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PROJECT TOPIC- EFFECT OF INTERNAL CONTROL MECHANISM ON FRAUD PREVENTION IN SETRACO NIGERIA LIMITED OF EBONYI STATE

PROJECT TOPIC- EFFECT OF INTERNAL CONTROL MECHANISM ON FRAUD PREVENTION IN SETRACO NIGERIA LIMITED OF EBONYI STATE

CHAPTER ONE

INTRODUCTION

  • Background of the Study

Internal controls in accounting are a process for assuring achievement of an organization, objectives in operational effectiveness and efficiency, reliable financial reporting and compliance with laws, regulations and policies. A broad concept, internal control involves everything that controls risk to an organization. It is a means by which an organization’s resources are directed, monitored and measured. It plays an important role in detecting and preventing fraud and protecting the organization’s resources.

According to Okezie (2008) internal control is an integral part of accountancy and auditing. In the bid to reduce fraud, companies setout control objectives of which when achieved help in preventions of fraud. Under the Sarbanes Oxley Act, companies are required to perform fraud risk assessment and assess related control. This typically involves identifying scenarios in which theft or loss could occurs and determined if existing control procedures effectively manage the risk to an acceptable level.

Based on this, this research work is centered/ directed on internal control as a mechanism on fraud prevention in organization with reference to Sectraco Nigeria Limited Ishiagu –Ebonyi state. Internal control varies from an organization to another, depending on the nature of the activities being carried out. From the information retrieved from the internet at (www.sectraconigeri.com) over the last thirty years the company has rapidly grown to become one of the largest construction companies in Nigeria specialized in the construction roads and bridges.

With a presence today in around 20 states Setraco has played a key role in developing Nigeria’s infrastructures as the country strives towards becoming a developed nation. Setraco Nigeria is a member of the Setraco international Holding group of companies. The company is also technically partnered with a number of leading designs and consulting firms across the globe which enables them to presents their clients with cutting edge solution for their needs.

Over the last 30years the company has rapidity grown to become one of the largest construction companies in Nigeria specialized on roads and bridges, with its branches in around 20 states of federation. The states are Kogi state, and Ebonyi state among others. In Ebonyi state it is located in Amaeze in Ishiagu in Ivo Local government area. The branch of the quarry site is called Amaeze quarry site. It is a member of Setraco international holdings groups of companies and also technically partnered with a number of leading design and consulting firms across the globe. It has 30 years working experiences in providing value added services. But now, the company has re-located to its new headquarters at Shehu Yar’Adua located at the nation capitals.

PROJECT TOPIC- EFFECT OF INTERNAL CONTROL MECHANISM ON FRAUD PREVENTION IN SETRACO NIGERIA LIMITED OF EBONYI STATE

  • Statement of the Problem

This research work is center on internal control mechanism on Fraud prevention in Setraco Nigeria limited. The organizations achieve success with this control measure to some extent. Notwithstanding, the successfulness of internal control system of management in Setraco Nigeria limited the following problems still occur.

Lack of adequate system of internal control.

Lack of adequate internal auditors services.

Lack of internal checks and balances in various levels of the organizations.

Loose system of management in the organizations management system.

The employees seeing and taking fraud as a result of economic hardship characterized by high standard of living and also the syndrome of getting rich.

  • Objectives of the Study

The main purpose of the study is to investigate the effect of internal control mechanism on fraud prevention in Setraco Nigeria Limited of Ebonyi state.

The study sought to:

  1. Ascertain the role of internal control in improving the reliability of published financial statement of organizations.
  2. Find out the extent of effectiveness of internal control in safeguarding the assets of organization.
  3. To determine to what extent internal control enhances efficiency and effectiveness of operations due to adequate knowledge of it.

1.4 Research Questions

       The following research question as designed to guide this work:

  1. What role does internal control play in improving the reliability of published financial statement of organization?
  2. How effective is internal control in safeguarding the assets of organization?
  3. To what extend does internal control enhances efficiency and effectiveness of operations in organization from adequate knowledge of it’s?

1.5 Research Hypotheses

     The research work is based on the following hypotheses which are formulated in tackling the problems in the subject.

H1: Internal control has the role of improving the reliability of published financial statement of organizations.

Ho: Internal control has no role in improving reliability of published financial statement of organizations.

H1: Internal control is not effective in safeguarding the assets of organization to a large extent.

Ho: Internal control is effective in safeguarding the assets of organizations to a large extent.

H1: Internal control does not enhance efficiency and effectiveness of operations in an organization due to inadequate knowledge of the system.

Ho: Internal control enhances efficiency and effectiveness of operations in an organization due to inadequate knowledge of the system.

  • Significance of the Study

This research work will enable the researcher to establish the possible result in the society. Therefore, the researcher proposed this research work for her own benefits and for the benefit of the entire Ebonyi state university students including accountancy students embarking on their own project as secondary sources of data and for other purposes outside the school environment.

More so, this study is aimed at revealing the numerous fraudulent acts performed in the organization and how internal control can be used as a mechanism to curb it.

Finally, it teaches the use of internal control as a mechanism for effective management skill so as to curb irregularities, frauds and other mis- management acts.

1.7 Limitations of the Study

In this research work, there are many constraints that affect the output of this work. One of the limitations is time frame given to this work by the school for the writing and submission of this project work as well as academic and personal pressure was faced. Also, it was not easy collecting information from the organization area.

No internal control system can be itself guarantee efficient administration , completeness and accuracy of the records, nor can it be proof against fraudulent conclusion, especially on the part of those holing position of authority or trust .

Another important matter to point out in the discussion of internal control limitations is the pay off of the cost of providing internal control procedures and the cost waste, theft and errors etc to the organization.

1.8 Delimitation of the Study

      The use of in an organization is an efficient and effective management system in an organization. Thereby ensuring accountability, standardized management system and successful operations.

       But the researcher limits her work solely on the use of internal control as a mechanism in prevention of fraud in the organization through the analysis of the roles of managing directors and internal auditors in the organization.

1.9 Definition of Term

  1. Internal Control: This can be defined a s a whole system of controls, financial and otherwise established by management I order to carry out business of the organization in an orderly and efficiency manner, ensure adherence to management policies, safe-guard competences and accuracy of the record.
  2. Fraud: This means the crime of deceiving people in order to gain something such as money or against management policies.
  3. Mechanism: A method or a system for achieving something.
  4. Auditor: This is a person responsible for examining the financial statement prepared by the accountants to see that the financial statement agree with the underlying accounting records, give a true and fair view.
  5. Curb: To control or limit something in order to prevent it from having a harmful effect.

Error: Serious mistakes that contrary to an organizational policy, which could be intentional or unintentional.

PROJECT TOPIC- EFFECT OF INTERNAL CONTROL MECHANISM ON FRAUD PREVENTION IN SETRACO NIGERIA LIMITED OF EBONYI STATE

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