INTERNAL CONTROL SYSTEM IN MANUFACTURING INDUSTRIES
(A CASE STUDY OF LIFE BREWERIES LIMITED ONITSHA)
ABSTRACT
INTERNAL CONTROL SYSTEM IN MANUFACTURING INDUSTRIES (A CASE STUDY OF LIFE BREWERIES LTD ONITSHA)
There is a need for strong internal control system in manufacturing organization to make sure that organization assets are safe guarded.
Considering the importance of internal control to life Breweries limited Onitsha the researcher deems it necessary to study the effectiveness of internal control.
Officers of the organization were interviewed and their records were also examined related tools were also reviewed by the researcher.
The researcher revealed that the organization applies internal control measurers though weak, because of the nature of human beings.
The researcher recommends that the company should review their operation, measure applied and improve in their system of internal control by training their staffs and changing the corrupted ones.
TABLE OF CONTENTS
Title page ii
Approval page iii
Dedication iv
Acknowledgement v
Abstract vii
Table of content viii
CHAPTER ONE
1.0 Introduction 1
1.1 Background of study 5
1.2 statement of problem 6
1.3 Purpose of the study 6
1.4 Significant of the study 7
1.5 Statement of hypothesis 7
1.6 Scope of the study 8
1.7 Limitation of the study 8
1.8 Definition of terms 9
CHAPTER TWO
2.0 Review of related literature 11
2.1 Introduction 11
2.2 Internal cheek and internal audit 14
2.3 Internal control in manufacturing industries 24
2.4 Delegation of duties 29
CHAPTER THREE
3.0 Research design and methodology 33
3.1 Sources of data 33
3.2 Sample population and size 34
3.3 Method of data collection 34
3.4 Sources of data 35
3.5 Description of questionnaires 36
3.6 Method of data analysis 37
3.7 Method of typing hypothesis 38
CHAPTER FOUR
4.0 Data presentation and analysis 40
4.1 Data presentation 40
4.2 Interpretation of data 48
4.3 Analysis of data 50
CHAPTER FIVE
5.0 Summary of findings, conclusion and recommendation55
5.1 Finding 55
5.2 Conclusions 56
5.3 Recommendation 56
Bibliography 58
Appendix (ices) 60
CHAPTER ONE
INTRODUCTION
Internal control is defined by the consultative committee of accounting bodies in the united kingdom as a whole system of controls, financial an do otherwise established by the management in order to carryon the business of the enterprise in an orderly and efficient manner, ensure adherence to management polices, safeguard the asset and secure as far as possible the completeness and accuracy of his records.
The individual components of an internal control system are known as “control” or internal control.
According to J.C Ezeh Apil 2001 he defined internal control system as a whole system of control financial and otherwise, established by the management in order to carry on the business of the enterprise in an orderly and efficient manner, ensure adherence to management policies, safe guard the asset and secure as far as possible the completeness and accuracy of the records. The individual components of an internal control system are known as “control or internal controls”.
Internal control by J.C. Ezeh can also be seen in the following definitions they are:
i. As a whole system
ii. Established by the management
iii. Ensure Adherence to management policies
iv. Safeguard the assets
v. Secure completeness
vi. Accuracy of the records
i. Internal control as a whole system, can be seen as a single procedure (e.g a clerical officer Y, check the calculations done by a clerical officer z) or as a whole system. The whole system should be more than some of the parts.
ii. Internal control system are established by the management, either directly or by means of external consultants, internal audit or accounting personnel external auditors may be asked to advice on the establishment of system.
Finally by J. C. Ezeh internal control refutes to the entire system of controls in an enterprise and is not limited to accounting information.
Millichamp A.H of 1991 defined internal control as a whole system of control finance and otherwise established by the management in order to carry on the business of the enterprise in an orderly and efficient manner ensure adherence of management policies and completeness and accuracy of records.
Oknowko I. E of 1994 in his own definition of internal control he defined it as that which comprise the plan of an organization and all of the coordinated methods and measure adopted, within a business to safeguarded its assets, checking accuracy and reliability of the accounting records, promotes operation efficiency and encourage adherence to management policies.
Control is necessary to assure that management policies and directives are properly adherence to.
Management is far removed from the scene of operation in the typical large industry and personal supervision of employers is an impossibility. As a substitute, management must rely on various control techniques to implements its decision and goals.
The responsibility for establishing and maintaining an adequate system of internal control lies with management to decide the extent of the internal control system which is appropriate to the enterprises. It depends on nature size and volume of the enterprise and the geographical distribution of the enterprise and many other factors. Management has recognized internal control as a valuable tool in effectively carrying out its responsibilities and auditors have pressed for improvement in internal control to their effects to be of assistance to management as well as to permit education in audit work made possible by the concomitant increase in the creditability of the accounting records.
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