INTERNAL CONTROL AS A TOOL FOR EFFICIENT MANAGEMENT, A CASE STUDY OF P & CO FEED LIMITED

CHAPTER ONE

INTRODUCTION

The study of this internal control system of an organization is like the study of an anatomy of man. In word of Peter Druker” Good organizational structure dose not buy itself produce good performance just like a good constitution dose not guarantee great presidents or good laws a moral society. But a poor organizational structure makes good performance impossible, no matter how good the individual managers”. Promised on this dictum, it is therefore obvious that the organizational structures of an establishment will greatly determine to what extent the organization is to be managed. In some organizations, jobs are not properly defined, duties are not efficiently assigned to the right persons and functions are sometimes duplicated with the result that in fighting within the organization results in sub-optimization. By this I mean that each staff and sub-manager try to impress the management and often times to the detriment of the overall goal of the organization.

A good internal control system ensures that functions/duties are properly defined and that duties are properly are properly assigned to qualified staff and that there is an inbuilt control in the system to ensure feedback, detection and correction of errors in good time. It is the overall good of any organization to ensure its continued existence and growth hence establishments set up certain units/departments in their organization to ensure that its good is achieved to a reasonable degree. The internal audit is one such unit established by the management to ensure compliance to policy instructions and to correct for correction deviation from the management set guideline .it objectively examines, evaluates and reports on the adequacy of the internal control, thereby ensuring efficient and effective application of limited resources. Internal check is also another internal control tool employed by the management to ensure that the objective of the organization is attained. The entire system of check internal audit and internal check, which is geared towards the attainment of the organizations goal, is called internal control. Internal control has different definitions but most widely accepted is that of the statement of accounting standard (SAS) which defined internal control as “not only internal check and internal audit, but the whole system of controls, financial and otherwise established by management in order to carry on business of the company in an orderly manner, safeguard its assets and secure as far as possible the accuracy and reliability of its records”. The internal control system should be an open one and should be cheap, conveniently manipulated by management to ensure completeness and accuracy of records and also prevent or uncover errors and fraud. It should be based on the overall view of the organization and should provide information for all uses of the system.