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Assessment of Effectiveness of Internal Control in Government Ministries

The document summarizes a study that assessed the effectiveness of internal control systems in government ministries, using Benue State Ministry of Finance as a case study. The study found that the ministry prepares annual budgets promptly and has adequate expenditure tracking to prevent financial recklessness. However, the study recommended that the ministry should adhere more strictly to budgeting principles and procedures to ensure flexibility. It also recommended that oil expenditures be properly authorized and recorded by appropriate personnel to enhance monitoring. The study used questionnaires and interviews of 80 ministry staff and statistical analysis to evaluate the internal control system.

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Ronnie Balleras Pagal
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181 views

Assessment of Effectiveness of Internal Control in Government Ministries

The document summarizes a study that assessed the effectiveness of internal control systems in government ministries, using Benue State Ministry of Finance as a case study. The study found that the ministry prepares annual budgets promptly and has adequate expenditure tracking to prevent financial recklessness. However, the study recommended that the ministry should adhere more strictly to budgeting principles and procedures to ensure flexibility. It also recommended that oil expenditures be properly authorized and recorded by appropriate personnel to enhance monitoring. The study used questionnaires and interviews of 80 ministry staff and statistical analysis to evaluate the internal control system.

Uploaded by

Ronnie Balleras Pagal
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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ASSESSMENT OF EFFECTIVENESS OF INTERNAL CONTROL IN

GOVERNMENT MINISTRIES: A STUDY OF BENUE STATE


MINISTRY OF FINANCE.

ABSTRACT
This study tackles the importance of evaluating the effectiveness of internal control
system in government ministries (units). With particular reference to Benue State
ministry of finance, the study sought to find out the impact of internal control
system on the performance of Benue State ministry of finance. The sample of the
study consists of eighty staff of the ministry selected from the ministry using a
stratified random sampling. The instrument used in collecting data is
questionnaire and personal interview while simple percentages are used to analyze
the data. Chi-square was used to test the hypothesis. The study found out that
Benue State ministry of finance do prepare annual budget promptly and also have
adequate expenditure tracking to prevent financial recklessness. The researcher
recommended that, in preparation of budget, the Benue State ministry of finance
should adhere strictly to the principles and procedures to ensure that slack are
built into the budget and also oil expenditure should properly authorize and
recorded by appropriate personnel to enhance monitoring.

CHAPTER ONE: INTRODUCTION


1.1

Background to the study1

1.2

Statement of the problem...2

1.3

Objectives of the study...3

1.4

Research questions.4

1.5

Research hypothesis...4

1.6

Significance of the study5

1.7

Scope of the study...5

CHAPTER TWO: LITERATURE REVIEW


2.1.

Introduction...6

2.2.

Conceptual Framework6

2.2.1 Internal Control System6


2.2.2 Types of Internal Control Systems...8
2.2.3 Components of Internal Coltrol Systems11
2.2.4 The Essential Characteristics of Internal Control Systems...15
2.2.5 Documentation And Report On The Assessment Of Internal
Control System..18
3

2.2.6 Benefits of Effective Internal Control System19


2.2.8 Effects of Absence of Reliable Internal Control System21
2.2.9 Evaluating the Internal Control System...22
2.3.

Review of Empirical Studies.26

2.4.

Summary of the Review.28

CHAPTER THREE: RESEARCH METHODOLOGY


3.1.

Introduction29

3.2.

Research Design..29

3.2.1 Population of the Study..29


3.2.2 Sample Size and Sampling Technique30
3.3

Sources of data30

3.4.

Instrument of Data Collection.31

3.5

method of data collection....32

3.6

Data Analysis Technique32

CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA


4

4.1.

Introduction34

4.2.

Presentation and Analysis of Data.34

4.3.

Test of Hypothesis/ interpretation of findings..43

4.4

Result of findings and interpretation.51

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION


5.1.

Introduction...52

5.2.

Summary52

5.3.

Conclusion.....54

5.4.

Recommendation..56

5.5.

Suggestion for further study.....56


Bibliography58
Appendix.61

1.1.

