An Appraisal of Internal Control System as a Means of Efficiency and Profitability in the Nigeria Deposit Money Bank Plc (A Case Study of Skye Bank Plc)

PROPOSAL

1.1     INTRODUCTION

          In banking, Accounting and auditing internal control is defined as a process effected by an organization structure, work and authority flows, people and management information system designed to help the banking accomplish specific goals or objectives.

          It is a mean by which organization resources are directed, monitored and measured. It plays an important role in preventing and detecting fraud and protecting the organization’s resources.

Internal control-integrated framework, a widely-used frame-work in not only the United State but around the world, internal control is broadly defined as a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories.

A.              Effectiveness and efficiency of operation

B.              Reliability of Financial reporting

C.             Compliance with law and regulations

Internal control has five components

1.       Control Environment:     set the tone for the organization, influencing the control consciousness of it people.

2.       Risk Assessment:   the identification and analysis of relevant risk to the achievement of objective, forming a basis for how the risk should be managed.

3.       Information and Communication:     System or process that supports the identification, capture and exchange of information in a firm and time frame that enables people to carry out responsibilities.

4.       Control Activities: the policies and procedure that help ensure management directive are carried out.

5.       Monitoring: process used to assess the quality of internal control performance over time. 

The internal control relates to the aggregate control system of the organization, which is composed of many individual control procedures.

Discrete control procedures, control are defined by the SEC as a specific set of policies, procedures and activities designed to meet an objective. A control may exist with a designated function or activities in a process. A control’s impact may be entity wide or specific to an account balance class of transaction or application.

Internal control procedure reduce process variation, leading to more predictable outcomes. Internal control is a key element of the foreign corrupt practices Act (FCPA) of 1977 and the Sarbanes-Oxley Act of 2002, which requires improvement in internal control within business entities are also referred to as OPERATIONAL CONTROLS.

The internal control system (ICS) consists of a set of rules, procedures and organization structure which aims to.

vAchieve effective and efficient corporate process

vSafeguard the value of corporate asset ensure that corporate strategy is implemented

vEnsure the reliability and integrity of accounting and management data.

vEnsure that operation comply with all existing rules and regulations