Internal Control As An Aid To Accountability In The Public Sector. (A Study Of Biase Local Government Area, Cross River State)

Internal Control As An Aid To Accountability In The Public Sector. (A Study Of Biase Local Government Area, Cross River State)

First Part

Introduction

1.1 Introduction To The Study

According to Okezie (1999:43), internal control is comparable to the heart, which regulates the business’s circulation. Without an effective control system, no business can succeed. Internal control can also be compared to a vehicle’s brake and steering, without which the business “train” will crash. It is comparable to the laboratory or quality control apparatus that regulates the quality of an organization’s products. It is the hub of all financial activities in an organization.

Internal control is one of the essential measures for establishing and maintaining management control within an organization. It encompasses the entire fundamental element of management control and is the principal element of appraisal, measurement, and evaluation control.

An effective control system is a prerequisite for the achievement of organizational objectives, yet it has remained one of the greatest challenges confronting contemporary businesses. It is an extremely broad topic that is not limited to the accounting field but encompasses all organization activities.

Generally, every aspect of human endeavor requires management. For instance, the manager or director controls the business, the pastor controls the church, and the chief teacher or vice chancellor controls the school, depending on the situation. All of these are aimed at achieving satisfaction, maximizing profits, adhering to ethical standards, and minimizing expenses or losses. However, these requirements cannot be reached without an effective and well-organized internal control system.

The consultative committee of accounting bodies in the United Kingdom (auditing guidelines 1985:5 defined internal control as “the entire system of controls, financial or otherwise, established by the management in order to carry out the business of the enterprise in an orderly and efficient manner, to ensure adherence to management policies, to safeguard the assets, and to ensure, to the greatest extent possible, the completeness and accuracy of the records.”

The primary components of an internal control system are accounting controls and administrative controls. However, for the purposes of this research endeavor, the emphasis is primarily on accounting control.

Internal control is essential in the government accounting system because representative government depends on a system of checks and balances to protect the interests of taxpayers and other citizens. It is a disposition of operations and procedure in which the completion and recording of every transaction requires the participation of two or more individuals. In addition to the aforementioned conditions for the existence of internal control, the interrelationship of records must be such that the occurrence of another or others triggers the existence of internal control.

In recognition of the essential characteristics of an effective system of internal control, this research project will attempt to evaluate the fundamental elements of a well-organized system of internal control as they pertain to Biase local government area, Cross River State. In light of this, the researcher will investigate the various aspects of the local government and its administrative policies, focusing on how the local government records its transactions, its system of authorization and approval, the separation of duties, and the protection of property.

The administration of the public sector is solely responsible for the implementation of the system it requires and the internal control measures associated with that system. The concept acknowledges that human beings are imperfect. There is always the possibility of: honest and genuine errors. False manipulation and intentional distortion. Unobjective evaluation and reporting.

All of these indicate the inherent frailty of an organization. This necessitates a robust internal control system that is capable of producing the intended results, i.e. public accountability.

1.2 Description Of The Problem

In recent years, internal control has been singled out for special emphasis. Most authors have written about the evaluation of the effectiveness of internal control measures in the public sector, and it has been portrayed as a problem the majority of the time. Some focus on the recording pattern, inventory control system, segregation of duties, and authorization and approval procedures, while others are concerned with physical check issues.

Internal control is frequently cited as the source of the majority of public sector problems. Failures and mismanagement in public sectors are attributed to problems with internal control.

Given that internal control is crucial to the viability of public sectors, the researcher wishes to assess the effectiveness of internal control measures within public sectors. The researcher is also interested in identifying the factors that contribute to the achievement of an effective internal control system and the problems associated with this. Duplication of functions and responsibilities, embezzlement of funds, errors of omission and commission, overstaffing, theft and misreporting of data are some of these issues. Why do these difficulties exist? What impact does this issue have on the overall efficacy of the organization? In addition, the researcher wishes to identify the numerous efficiency and effectiveness measurement criteria for an internal control system. All of these necessitate research, and the objective of this study is to find solutions to the aforementioned issues pertaining to public sectors.

1.3 Description Of The Objectives

The impossibility for the chief executive to exercise direct, personal supervision over operations has resulted from the local government’s growth in size and scope, which now encompasses a vast array of specialized facilities and technical operations, and the numbering of villages in tenth place. Since he can no longer rely on personal observation as a means of evaluating operational results, the chief executive must now rely on the unit heads, department leaders, and a steady stream of accounting and statistical reports to control and direct the sector.

The information provided maintains management informed regarding the sector’s policy implementation. It enables management to determine whether government regulations are being followed and whether the organization’s financial position is stable for accountability purposes.

Therefore, the following are the objectives of this study:

Determine the rate of implementation of an internal control system in Biase local government area, Cross River State.

To provide the public sector with recommendations for development based on findings.

To add to the existing knowledge of internal control as a tool for accountability and to make any necessary recommendations for the government that finances the sector.

4. To make reasonable recommendations on how to achieve a good internal control as a means of controlling costs and protecting assets, with the goal of ensuring the appropriate accountability of public funds.

Identifying the probable factors that impede effective internal control measures.

To make general and specific recommendations will, according to the researcher, make internal control more effective in the public sector.

1.4 Research Questions

In addition to other primary data, the following questions were utilized for the completion of the study.

Does internal control in the public sector produce the intended effect or result?

2.Does internal control allow for the separation of functional responsibilities?

3.Does internal control provide an adequate system of authorization and record procedures for accounting control over assets, liabilities, revenues, and expenses?

4. Does the sector’s internal control provide adequate accountability for records?

5. Does internal control provide each department with effective procedures for carrying out its duties and responsibilities?

6. Does internal control allow for the detection and prevention of embezzlement, fraud, and errors?

1.5 Research Hypothses

Several variables must be taken into account in order to assess the effectiveness of internal control measures in the Biase local government area, Cross River State. The researcher wishes to uncover these variables in order to comprehend the role performed by the implementation of internal control measures in the survival of the public sectors.

The researcher formulates the following hypotheses based on the problem statement and the purpose of the investigation:

Internal control in the public sector does not produce the intended effects or outcomes.

Ho: The internal control system does not provide adequate separation of functional responsibility.

Ho: Internal control does not provide an adequate system of authorization and record procedure for accounting control over assets, liabilities, revenues, and expenses.

In the sector, internal control does not provide adequate accountability for records.

5. False: Internal control does not provide a sensible practice for the performance of each department’s duties and functions.

Internal control does not provide for the detection and prevention of embezzlement, fraud, and errors.

1.6 Significance Of The Evaluation

This type of research will be significant for the government, business organizations, academia, and the researcher himself.

The government establishment is frequently accused of dishonest manipulation and deliberate distortion, thereby evading public accountability. In light of this, the study’s significance encompasses the following:

1. GOVERNMENT: It is anticipated that the findings of this research and the subsequent recommendations will go a long way toward assisting the state and federal governments in achieving their goals and objectives and determining whether or not the accusation is true.

Every establishment must maintain a cordial relationship with business organizations. The disclosure of this relationship and the government’s actions will go a long way toward informing the public about the government’s efforts to provide adequate amenities and sound infrastructure.

3. ACADEMIC: By revealing the distortions in the local government and uncovering some of their offenses, this study will contribute to the academic community’s understanding of the dynamics of Biase local government area, Cross River state.