1.1 (BACKGROUND OF THE STUDY)
The human society is increasingly becoming more complex. We live in a society in which both our work and leisure activities are dominated by both private and public complex organization. Organizations emerge to carry out certain activities to the benefit of any of its members and the public. Everyone in the organization carries out certain activities to contribute to the goals of the organization and these activities can be positive or negative, high or low. All of those efforts put in place by individual to achieve organization goal is called “individual performance” the sum total of individual and group effort is referred to as organizational performance. Thus, the objective of every manger is to ensure the individual and groups within the organization put in their best to bring about the performance need to be managed so as to contribute to organization expectation goal, and to being about performance success which is the essence of organization; there is need for the success which is the
EFFICIENT INTERNAL CONTROLS SYSTEM AND HUMAN RESOURCES MANAGEMENT
essence of organization, there is need for the management to predict and control individual and group behaviour so as to reduce the incidence of unfavorable attitude. In other words, it is not only on individual level only that performance is evaluated. Organization at regular interval always evaluates its performance against certain criteria to see if it is efficient and effective. These criteria have variously termed as performance indicator. These performance indicators could be meeting goals, sourcing of inputs, organizational participant and satisfaction etc. Internal control is not only essential to maintaining the accounting and financial records of an organization, it is essential to managing the entity. Reinforcing internal control is generally seen as one of the most important steps in avoiding negative surprises. Effective internal controls ensure that risks are identified at an early stage. As important as internal control is everyone such as the external auditors, the management, the management, the board of directors, the shareholders of large public companies, the government etc has interest in it. According to the committee of sponsoring organization of the Trade Way Commission (COSO) internal control system is a process, established by an entity’s board of directors, management and other personnel, to provide reasonable assurance regarding the achievement of objectives in the following categories. i. Effectiveness and efficiency of operation ii. Reliability and financial reporting iii. Compliance with applicable laws iv. Regulations and safeguarding of assets against unauthorized acquisition, use or disposition.
Division of duties make internal controls system to be effective, the fundamental principle underlying adequate division off duties is that employees who, as part of their normal, have access to an entity’s assets should not also have uncontrolled access to the records that establish accountability for those assets.
1.2 STATEMENT OF PROBLEM
In efficient internal controls system and human resources management is an important cause of the organization crises. Inadequate internal controls system has often been cited as one of the constraints in achieving the expected organizational performance in the economy and also lapses on the authority of staffs. Consequently, a major issue in organization today relates to the prospect of adopting the most relevant internal control system in the organization performance.
1.3 PURPOSE OF THE STUDY
The research study focuses mainly on the impact of internal control system on organizational performance. The specific objective includes: – To determine the impact of internal control system on organizational performance. – To know how the internal control system influence individual performance in the organization. – To determine the relationship between organizational performance and internal controls system.
1.4 SIGNIFICANCE OF THE STUDY
The importance of this study is to critically analyze and assess the internal control system for organization performance with particular reference to Nestle Nigeria plc, Agbara branch. Its significance shall be evident in the following ways. The management and staffs of the organization would understand peculiar problems affecting their procedure. In the areas of recording, authorization and custody of assets and liability and would supply the necessary means of curb menace.
1.5 RESEARCH QUESTIONS
These are some questions that will be relevant to help carry out the research work to perfection such as: – Does internal controls system enhance organizational performance? – Does internal controls system help the organization in case of workers commitments to work? – How does internal control system increase organization productivity?
1.6 RESEARCH HYPOTHESIS
These are statements which a research draw up to assist him/her in achieving the aims and objectives of the study or research effort, they form the basic findings of the study thus: Ho: Internal controls system does not enhance organizational performance H1: Internal controls system enhance organizational performance Ho: Internal controls system does not encourage organizational growth. H1: Internal controls system encourage organizational growth Ho: Internal controls system does not increase organizational productivity H1: Internal controls system increase organizational productivity 4
1.7 SCOPE OF THE STUDY
The scope of this study is limited to the internal controls system in organization. Nestle Nigeria Plc Agbara branch, shall serve as the case study and the research sample shall be derived from the organization.
1.8 LIMITATIONS OF THE STUDY
The limitation envisages in the course of this research work will include: – Time constraint – Financial constraints – Inaccessibility to data and officers – Low response rate to questionnaire and interviews.
However, notwithstanding the above mentioned limitations, the good “texture” of the research work is not impeded.
1.9 DEFINITION OF TERMS
At this point it is pertinent that some terms used in the course of this research should be defined in summary to help faster a general understanding of the work. Although no definition over embraces all characteristics or traits of a phenomenon and attempts to do this make it too broad and superficial to its analytical meaning. However, this study provides working definitions concepts as they appear throughout in this work and it includes the following: Accounting: This is defined by the American accounting association as the process of identifying, measuring and communicating financial information to permit informed judgment and decision by the users of the information. 5
Controls: Control is an integral part of the process of management Payne and Payne (2003) defines control as monitoring performance of the delegated task so that the expected results are successfully achieved.” It is synonymous with management itself. It embraces the various processes by which management determines its objectives, draws up plan to attain these objectives, organize and supervise the operation necessary for the implementation or plans and appraise performance. Auditing: This is a process carried out by suitable qualified auditors during which the accounting records and financial statement of an organization are subjected to examination by independent auditors with the main purpose of expressing an opinion in accordance with his term of appointment. Auditors: This is a person who officially examines the accounts of an organization. A person who performs an audit. Internal control: According to audit guidelines, it is the whale system of controls, financial and otherwise established by the management in order to carry on the business of the enterprise in an orderly and efficient manner, ensure adherence to management policy, safeguard the assets to secure as far as possible the completeness and accuracy of records in addition to internal audit. Management: Management is the process of activities completed efficiently and effectively with and through other people. Organization: Organization is a group (large or small) collaborating in a structural and relatively permanent way in order to achieve one or more goals. It is also a rational co-ordination of the activities of a number of people for the
achievement of some common explicit goal through division of labour and function and through hierarchy of authority and responsibility. System: A system consists of parts and each part (structures components) is contributing to the goals of the whole in an independent manner. Performance: Performance is all of the efforts that individual contribute towards organization goals. Organizational performance: Organizational performance is the sum total of individual and groups efforts and contributed towards organizational goals.
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