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INTERNAL CONTROL AS A TOOL FOR PREVENTION AND CONTROL OF FRAUD IN GOVERNMENT ESTABLISHMENTS

  • Type:Project
  • Chapters:5
  • Pages:71
  • Methodology:Simple Percentage
  • Reference:YES
  • Format:Microsoft Word
(Accounting Project Topics & Materials)
INTERNAL CONTROL AS A TOOL FOR PREVENTION AND CONTROL OF FRAUD IN GOVERNMENT ESTABLISHMENTS
(A STUDY OF FEDERAL PAY OFFICE ENUGU)
ABSTRACT
This study examined “Internal control as a tool for prevention and control of fraud in government establishment” with reference to Federal Pay Office Enugu. This research seeks to study about how government is expected to establish a system of control within government owned organizations and put in place some procedures, techniques and rules that guide activities for optimal utilization of resources. The sources of data collection were primary and secondary sources of data. A survey research design approach was adopted for this study, out of a population of 60 staff, 52 permanent staff of the Federal Pay Office Enugu, were randomly selected through Taro Yamane formular. Three hypotheses were formulated and tested in the course of this study. T-distribution (Z-test) statistical analysis was used to test the hypotheses of the study. The findings revealed that fraud affects the growth of government establishment and the achievement of audit objectives is dependent on strict institution of internal control measures in government owned organization. The study concluded that adequate and efficient internal control should be installed to prevent fraud and misappropriation in the organization. Also, government expenditures should go through due process to avoid fraud and misappropriation in the public sector. The recommendation states that, proper internal control should be made possible by introducing the use of computer base accounting system of control. Finally, management should exercise their responsibility primarily by the installation of appropriate system of internal control to avoid fraud.                   
TABLE OF CONTENTS
CHAPTER ONE: Introduction                        
1.1    Background of Study                            
1.2    Statement of the Problem                            
1.3    Objectives of the Study                            
1.4    Research Questions                            
1.5    Research Hypotheses                            
1.6    Significance of the Study                                
1.7    Scope of the Study                                
1.8    Limitations of the Study                            
1.9    Operational Definition of Terms                    
CHAPTER TWO: Review of Related Literature             
2.1    Conceptual Framework                            
2.1.1    Concept of Internal Control                        
2.1.2    Elements of Internal Control                         
2.1.3    Benefits of Internal Control                            
2.1.4    Causes and Consequences of a Weak Internal Control System    
2.1.5    Concept of Fraud                                
2.1.6    Terms Related to Fraud                            
2.1.7    Types of Fraud                                
2.1.8    Management Responsibilities towards Fraud             
    Controlling/Detection                            
2.1.9    Role of Internal Auditing in Controlling Fraud            
2.1.10     Auditors’ Professional Etiquette                     
2.1.11 Conditions for Functional Internal Control System         
2.2    Theoretical Framework                            
2.2.1    The Policeman Theory                            
2.2.2    Theory of Inspired Confidence                         
2.2.3    The Moderator of Claimant’s Theory                    
2.2.4    Agency Theory                                 
2.2.5    Efficiency Theory                                
2.2.6    Prudential Theory                                
2.2.7    The Theory of Management by Objectives                
2.2.8    The White Collar Crime Theory                     
2.2.9    The Fraud Triangle Theory                         
2.2.10     Fraud Scale Theory                            
2.2.11     The New Fraud Diamond Theory                    
2.3    Empirical Review                                
2.4    Summary of the Review of the Related Literature            
CHAPTER THREE: Research Design And Methodology                
3.1    Research Design                                
3.2        Area of Study                                
3.3        Population of the Study                            
3.4    Sampling Method                                
3.5    Research Instrument                            
3.6    Validity and Reliability of Research Instrument             
3.7    Sources of Data Collection                        
3.8    Method of Data Analysis                            
CHAPTER FOUR: Data Presentation and Analysis            
4.1    Presentation and Analysis of Results                     
4.2    Test of Hypotheses                            
CHAPTER FIVE: Summary of Findings, Conclusions
and Recommendations                                
5.1    Findings                                        
5.2    Conclusion                                
5.3    Recommendations                                
Bibliography                                
Appendix I                                    
Appendix II: Questionnaire                        
CHAPTER ONE
INTRODUCTION
1.1    Background of the Study
