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INTERNAL CONTROL SYSTEM NIGERIA DEPOSIT MONEY BANKS PROSPECTS AND PROBLEM (A CASE STUDY OF UNION BANK PLC)

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Abstract

The Project File Details Name: INTERNAL CONTROL SYSTEM NIGERIA DEPOSIT MONEY BANKS PROSPECTS AND PROBLEM Type: PDF and MS Word (DOC) Size: 44.3KB Length: 50 Pages

INTRODUCTION

Banks are very important in nation; they are the backbone of the nation’s economy.  Functions of the bank according to ezeuiji (1997), including money creation, acceptance of deposit from the customers, provision of facilities for domestic and foreign remittance, help government in implementing monetary policies etc.

According to the operational standard (guideline). Internal control is defined as the whole system of controls,, financial and otherwise, established  by the management in order and efficient manner, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and accuracy of the records.

The function of internal control system include, the detection  or safeguarding of business asset but despite the fact a that  all bank have internal control system, there have been a lot of problem in the banking sector. Ranging from bank liquidating to defrauding the banks, many banks have been liquidated example of such bank include savannah bank plc, national bank plc (although it is now being resuscitated) merchant bank Nigeria limited Nigeria internal bank limited mention few.

According to central bank of Nigeria (CBN) annual report over (N16 billion) sixteen billion naira was defrauded from the banking sector, also recently a bank was suspended from the clearing system by the central bank of Nigeria (CBN) because of mismanagement of banks resources expert have given reason as to what causes banks distress. According to ezeudiji (1997) one of the causes of bank distress is the internal control system problems include poor or lack of proper authorization of loan and contract, poor loan recovery, failure to collect proper collateral security, management override the control e.t.c.

According to koroye (1989), it bank internal (detective in any significant way) that audit should be decline outright opinion  must be qualified as strictly as possible. It is because of two main reason.

1.2     STATEMENT OF PROBLEMS

Internal control system many organization, including bank is very important because it ensure orderliness, in the organization, advance to management polices, early detection of error and fraud, protection of assets e.t.c.

Internal control system problem have led to closure of many banks in Nigeria, ezudiji (1997) thereby making depositors customer to shareholder of such bank to loss his or her shares. It is inimical to nations economy because provide 90% of the capital employed in Nigeria. Due to the following problem it leads to the following question.

Does bank operation carried out in any orderly manner and follow the procedure laid down. Does transaction recorded accurately and correctly.

1.3           RESEARCH QUESTION

This project has been able to provide answers to the following research questions.

1. What is internal system?
2. How does banks operations can be carried out in internal control system?
3. What are the functions of the internal control system?
4. What are the benefits of internal control system to the government, public, students and researchers?
5. Does transactions recorded accurately and correctly?
6. What cause banks distress?
7. What are the problems facing by internal control system?
8. What are the aims and objectives of internal control system to banks?
9. What is a bank and functions of a bank?
10. What is a fraud?
11. How to control fraud in banking sector

1.4     OBJECTIVES OF THE STUDY

The objectives of the study are:

1. To find out if there is internal control in union bank plc.
2. To investigate the effectiveness of internal control system in union bank plc.

• To find out factors that affects internal control system in union bank plc.

1. To suggest way to improve internal control system effectiveness in union bank plc.

1.5 RESEARCH HYPOTHESIS

Ho: The internal control system is not significantly effective on deposit money bank

H1: The internal control system is significantly effective on deposit money bank.

1.6 SIGNIFICANCE /JUSTIFICATION OF THE STUDY

The study is very importance nowadays were federal government have hard to invest of in Nigeria. Since foreign investor will not invest in any country where there is no good banking sector. The study will be of immense benefit to banks determine the extent to which internal control system is effective. In addition the study would determine the factor problem militating against the to it. The study will be of immense help because most of the founds requires by Nigerian are provided by bank also that affect banking sector also affect many others sectors such as agriculture and economy sector of the nations.

1.7 SCOPE AND LIMITATION OF THE STUDY

This study is limited to union bank plc Muritala Muhammed way branch Ilorin due to financial constraint and other problem. The study can only be generated to union bank plc branch all over the country.

• FINANCE:- due to limitation funds at students disposal, the researcher has no accessibility of some area dues to cost of getting to every part of research areas.
• TIME CONSTRAIN:- considering the time limit, the researcher do not have enough time to research and elaborate more on the work. Another factor worthy of mention was the difficult encounter in getting the right to do the research work at the right time place.
• INSYFFICIENY OF DATA INFORMATION:- most of the information available to the researcher have out dated and the current ones are not easily obtained, therefore the researcher sees it as a constrain to this project work.
• PROBLEN OF SOURING:- some of the respondents regard some questions are secret such as the main target of a fraudster which they regard as confidential and feel reluctant to disclose.
  • 8 DEFINITION OF KEY TERM.

1. BANK:- is a financial institution where money and other valuable items are been kept for safety purpose.
2. INTERNAL: it is the affairs and activities within a country.

• CONTROL: is the power to direct influence or limit something e.g. fraud, error, and to safeguard business

1. SYSTEM: it is a set of things working together as a mechanism or network, the prevailing political or social order.
2. INTERNAL CONTROL SYSTEM: This whole of control, financial and otherwise established by the government in order to carry on business of the enterprises in an orderly manner, ensures stick firmly to management policies the completeness and accuracy of accounting records.
3. MONEY: it is anything which is generally acceptable for making payments or in the settlement of debt.

• DATA: – is a term used to describe basic “FACT” based on measurement and recording something knows or assumed as facts and made on basic reasoning or calculations. It can be said to be unprocessed information or raw facts.
• FRAUD: – is the act of deceiving somebody in order to get money or goods illegally or the use of deception to obtain unjust or illegal financial advantage.

1.9 ORGANISATION PLAN

This research work is divided into five (5) main chapters and each chapter has the following content:

Chapter one is the introduction consisting of the statement of problems, research question, objective of the study, research hypothesis, significance justification of the study, scope and limitation of the study, definition of key terms, and organization plan of the study.

Chapter two is the literature review consisting of the historical of the case study, concept of internal control system, classification of internal control system, reliance control, types of internal control system, objective of internal control system, environment of internal system, requirement for effective internal control system, application of internal control system.

Chapter three is research methodology consisting of the types of data, research design, sample procedure and method of data collection.

Chapter four is data presentation and data analysis and finding.

Chapter five is summary, conclusion, recommendation and references.