Effect of Internal Control on Financial Management
1.1 Background of the study.
Internal control is define as the whole system of internal control, financial and otherwise established by management in order to carry on the business of the enterprise in an orderly manner and efficient, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and the accuracy of records. - Dr. Kwame Aveh. (Auditing page 82-83, 2010)
The individual components of an internal control system are known as controls or internal controls.
Internal controls includes all policies and procedures adopted by the directors and management of an entity to assist in their objective to achieve as far as possible the orderly and efficient conduct of the business including adherence to management internal policies, safeguard of assets, prevention and detection of fraud and error, the accuracy and completeness of accounting record and timely preparation of reliable financial statement.
An internal control is of a great importance to every organization because of its impact on the management of its resources especially finances. It is evident that where there are no rules controlling how a thing is to be done, that very thing is done anyhow and the best of it is not attained, this is exactly what effective internal control systems is about .
For the purpose of our studies, financial management will mean the application of an organization’s financial resource (money) on activities meant for its usage. It is the proper use, the effective and efficient use of financial resources or simply put the expedient use of financial resources.
1.1.2 OBJECTIVES OF INSTITUTIONS.
The sole aim and objective of most organizations is to make profit. The theory of a firm, also states that “the firm tries to maximize its profit operate” it goes further to explain that this definition is too stark to be useful in many circumstances, particularly where a problem facing the firm has important dynamic elements and where risk
Internal control is define as the whole system of internal control, financial and otherwise established by management in order to carry on the business of the enterprise in an orderly manner and efficient, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and the accuracy of records. - Dr. Kwame Aveh. (Auditing page 82-83, 2010)
The individual components of an internal control system are known as controls or internal controls.
Internal controls includes all policies and procedures adopted by the directors and management of an entity to assist in their objective to achieve as far as possible the orderly and efficient conduct of the business including adherence to management internal policies, safeguard of assets, prevention and detection of fraud and error, the accuracy and completeness of accounting record and timely preparation of reliable financial statement.
An internal control is of a great importance to every organization because of its impact on the management of its resources especially finances. It is evident that where there are no rules controlling how a thing is to be done, that very thing is done anyhow and the best of it is not attained, this is exactly what effective internal control systems is about .
For the purpose of our studies, financial management will mean the application of an organization’s financial resource (money) on activities meant for its usage. It is the proper use, the effective and efficient use of financial resources or simply put the expedient use of financial resources.
1.1.2 OBJECTIVES OF INSTITUTIONS.
The sole aim and objective of most organizations is to make profit. The theory of a firm, also states that “the firm tries to maximize its profit operate” it goes further to explain that this definition is too stark to be useful in many circumstances, particularly where a problem facing the firm has important dynamic elements and where risk
References: Johnson, R (2001), “Linking complaint management to profit”, International Journal of Service Industry Management, Vol. 12 No.1 Saunders et al (2007), “Research Methods for Business Students”, Prentice Hall, London Kwame Aveh (2010), “auditing” institute of professional studies-legon Ms. Gosky Alabi (2010), “research methods” Institute of Professional Studies- Legon. Asish. K Bhattacharya(),Financial Accounting for business and managers third edition. Edwin Mansfield, W. Bruce Allen, Neil A. Doherty and Keith Welgelt () managerial Economics Theory Application and cast 5th Edition