    During the last years, there has been a great number of accounting scandals throughout the world; most recent that have been revealed are, among others’ Enron, World Com parlmalat and Famie Mac. These scandals have seriously damaged the confidence in financial reports, as a result of fraud. After this huge number of scandals had profound impact on the profession, leading to the disbanding of the public oversight Board (Mulligan 2022) and the collapse of Arthur Anderson, one for the world’s largest accounting firms (Baher 2002). New legislation (e.g. Sarbanes- Oxley Act of 2002) and a new oversight board are a just a few of the effects resulting to these scandals.
    Fraud involves misallocation of resources or distorted reporting of the availability of resources, so this contradicts the elements of round and prudent management. In addition, these failures have focused attention on auditor’s ability and incentives to detect management fraud. Fraud, as it is currently defined in accounting standards, reports” an international act that results in a material misstatement in financial statements that are the subject of an audit (A.I.C.PA, 2003). There are two ways in which a material misstatement could occur with respect to fraud:  a misappropriation of assets and fraudulent financial reporting.
    Internal control systems can be described as the whole system of control, financial and otherwise established by management in order to carry on the business of the enterprises in an orderly and efficient manner. It involves the control environment and control procedure, all the policy and procedure adopted by the directors and management of an entity to assist in achieving their objectives, including adherence to internal policies, the safe guarding of assets, the prevention and detection of fraud and errors as well as the completeness and accuracy of records with the timely preparation of reliable financial information (Benjamin, 2001).
    The internal control comprises of two components which are the preventive control and the detective control. Our law makers have seen the need for accepting accountability by making a provision for the federal and state government to report on the account of stewardship rendered by these public officers. An internal control system is so significant to organizations mostly in the aspect of assurance, reliability and accuracy of financial reports (Changchit et al, 2001, Badara and Saidin, 2013).
    Internal controls should not be thought as been static, rather they are dynamic and fluid set of tools which involve over time as the business, technology and fraud environment changes in response to competition, industry practices, legislation, regulation and current economic condition internal control needs to be strengthened toward changing the attitude some employees have towards auditors. A common misperception among corporate employees is that internal controls are solely the responsibility of company’s audit department.
    The office of the Accountant General of the Federation was established under Civil service Reorganization Decree No. 43 of 1988 in the Federal Pay Office. The Office is headed by Accountant General of the Federation who is the chief accounting officer for the receipts and payments of account of the Federation. Their mandate is to supervise the account of Federal Ministries and Extra-Ministerial department, manage Federal Government investments, present and publish statutory financial statements of account required by the minister of finance, to ensure compliance with rules, regulation, policies and internal audit guide.
    The Federal Pay Office vision statement is to install and operate an effective accounting system for the control and monitoring of the nation’s finances, leveraging on people and technology in collaboration with all. Their objective is to install and operate a fully integrated accounting and financial management system. Also, they provide a system of the monitoring of the account of ministries, departments and agencies to ensure timely submission of all financial statements to the Auditor General of the federation. But how far have all these fared? The study therefore evaluates the internal control as a tool for preventing and controlling of fraud in government establishment.
1.2    Statement of the Problem
    The problem of this study was developed considering the previous studies in this area, which this study seeks to improve upon such as:
•    Lack of proper records keeping which have brought about fraud in government establishment.
•    Government internal control measures in government establishment do not co-related with the audit objectives.
•    To filter the existing gap by assessing government expenditure using the appropriate warrant.
1.3    Objectives of the Study
    The broad objective of the research work is to examine internal control as a tool for preventing and controlling of fraud in government establishment while the specific objectives include:
1.    To determine the extent that fraud affects the economic development of the country.
2.    To find out the measures that should be taken to ensure that the objectives of internal control are achieved in government establishment.
3.    To determine the means through which the expenditure of the government can be supervised by the government establishment using the appropriate warrant.
1.4    Research Questions
    The following research questions were formulated by the researcher for the conduct of this research work:
