER | % |
| Single | 11 | 31.4 |
| Married | 24 | 68.6 |
| Divorce | – | – |
| TOTAL | 35 | 100 |
Source: Sample Occupational Data 2012
TABLE 4.2.3
TOTAL SAMPLE”AGE” DATA
| AGE | NUMBER | % |
| 18-30 years | 10 | 28.5 |
| 31-40 years | 20 | 57.2 |
| 41-45 years | 5 | 14.3 |
| 46-50 years | – | – |
| 50 year above | – | – |
| TOTAL | 35 | 100 |
Source: Sample Occupational Data 2012
The analysis in table 4.2.3 above confirms the age of employee and their year in the industry.
TABLE 4.2.4
TOTAL SAMPLE” DEPARTMENT” DATA
| DEPARTMENT | NUMBER | % |
| Branch Administration | 5 | 14.3 |
| Systems (Computer) | 10 | 28.6 |
| Account | 7 | 20 |
| Internal Control | 5 | 14.3 |
| Security | 6 | 17.2 |
| Cleaner | 2 | 5.6 |
| TOTAL | 35 | 100 |
Source: Sample Occupational Data 2012
From the above table, it glaring that both the computer department and the accounting department as the greater number of respondent.
TABLE 4.2.5
TOTAL SAMPLE”LEVEL OF EDUCATION” DATA
| LEVEL OF EDUCATION | NUMBER | % |
| O Level | 6 | 17.1 |
| ND/NCE | 8 | 22.9 |
| HND/BSC | 12 | 34.3 |
| Professionals | 9 | 25.7 |
| TOTAL | 39 | 100 |
Sample “Level of Education Data 2012-
TABLE 4.2.6
COMPARISON OF STATEMENT REFLECTING WHETHER INTERNAL CONTROL SYSTEM ARE IN PLACE AND HOW CAN THAT BE IMPROVED.
| Serial No | Variance | Responded | Yes | No |
| 1 | Are all cheques are cash receive recorded daily? | 35 | 100% | |
| 2 | Are paying in slips prepared by the cashier? | 35 | 100% | |
| 3 | Are all duplicate paying in slips received and stamped by the bank? | 35 | 100% | |
| 4 | Does the cashier count and balance is cash daily? | 35 | 100% | |
| 5 | His there any limit to their authority to sign cheques? | 35 | 100% | |
| 6 | Are All cheques drawn dispatched immediately | 35 | 100% | |
| 7 | Are reconciliation prepared | 35 | 100% | |
| 8 | Are all cheques drawn from the gross or net amount for wages | 35 | 100% | |
| 9 | Are the banks reconciliation cheques are initiated | 35 | 100% | |
| 10 | Are the cheques written by staff | 35 | 100% | |
| 11 | Are voucher used on all payment are signed by recipient | 35 | 100% | |
| 12 | Is the petty cash book regularly examined by responsible officials and initiated? | 35 | 100% | |
| 13 | Are project required signed for? | 35 | 100% |
Source: Sample Occupational Data 2012
It could be observed that all question are asked, has 13 respondents given despondence “Yes” that is 100% therefore indicating whether effective and reliable internal control can help to reduce failure in banking industry.
Using the correlation co-efficient to find degree of the relationship between the variable Y and x with Yes and no
R = n∑xy – (∑x) (∑y)
[n∑x2 – (∑x)2] [n∑y2 – (∑y)2
| X | Y | X2 | Y2 | XY |
| 320 | 75 | 102400 | 5625 | 24000 |
| 335 | 70 | 112,225 | 4900 | 23450 |
| 405 | 84 | 164025 | 7056 | 34020 |
| 310 | 76 | 96100 | 5776 | 235600 |
| 380 | 77 | 144400 | 5929 | 2926 |
| 195 | 56 | 38025 | 3136 | 10920 |
| 265 | 59 | 70225 | 3481 | 15635 |
| 320 | 78 | 102400 | 6084 | 24960 |
| 450 | 84 | 202500 | 7056 | 37800 |
| 360 | 85 | 129600 | 7225 | 30600 |
| ∑x 3340 | ∑y 744 | ∑x21161900 | ∑y2562268 | ∑xy254205 |
Let “No” be x and
Let “Yes” be y
No = 10
∑x = 3340
∑y = 744
∑x2 = 1161900
∑xy = 254205
R =
n∑xy – (∑x) (∑y)
[n∑x2 – (∑x)2] [n∑y2 – (∑y)2
r = 10(254205) – (3340) (744)
[10 (1161900) –(3330)2 [10(56268) – (744)2]
r = 2,542,050 – 2,484,960
[1,619,000 – 11,155,6600] [562,680 – 553, 536]
r = 57090
463,400 – 9144
r = 57090
454256
r = 57090
65094.77
r = 0.88
From the above calculations, the relationship between the variable Y and x in those 10 regions of whether effective and reliable internal control can help prevent banking failure establishment is calculated to be 0.88 signifying a perfect positive or linear relationship between our valuable and banking failure to effective and reliable internal control.
