CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Internal control according to Okezie (1999:43) could be likened to the heart”, which regulates the business blood”. No business could succeed without an effective control system. Internal control can also be likened to the brake and steering in a vehicle, which, if there are not there, the business “train” will cash. It can be likened to the laboratory or quality control machinery, which controls the quality of products produced by an organization. It is the centre hob of all financial activities of an establishment. Internal control is one of the essential means of establishing and maintaining management control of a business. It involves the entire basic element of management control and is itself the main element of the appraisal, measurement and evaluation control. Effective system of control is a prerequisite for the attainment of organizational goals, but it has remained one of the biggest problems facing modern day business. It is an extremely broad topic and of course is not restricted to the accounting field but embraces all activities of the organization. Generally, all aspect of humans endeavor need control. For instance, the business is controlled by the manger or director, the church by the pastor, the school by the head teacher or vice chancellor as the case may be. All these are aimed at satisfaction, maximizing gains, ethical requirement, minimizing cost or losses. But these requirements cannot be met if there is no efficient and organized internal control. The consultative committee of accounting bodies in the United Kingdom (auditing guidelines {1985:5} defined internal control as “the whole system of controls, financial or otherwise, established by the management in other to carry on the business of the enterprise in an orderly and efficient manner, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and accuracy of the records”. Internal control system is divided into two main aspects – Accounting controls and Administrative controls. However, for the purpose of this research project, eort is concentrated mainly on the accounting control aspect. In government accounting system, internal control is important because the essence of representative government is the existence of a system of checks and balances to safeguard the interest of taxpayers and other citizens. It may be described briefly as a disposition of operations and procedure whereby the accomplishment and recording of every transaction requires the participation of two or more persons. Supplementary of those conditions for constituting internal control is the additional requirement of an interrelationship of records so designed that the occurrence of another or others. In recognition of the essential features of a good system of internal control, this research project will try to evaluate the basic element of an organized system of internal control as it applies to Biase local government area, cross river state. In view of this, the researcher will look at the various facet so the local government, and administrative policies of the local government, with special attention on how the local government records her transactions, system of authorization and approvals, segregation of duties as well as safeguarding of properties. The management of the public sector aairs is totally responsible for the establishment of the system it implores and internal control measures with that system. The concept takes into consideration the fact that human beings are not perfect. There is always the tendency for: Honest and genuine mistake.Dishonest manipulation and deliberate distortion. Biased judgment and reporting. All these portray the overall weakness inherent in an organization. This therefore calls for a strong system of internal control, which is capable of producing the desired eects i.e. being accountable to the public.