1.    To what extent does fraud affect economic development of the country?
2.    What measures should be taken to ensure that objectives of internal control are achieved in government establishment?
3.    How can government establishment supervise the expenditure of government by ensuring that no government fund is spent without the appropriate warrant?
1.5    Research Hypothesis
1.    Ho:    Fraud does not affect the growth of government establishment.
H1:    Fraud affects the growth of government establishment
2.    Ho:    Achievement of audit objectives are not dependent upon strict     government internal control measures.
3.    H1:    Achievement of audit objectives are dependent upon strict     government internal control measures.
4.    Ho:    Incurring of expenditures without proper warrants are the major cause     of fraud cases within the public sector.
H1:    Incurring of expenditures with the proper warrants are the major cause     of fraud cases within the public sector.
1.6    Significance of the Study
    It is expected that the result of this study will help improve financial reporting by government establishments as given below;
a.    It helps the management to formulate and implement all their major policies and objectives by bringing systematic discipline to their process of internal control system and the process of good governance.
b.    Internal auditors and employees of the internal audit unit find this study useful as it would exposé them to their roles, duties, functions and responsibilities.
c.    The study also expects to serve as a useful reference material for future researchers in the area of auditing, especially auditing and internal control system.
1.7    Scope of the Study
    The study is being centered on the “Internal Control. As a Tool for Fraud Prevention and Control in Government Establishment”. The study is narrowed down to Federal Pay Office Enugu. The account and administration department of the Federal Pay Office was used and the study lasted for the period of 2018-2019.
1.8    Limitations of the Study
    Due to the vastness of the area to be covered by the researcher, the researcher found it difficult during the research work.
    Below are problems encountered in the course of this study.
Distance:  Not all the necessary information was gotten due to the long distance from the researcher’s residence to the area under study.
Time:  Time was a great challenge the researcher encountered in the course of this study, as combined with the academic activities which is very brief. More could had been done if there were time available for the study.
Finance:  This has been one of the major problems that face every researcher. Due to level of financial status or background of the researcher, the cost of acquiring the necessary information of this write up was affected.
Cost of Information:  The information gotten within the time available for this study was not adequate to cover the study as a result of inadequate documented materials and insufficient response received on the oral interview conducted and questionnaire distributed.
1.9    Definition of Terms
Internal Control:  This is a process policies and procedures adopted by management or organization to assist in achieving management objectives of ensuring the orderly and efficient conduct of its business.
Fraud:  Fraud is an intentional misstatements in or omission of amounts of disclosures from an entity’s accounting record or financial statement.
Accountability:  The obligation of an individual or organisation to account for its activities, accept responsibility for them and to disclose the results in a transparent manner. It also includes the responsibility for money or other entrusted property.
Auditing:  This refers to a specific and independent examination of books, accounts, documents and vouchers of an organization to ascertain how far the financial statements present a true and fair view of the term.
Management Control:  This control includes the use of budget or management accounting to plan and control organizational operations and the establishment of function internal audit unit or department.
Preventive Control:  This refers to the type that is designed to discourage errors, preventing irregularities from occurring, they are proactive control that helps a prevent a loss.
Detective Control:  This control is designed to find errors or irregularities after they have occurred.
Stewardship:  This is an ethic that embodies the responsibilities, planning and management of resources. The concept of stewardship can be applied to environment economy, health, property, information.
Risk Assessment:  This denotes the identification, analysis and management of uncertainties.
Supervision control:  This control is to be exercised by higher-level officers in the organisation in order to put the activities of the subordinates under check.
 

INTERNAL CONTROL AS A TOOL FOR PREVENTION AND CONTROL OF FRAUD IN GOVERNMENT ESTABLISHMENTS

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Details

Type Project
Department Accounting
Project ID ACC2828
Price ₦3,000 ($20)
Chapters 5 Chapters
No of Pages 71 Pages
Methodology Simple Percentage
Reference YES
Format Microsoft Word

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    Details

    Type Project
    Department Accounting
    Project ID ACC2828
    Price ₦3,000 ($20)
    Chapters 5 Chapters
    No of Pages 71 Pages
    Methodology Simple Percentage
    Reference YES
    Format Microsoft Word

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