INTERNAL CONTROL FRAMEWORK IN PRIVATE COMPANY IN NIGERIA
1.01 GENERAL DESCRIPTION OF THE AREA OF STUDY
Internal control is an integral part of accountancy and auditing. Any discussion in auditing literature will not be complete without internal control. Internal control can be likened to the “heart” which regulates the business “blood”. No business can succeed without effective internal control system. Internal control can also likened to the “brake” and “steering” in a vehicle, which if are not there, the business “train” will get crushed. It can also be likened to the laboratory or quality of products by all financial activities of an establishment. It plays an important role as far as prevention and detection of crime is concerned and protecting the organization’s resources.
It is a process affected by an organizations’ structure, work and authority flows, people and management systems, design to help the organization accomplish specific goals or objectives. It is also a means by which organization’s resources are directed, monitored and measured.
Based on this, this research work is centered on internal control framework in the construction companies in Nigeria. With reference to Setraco Nigeria limited Ishiagu – Ebonyi State.
1.02 HISTORICAL BACKGROUND OF SETRACO NIGERIA LIMITED
Setraco was established by two young entrepreneurs called Said Walat and Inno Umoru with merely N100,000. It was located in the then Bendel State. It started by constructing township and district roads and undertaking the rehabilitation of various roads in Bendel state before being awarded the construction phase I of the Atuze – Otuo – Uzebba road.
Over the last 30 years the company has been rapidly grown to become one of the largest constructions company in Nigeria specialized on roads and bridges with its branches in around 20 states of the federation. The states include Kogi state, Ebonyi state etc. Setraco has played a key role in developing Nigeria’s infrastructure as the Country strives towards becoming a developed nation. Setraco ensures that all projects are successfully completed to specification and in line with the company’s sense of responsibility towards our Clients and host communities.
Setraco Nigeria is a member of the Setraco International Holding group of companies. The Company is also technically partnered with a number of leading design and consulting firms across the globe which enables us to present our clients with cutting edge solutions for their needs.
Setraco Nigeria Limited is a leading engineering company with over 35 years in delivering value-added civil and infrastructural projects in Nigeria.
Having continually executed and delivered projects in Nigeria over the past 35 years, the company has cemented its reputation as a competitive contractor guaranteed to deliver standards set by our Clients.
Our vision is to build on that reputation and continue executing projects across Nigeria, in the hope of being able to touch the lives of all Nigerians positively by completing much needed infrastructure development in their region.
It is our belief that the success achieved by the company is a result of the management’s attention towards community relations, customer satisfaction, supplier relations and employee motivation.
With dedicated Corporate Relations, Procurement, Human Resources and Contracts Departments the management has put in place the necessary policies and procedures upon which Setraco can build going forward.
In Ebonyi State, it is located in Amaeze Ishiagu in Ivo Local government area. The branch of the quarry site is called Amaeze quarry site. It is a member of Setraco technically partnered with a number of leading design and consulting firms across the globe.
1.03 PROBLEM ANALYSIS
This research work is centered on internal control framework in Setraco Nigeria limited. Despite the effectiveness of internal control in Setraco Nig. Ltd, the following problems still occur.
a) Loose system of management in the organizations management system
b) Lack of adequate system of internal control
c) Lack of internal checks and balances in the various level of the organization
d) Lack of adequate internal auditors services
e) Lack of effective utilization of the framework
1.04 PURPOSE OF THE STUDY
The purpose of this research work is to review the essential of internal control framework in Serrano Nigeria limited. The following objectives are to be achieved:
a. To find out internal control frameworks in private organization in Nigeria.
b. To find out the extent to which internal control frame work guiding the organization is being adhered to.
c. To identify the common internal control frameworks in Nigeria.
d. To find out the role of internal auditing in the internal control framework in private organization.
1.05 RELEVANT RESEARCH QUESTION
This research work is set out to answer the following questions
a. What is the internal control frameworks used in private organization in Nigeria?
b. To what extent is internal control framework adhered to in private organization?
c. What are the common internal control frameworks in Nigeria
d. Does internal auditing has a role in the internal control framework in private companies?
1.06 DELIMITATION (SCOPE) OF THE STUDY
The use of internal control in an organization is an efficient and effective management system in an organization, thereby ensuring accountability, standardized management system and successful operation. But the researcher limits her work solely on the use of internal control framework in the organization through the analysis of the rules of managing directors and internal auditors in the organization.
The problems encountered as a result of carrying out this research are:
a) Regulation on organisation’s internal control and risk management system
b) Problems are compounded when the term, if not management directives are carried out throughout the organization
c) Misappropriate management of the framework.
It was assumed that the management and staff of Setraco Nigeria Limited Ishiagu, Ebonyi State will review the essential of internal control framework to help enable work efficiency and segregation of duties in the company.
It was also assumed that the organization will gather literature to propose an appropriate study on internal control framework
And also to ensure that provision of laws, rules and regulations guiding the organization are strictly adhered to.
1.08 SIGNIFICANCE OF THE RESEARCH QUESTION
Every research work is expected to yield good result both to the society and the researcher when conducted. Therefore, this research work has been proposed to benefit the researcher and the entire students of Akanu Ibiam Federal Polytechnic Unwana, Ebonyi State, and also for accountancy students embarking on their own project research as a secondary source of data and for other purposes outside the school environment.
Thus, this study is aimed at revealing the internal control framework as stipulated by COSO updated in 2011.
Finally, it teaches the use of internal control framework as a tool for effective and efficient management skill.
1.09 DEFINITION OF UNFAMILIAR TERMS
a. Internal Control: this can be defined as a whole system of controls, financial and otherwise established by management in order to carry out business of the organization in an orderly and efficient manner, ensure adherence to management policies, safeguard assets and ensure completeness and accuracy of the record.
b. Framework: A set of assumptions, concepts, values and practices that constitute a way of viewing reality.
c. Management: This is the organization and coordination of the activities of a business in order to achieve a defined objectives.
d. Auditing: Is a systematic examination of the books and records of a business or the organization in order to ascertain or certify and to report upon the facts regarding the financial operation and the result thereof.
e. Auditor: This is a person responsible for examining the financial statements prepare by the management to see that the financial statements agree with the underlying accounting records, give a true and fair view.