INTRODUCTION
5

In every organization, business or government establishment, size


notwithstanding, they must have effective and efficient internal control system so
as to protect it from possible losses or organizational resources. Losses could erupt
as a result of misappriopriation of funds, misuse and vandalization of company
property and errors made by inefficient personnels. To avoid all these losses,
misuse, vandalization of company property, errors e.t.c. in an organization Kola
(2007) view that any form of control is imperature for an organization to
succeed. The collapse of internal control will certainly lead to the extinction of
business of organization. Therefore, adequate internal control should encompass
proper accountability for assets from organization of finance transaction to
reporting and proper documentation of all tasks and procedures must be
maintained.
According to the International Standard on Auditing (ISA 40), the term
internal control system means that all the policies and procedures adopted by the
management of an entity to assist in achieving management objectives of insuring
as far as practicable, the orderly and efficient conduct ot its business including
adherence to management policies. The accuracy and completeness of accounting
records of timely preparations of reliable financial information. It can be fathomed
from these defination that the internal control system extends beyound those
matters which relate directly to the function of the accounting system.

Therefore, internal control system provides assurance to the management of


the dependability of accounting data used in making decision. Decisions made by
management becomes company policies and to be effective, these policies must be
communicated throughout the organisation and consistently followed. However
policies are not adequately followed in the public sector and to the extent that good
governance is only imagined in Nigeria. The project study seek to examine the
preparation and implementation of budget, the level of transparency and
accountability and the extent fiscal discipline in Benue state ministry of finance.

1.2

STATEMENT OF PROBLEM
It has been established that public sector organisation form an important part

of the economy, Setana (2009). Currently, there is a general fall in the operational
performance of these organisations forcing the government to achieve less than its
target objectives. Research conducted to find out the causes of ministries failure to
achieve their objectives point to ineffective internal control system. Adepoju
(2011), found that internal control was primary to the achievement of objectives in
public organisations and the indications of effective internal control system that
enhance performance. The problem here is to find out whether there are effective
control mechanisms with regards to the budgeting, expenditure, tracking,
transparency and accountability, risk management, fraud prevention and detection
in the benue state ministry of finance.
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1.3 OBJECTIVES OF THE STUDY


The study is aimed at examining the impact of internal control system on the
performances of the Benue state ministry of finance. The study has the following
specific objectives:
1. To determine whether budget are promptly prepared by Benue state ministry
of finance.
2. To examine whether adequate expenditure tracking exist to ensure fiscal
discipline.
3. To determine the level of transparency, accountability in the ministry
4. To investigate whether internal control system minimize embezzlement and
fraudulent practices.
1.4 RESEARCH QUESTIONS
The following are the research questions this study intends to address
1. Are annual budget promptly prepared by the Benue state ministry of
finance?
2. Does Benue state ministry of finance have adequate expenditure tracking
and authorisation procedure for fiscal discipline?
3. What is the level of transparency and accountability in the Benue state
ministry of finance?
4. Does effective internal control system minimizes fraudulent practices in the
ministry of finance?
1.5 RESEARCH HYPOTHESES
The main objective of this study is Assessment of the effectiveness of internal
control system in government ministries: The case of Benue state ministry of
finance. To address the issues raised, the following null hypotheses will be tested
to validate or reject the research questions.
Ho1:Benue state ministry of finance does not promptly prepare annual budget
8

Ho2 : Benue state ministry of finance does not have adequate expenditure tracking
to prevent financial recklessness.
Ho3 : The level transparency and accountability in benue state ministry of finance
is not adequately to check fraud and embezzlement
1.6

SIGNIFICANCE OF THE STUDY


Internal control system promotes efficiency, reduce risk of assets loss and

help ensure the reliability of financial statements and compliance with rules and
regulations.
This study will bring the awareness to the need for effective internal
control system in public sector in general and the ministry of finance in particular.
Beside designing the study show the importance of a proper and effective
internal control system in government ministries. It will be of imense benefit to
academics, researchers, and students who are interested in internal control and
financial management. The study therefore provides informative reference materia
as well as add to existing body of literature.

1.7

SCOPE OF STUDY
This study is limited to the internal control system in the ministry of

finance of Benue State. Therefore, the research will cover all units and sections of
the ministry of finance and all relevant components and variebles of internal
control system.

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