CHAPTER ONE
- INTRODUCTION
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 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.
- Effectiveness and efficiency of operation
- Reliability and financial reporting
- Compliance with applicable laws
- 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.
