The study of internal control system as it is practiced in the civil service can not be over emphasize. The project which the researcher has worked on has to do with the civil service hence the topic internal control system in the civil service. (A Case study of Federal Ministry of Finance, Enugu).The researcher went ahead to determine the effective regulation of internal control system as a valuable tool in carrying out effective responsibilities, the objectives, process of control, the various organs f control , the weakness and strength of the internal control in the establishment.However the researcher based his study mainly on the financial Accounting and stores control though there are different types of controls established by the government for managerial efficiency.The research project is divided into five chapters, The introduction, Literature review, The research Design and methodology Data presentation and Analysis, and Finally The Summary of Finds, conclusion and recommendation were dealt with in they research project. Questionnaires were used well in gathering information for the project work.
TABLE OF CONTENTS
1.1 Historical Background
1.2 The study
1.3 Purpose of the study
1.4 Objective of the study
1.5 Policy relevance
1.6 Statement of Hypothesis
1.7 Scope of the study
1.8 Definition of Terms.
2.0 Literature Review
2.2 General background
2.3 The concept of Control
2.4 Types of Internal Control
2.5 Qualities of Good interval control
2.6 Organs of control in Government
2.7 Assessing the strength of internal control
2.8 Principles of internal control in Government
3.0 Research design and Methodology
3.1 Research Design
3.2 Sources of data Collection
3.3 Population of the study
3.4 Sample and sampling technique
3.5 Instrument of data Collection
3.6 Method of Data Collection
3.7 Method of data Analysis
4.0 Data Presentation and Analysis
4.1 Evaluation of data Collection
4.2 Interpretation and Analysis
4.3 Test of hypothesis
5.0 Summary of finding, Conclusion and Recommendations
5.1 Summary of findings
The word control has been in use form time immemorial. In any type of organization one form of control or the other is exercised to see to the small family size to the large business organisation be it in the small family size to the large business organisation and the complex public sector or government institution.
“Control means power or authority to direct order”. To have control authority, power over, regulate, check”. The last two words regulate and Check are of paramount importance to this study.The importance of control in any organization cannot be over emphasized, hence it was said that: “Without audit no accountability without accountability no control and if there is no control where is the seat of power ?
Internal controls as the term itself suggest involves various actions taken within an organisation to assist in checking, regulating and directing the activities of the organization.
The concept of internal control has endued gradually over the years, with the greatest period of development occurring during the decade beginning about 1940. Impetus for such developments came form both management and auditors. Management has recognised internal control as a valuable tools in effectively carrying out its responsibilities and auditors in their effort to be assistance to their clients as well as to permit reduction in and it work made by the concomitant increase in the credibility of accounting records.
However, in Nigerian the history of financial and stores control in the civil service can be traced to 1958 when the finance (Control and Management ) Act was promulgated.
Part 1 of the act provides for “General supervision and control” section 3 of the act goes thus:
Legislative control and Management of Public Finance
The Minister shall so supervise the expenditure and finances of the Federation as to ensure that a full account is made to the legislature and its financial control is maintained and for such purpose shall subject to the provisions of the constitution order and of this ordinance, have the management of the consolidated revenue fund and the supervision control and direction of all maters relating to the financial affairs of the federation which are not by law assigned to any other Minister”
The 1979 Constitution of Nigeria also provides for such legislative control of the finances of the federation. In the federal civil services, no ministry can become self –accounting without establishing a well staffed audit section as a means of control over the activities of the accounts section. The provision for this is contained in the revised financial regulations of 1976.
“The Accounting Officer of a ministry of Eritrea Ministerial department will ensure that subject tot he availability of staff an internal Audit unit is established to provide a complete and continuos audit of the accounts and records of revenue, expenditure plant allocated stores and unallocated stores where applicable. The existence of internal audit unit will not divest any member of the ministry of extra-Ministerial department o the individual responsibilities placed upon him, neither will it obviate the necessity for normal departmental checks”
mention must also be made of the Audit f 1956 although it is not part of internal control system, but the Federal Audit department oversees he work of all Ministries as external auditors making sure that all reasonable precautions have been taken to safeguard the collection if public monies and that the finance (Control and Management) Act is being dully observed.
