THE EFFECTIVENESS OF INTERNAL CONTROL SYSTEM AND PROCEDURE ON PRODUCT INNOVATION IN NIGERIAN BANKS (A CASE STUDY OF WEMA BANKS PLC)
ABSTRACTInternal control in banks helps to protect the bank against fraudulent act and practices. Though its procedure varies from one institution to the other, its aim and objective remains the same. Internal control have therefore help banks to be better managed, more liquid and directed toward profit making by the bank. This project is therefore undertaking to know the effectiveness of this internal control system and procedures on innovation of product in Nigeria. The result was that with effective control internally, product would be well innovated. The result of the findings of the questionnaires would be tested through the chi-square method. CHAPTER ONEINTRODUCTION This research work is an attempt to review thoroughly the effectiveness or otherwise of the internal control systems and procedures in a banking environment. A case study of Wema Bank Plc.The importance of an effective internal audit, internal check, and control system cannot be overemphasized. More so with government policy of promoting accountability by others interested with government fund.Auditing can be described as an activity carried out by an independent person with the sole aim of reporting on the truth. And fairness of a financial statement. It can be regarded as the activity embarked upon by the author when verifying accounting data. Determining the accuracy and reliability of accounting statements. Report and issue reports based on his finding.Internal audit can be appropriately termed as one conducted by an employee of an organization into any aspect of its affairs and work exclusively for the organization. Internal audit can be described as the eye of the board and the watch of the organization's activities. Internal control is the whole system of controlling finances and established by management in order 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.1.2 STATEMENT OF THE PROBLEMThe role of internal auditors of an organization has been underestimated. If not totally relegated to the background when compared with their counterparts in the private practice.That is the external auditor may be attributed to the fact that internal auditors are employees of the organization. The act of underestimating the role of the internal auditor is not exhibited by the authority alone. Workers of the organization also underrate the work of the internal auditors.1.3 SIGNIFICANCE OF THE STUDYThe purpose of the organization's research work is to examine the control system is operating in a banking environment to look out for any loophole out of any loophole or weakness in the audit program as revealed in the response of questionnaires to be administered.Study the relation and interdependence the internal auditors and external auditors. Make recommendations for improvement or a complete change of the system in operation so that the new improved methods can be introduced to replace the old system.The researcher is of the option that the stakeholders of the research work will be beneficial to all stakeholders in the banking environment.If the recommendation put forward is adopted, it will surely go a long way to reduce cases of fraud. Misappropriation inefficient use of assets and availability.LIMITATION OF THE STUDYMany people believe internal auditor can never be independent. This is largely true. Since the scope of any internal department is determined by the management of the organization concerned. The management also dictates low for the audit department can carry out its duties and the types expended from them.RESEARCH QUESTIONSIt is assumed that lack of adequate and lack of organized internal audit systems creates an avenue for fraudulent practices. Unreliable accounting data, lack of good and proper maintenance culture, wasteful spending as well as lack of strict adherence to prescribed management policies and financial regulations. Answers to the following questions will be importantDoes the existing internal audit in the institutions provide safety for their moveable and immovable assets?Is the adoption of a good internal audit procedure the appropriate measure used to eradicate or minimize the occurrence of fraud and other malpractices in tertiary institutions?To whom should the internal audit report?To what extent should the management take action on the reports of the internal audit?DEFINITION OF TERMSINTERNAL AUDITINGThis can be defined as an independent appraisal function established by the management of an organization as services to the organization.INTERNAL CONTROLThis auditing guideline on internal control defines internal control thus: the internal control system is the whole system of controlling financial and otherwise, established by the management in order to carry on the business manner, ensure adherence to management policies safeguard the assets, and score as far as possible the completeness and accuracy of the records.INTERNAL CHECKAn internal check is meant on the day activities or transaction which operates continuously as part of the routine system whereby the work of one person is proved independently to work of another, the prevention of error, all transaction independent of each other. Internal checks involve the distribution of duties of accounting staff in such a way the work of each employee will be subject to continuous and automatic checks by the other members of the company’s staff.AUDITINGAuditing can be defined as the independent examination of and expression on the financial statement of an enterprise by an appointed in pursuance of the appointment and in compliance with any relevant statutory obligation.MANAGEMENT AUDITThis is an inquiry into the advisability of any of the policies of the direction in furthering the objects of the company as defined in the memorandum and into efficiency which they secure the execution of these policies.PRIVATE AUDITThis is an audit conducted into organization affairs by an independent auditor. Because the owners (usually) sole proprietors when the audit to take place not because the law requires it.STATUTORY AUDITThese are audits carried out because the law requires that the accounts be audited at specific intervals. The company and Allied Matters Act (CAMA ’90) make the audit to limited liability Company be compulsory annual..