EFFECT OF INTERNAL CONTROL SYSTEM ON RISK MANAGEMENT
Abstract
This study examines the impact of internal control systems on risk management. The researchers considered employees of the Nigerian television station Lagos Center as the target group for the study. This study used a survey and descriptive study design. 100 questionnaires were randomly distributed to staff at his NTA center in Lagos, 97 of which were completed and returned. Acquired data were analyzed using SPSS version 23. Descriptive statistics using simple percentages and means were used to answer the research questions, and inferential statistics of regression were used to test the effect of the internal control system on risk management. Findings include: Management’s risk awareness has had a significant positive impact on the NTA Lagos Center’s internal control system. It was also recommended that NTA Lagos Center management should consider a general risk mitigation approach to the organizational situation through continuous monitoring of the control environment and a coordinated internal risk control system. It was concluded that internal risk management components can be designed to mitigate risk and ensure credibility of performance reports and compliance with laws, policies and regulations. Risk management activities protect an organization, its personnel, assets and interests from physical and adverse impacts by planning, coordinating and directing internal risk management activities.
chapter One
Foreword
1.1 Research background
Companies around the world face risks. Some of these risks, both internal and external, involve enormous losses that can rob an organization of continuity if not properly managed. Risk management is now mandatory. Therefore, this study examines the relationship between internal control systems and risk management. Risk is defined as an uncertain future event that could affect the achievement of an organization’s strategic, operational and financial goals (International Federation of Accountants IFA, 1999). Risk can be defined as the combination of the probability of an event and its consequences (The Institute of Risk Management IRM, 2002).
The purpose of a for-profit organization is to make a profit, stay in business long term, meet the demands and expectations of customers, pay debts on time, and achieve the goals of their stakeholders. These goals are easily achieved when companies are owned and managed by the same person. However, as the business grows and expands, the need for additional employees arises and the owners hire more and more people to run the business. This in turn leads to the so-called separation of ownership and control (Smith, 1776). At this point, the owner realizes that precautions need to be taken to protect the interests of the company and the owner. The issue of ownership and control becomes more complicated when the company is large and listed on a recognized stock exchange. This means companies with more capital expenditures in cash, assets, and people. Therefore, owners need assurance that the company’s intended goals will be achieved, that company assets will be protected from theft or improper management, and that accounting information will be received in a timely manner, accurate and reliable. .
The weaknesses in many companies’ internal control systems have been highlighted by major financial scandals in recent years, resulting in increased attention to risk management, internal control, internal audit, and their role in modern organizations. Following these high-profile corporate misconduct and accounting scandals, companies were asked to describe what risk factors they were exposed to in their corporate governance statements.
1.2 Problem Description
Risk is inherent in all economic activities, and without risk management no organization can survive in the long run, so all organizations must manage risk according to the size and type of activity. Today’s businesses face far greater challenges than ever before due to increased and increasing economic, technological and legal interdependence. Risk management and internal control systems are expected to vary from organization to organization, depending on the size and industry of the organization. It is therefore logical to assume that all business organizations have strong risk management structures and internal control systems to achieve their objectives. They are fundamental to business success and day-to-day operations and help companies reach their goals. Risks can affect many areas of activity, including strategic, operational, financial, technological and environmental. Specifically, for example, fire or other physical may include physical disasters. More generally, risks also include issues such as fraud, waste, abuse and mismanagement. Based on the above, current researchers examine the relationship between internal control systems and risk management in selected organizations.
1.3 Purpose of the survey
The purpose of this research is to:
Examination of the internal control system established in the organization. Identify organizational risks and risk management strategies.
Examination of the relationship between the internal control system and risk management in the organization.
1.4 Research question
What is the internal control system established in the organization?
What is your organization’s risk and risk management strategy?
What is the relationship between internal control systems and risk management in your organization? 1.5 Research hypothesis
E:
There is no material relationship between the internal control system and risk management within the organization
1.6 Importance of research
The significance of this research is as follows.
The results of this research will educate management, shareholders, business leaders, and the public about the different types of risks companies face and the different strategies/internal control systems that can be used to manage/mitigate them. To do.
This study contributes to the literature in the field of internal control systems and risk management and provides empirical literature for future research in this area.
1.7 Scope of investigation
The research is limited to the Nigerian Television Station (NTA) in central Lagos. It also describes the internal control system, the risks faced and the risk management strategies in place within the organization.
1.8 Research Limitations
Financial Constraints – Insufficient financial resources tend to prevent researchers from obtaining relevant materials, literature, or information and efficiently conducting data collection (internet, questionnaires, and interviews). Time Constraints – Researchers will be engaged in this study and other academic studies simultaneously. This reduces the time spent on research work.
1.9 Working with variables
Dependent variable:
Internal control system
Independent variable:
crisis management
Dependent variable:
Internal control system measured by management’s attitude, management’s awareness, and management’s behavior
Independent variable:
Risk management captured by policies, regulations and environmental factors
Y* ₌ f(Y1,
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