It is pertinent at this juncture to define internal control has a broader meaning than, financial accounting and stores matters. Such functions as budgetary control production quality control, staff training programmes and statistical analysis may be integral parts of the system, although not falling within the sphere of this study. In the civil service internal control can be broadly categorized into two namely, accounting controls and administrative controls.
a. “Accounting controls comprise the plan of organization and all method and procedures that are concerned mainly with and relate directly to safeguarding of assets and the reliability financial records. They generally include such control as the systems of authorization and approvals separation of duties, concerned with records & keeping and accounting reports form those concerned with operations or asset custody, physical controls over assets and internal auditing.
b. Administrative controls comprise the plan or organization and all methods and procedures that are concerned mainly with operational efficiency and adherence to managerial policies and usually relate only indirectly to financial records. They generally include such control as statistical analysis time and
motion studies performances reports and quality controls.
The Federal Government has ways of controlling the activities of Ministries in their respective financial commitments, there are done by legislative, budgetary and other financial controls, for example issuing of annual warrants to the individual ministries by the minister of finance before any expenditure can be made.
Also there are established internal control systems or organs that make sure financial regulations are strictly complied with, and expenditures and revenue are properly accounted for, these organs are:
i. Internal Audit section
ii. In-built internal Checks
iii. Stores verifiers
iv. Board of survey
v. Treasury Inspectorate.
1.2 THE STUDY
The study concerned mainly with the financial accounting and stores control even thought there are different types of control established by governments for management efficiency.
The definition of internal control quotes earlier is not only applicable to business enterprises or private companies but also to the civil service.
1.3 PURPOSE OF STUDY
Despite the system of Internal control established in government institution, cases of financial Mis- management and fraud are rampant.
Therefore, the purpose of this is to
i. Examine the process of control, for example budgetary control, legislative control and other systems of financial controls
ii. Examine the organs of control for example treasury Inspectorate, Board of Survey, internal Audit, Accounts section Audit, Accounts section, in –built internal checks and stores management.
To this end, efforts will be made to evaluate the composition and operations of these organs, types or process of controls and see if there are loopholes, test whether all the control mechanisms are being complied with identify the weakness that are allowing for fraud and malpractice.
1.4 OBJECTIVES OF STUDY
On identification of the weakness existing is the internal control system with bias in financial and stores control effects will be made to see how these weakness can be strengthened by reducing all the factors affecting the operational efficiency in order to direct our limited human and materials resources to the economic and social growth of this nation.
1.5 POLICY RELEVANCE
The Federal Government is particular about the way public funds are being managed, hence it was once stated as one of the main objectives of the administration in 1984 that to “uphold the principle of public accountability and encourage the development of improved work ethics among the Nigerian workers.
Having this in mind, a look into the issue of internal control system in government with special reference to financial and stores control will lead to the identification f the weakness and subsequent recommendations of strengthening such weakness to the policy makers and those who implement polices.
This will serve a long way in improving the accountability of government expenditures and revenue, as well as reducing financial wastes.
1.6 STATEMENT OF HYPOTHESIS
Financial Mis-management, fraud, deviations form prescribed management polices and principles and presentation of unreliable accounting records and financial statements are due to inadequate internal control syteme in an organization.
1.7 SCOPE OF STUDY
As this research is a case study of federal ministry of finance Enugu; the population for the study will be chosen from the Accounting, Auditing a stores staff of their treasury Departments.
1.8 DEFINITION OF TERMS
i. INTERNAL CONTROL: This means “the Whole system of controls, financial and otherwise, established by the management in order to carry on the business of the enterprise in an orderly manner, safeguard its assets and secure accuracy and reliability of its records.
ii. VOTE BOOK: The vote book or Departmental vote Expenditure Analysis Book (DVEA) is the most important book of expenditure control being used in Government establishment.
iii. SUPERVISION: This means to supervise that is to be in charge of something and make sure that everything is done correctly.
iv. BUDGETING: This is a quantitative plan of action prepared in advance of the period to which it relates.
v. Control Procedure: These are those polices and procedures in addition to the control environment which are established to achieve the entity’s specific objectives.
vi. Store Verification: This verification is part of audit work whose duty is based purely on stores control.
vii. Control: This means the power to make decisions about how an organisation is run.