INTERNAL CONTROL SYSTEM IN PUBLIC ORGANIZATION

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF STUDY

According to Oxford Learners Dictionary, Organization can be said to be a group of people who form a business, club etc. together in order to achieve a particular aim. It can also mean two or more people getting together for a purpose. In getting together, they decide to interact with one another to achieve the objectives of the organization (Unamka & Ewurum, 1995:1) When we discuss organization, we have variclasses among which are service organization and social organization etc. All these organizations have in mind the aim of continuing if not for eternity, a given period of time. (Unamka & Ewurum, 1995 1, 2, 3) For an organization to carry on its business there must be some factors put in place for the smooth running of the organization management, man-power, materials, money and machines. These need to be well coordinated in order for the success of the organization to be achieved. They are used by a group of persons known as management; neither can management exist without organization- the two are inseparable twin. (Unamka &Ewurum, 1995:65)

Good management weaves together the various parts of organization so that all factors function as a united body. Management refers to the group of executives or officials of a company who directs efforts towards common objectives by using available resources (Unamka & Ewurum, 1995:66) management can also be said to be a process of planning, organization to have an intergrated system that will aid the achievement of organization objectives (Musselman & Hughes, 1981) Effective management leads to purposeful, well coordinated, goal oriented and goal directed activities. As earlier social organizations have in mind “CONTINUITY” and “SURVIVAL” as they are being run for an organization to survive and continue existing without going bankrupt, or said to be illiquid, i.e. being its inability to meet up with its responsibilities as and when due, it must ensure the say of its assets, cash and also the accuracy and reliability of its records, it should ensure that it institutes a system of control, strong enough to ensure such. This system is what is known as INTERNAL CONTROL SYSTEM.

According to WIKIPEDIA, the free encyclopedia, in accounting and organization theory, INTERNAL CONTROL is defined as a process effected by an organization’s people and information technology (I.T) system, designed to help the organization accomplish specific goals or objectives. It is a means by which an organization’s resources are directed, monitored and measured. It plays an important role in preventing and detecting fraud and protecting the organization’s resources both physical (e.g. machinery and property) and intangible (e.g. Reputation and intellectual property such as trade marks) the organizational level, internal co9ntrol objectives relate to the reliability of financial reporting; timely feedback on the achievements of operational or strategic goals and compliance with laws and regulations. At the specific transaction level, internal control refers to the actions taken to achieve a specific objective (e.g. how to ensure the organization payments to third parties are for valid services rendered) There are also a variety of definitions of internal control as it affects a variety of constituencies (stakeholders) of an organization in various ways.