TABLE 4.2.7
COMPARISON OF THE STATEMENT REFLECTING WHETHER EFFECTIVE AND RELIABLE INTERNAL CONTROL CAN HELP TO PREVENT BANK FORTUNE
| Serial No | Variance | Yes | No |
| 1 | Could irregular recording of cash and cheques lead to omission of importance transaction is | 15 | 20 |
| 2 | Can improper safeguard with regards to token money to and from bank lead to theft by armed robber or by staff who knows that control are lacking? | 11 | 24 |
| 3 | Can paying in ship not prepared by cashier lead to Disappearance of deposit | 11 | 24 |
| 4 | Can irregular cash count and daily balance lead to fraud | 11 | 24 |
| 5 | Can too many signatories to bank cheques have any effect on capital | 24 | 11 |
| 6 | Can dummy names on payrolls lead to reduction in the bank profit | 24 | 11 |
| 7 | Could incompetent staff lead to low quality service, and low capacity utilization | 24 | 11 |
CHAPTER FIVE
5.0 SUMMARY, CONCLUTION, RECOMMENDATION AND BIBLIOHRAPHY.
5.1 SUMMARY
This study was undertaken to examine the reliability and effectiveness of the internal control system in banking industry and whether it has been fully utilized in the preventing of business failure.
This research gives entrance altogether of what the work all is about and what is ought to find. It give a brief understanding of auditing which involve were cash audit to more move complex issues such as to ascertain whether the balance sheet and profit and loss for auditing objective to achieved as control is needful.
Penlative research question were asked and hypothesis were formulated to be tested in respect of the problem scope of the study was mentioned and limitation which the research were to encounter in this course of study.
This research also reviewed peoples opinion of the said topic, that business to continue functioning.
The business failure could be noticed when employee start resigning, idleness of machines, when capital for running the day to day affairs become difficult to get and when outside interest holder are more than the original owner of organization, causes which were obviously that of an effective and reliable control.
The researcher concluded by suggesting that if there were proper reporting that bad corporate communication sales decline will be erased and adherence to authorization and approval could check excessive frauds, which gradually deteriorate working capital rotational of having capability, commensurate with responsibility segregation of duties, supervisor physical verification of asset, accuracy of record e.t.c .
- CONCLUSION
It is pertinent to note that for an organization to continues functioning properly, responsibilities must be allocated and define, also lines of reporting must be identified, strong adherence to authorization approach location of employee all duties must be segregated supervised, physical verification of assets and accuracy of records. The bank used as a case study was the guarantee trust bank of Nigeria plc. Control exist in the system and adequately but there was room for improvement.
It was shown in our test that, any inefficiency in any aspect of control would lead to one problem or other leading to business failure.
- RECOMMENDATIONS
The effectiveness and reliability of internal control system can help in improving the performance and continuity of operations of guarantee trust bank Nigeria plc
- The management should organize regular symposium, use of circular new, letter and manuals to enlighten and educate their employees and checks on the role of internal auditor in the bank.
- The system of internal control and its procedures must be evaluate at different state of operations and where loopholes are discovered, adequate steps should be taken to concept the immediately.
iii. The internal auditor department should not noly be honest and objective but must seen to be so, some qualities expect of them as professional qualifications experiences faithfulness and diplomacy.
- The internal control system should be reviewed to overcome. Some of its weakness which include all items for batching that must be thoroughly checked and others involved should make sure that all items needed in a batch are well prepared.
BIBLIOGRAPHY
ALALADE O.A (1990): Essay on auditing concepts
principles and practice (peacock publisher)
FAGBIHUNGBE O.B (1993): Researcher methods
Nigerian tertiary institution role consult human resources management and research
JADISH PRAKISH (1990): auditing principles, practices and
problem
JACK GRAY AND KENNETH S. JONSON (1979):
Accounting and management action 2nd edition. Mc graw hill inc. new York 1979.
MILICHAMP A.H (1990): Auditing instructional manual
for accounting students (or publications London.
OKOLO J.U.T (1989): Management audit (Amblic press
Benin city
SULAIMAN A.A (1994): Business management series
1994
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