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                                       CHAPTER ONE



The survival of any organization depends on the effective and efficient utilization of resources (financial and non-financial) at the disposal of the organization. Hence, to optimize the utilization of resources entrusted to all employees in an organization, various form of control are put in place by management of the organization, among these major controls are internal control and internal audit to mention a few. According to Kirsch, (2002) Internal control can be defined as a set of mechanism designed to motivate an individual or a group towards achievement of a desired objectives while, Ouchi (1979) stated that internal control must be able to achieve the objective of bringing about cooperation among people with divergent objectives in an organisation. Similarly, International Standard on Auditing (ISA 400) defines internal control as all policies and procedure adopted by the management of an entity to assist in achieving the primary objectives of the management by make sure the business is conducted in the most possible efficient way and also ensuring strict adherence to management policies, safeguarding of asset, prevention and detection of fraud and timely preparation of reliable account. On the other hand, Financial Performance of an organization can be described in various form, such as; return on assets, return on sales, return on equity, return on investment, return on capital employed and sales growth (Gerrit & Abdolmohammadi, 2010). Internal Control system of an entity is strictly interrelated to the structure used by management to oversee the activities of the organization, or to what is defined as the entity’s corporate governance.  Good corporate governance should provide proper incentives for the board or management to pursue objectives that are in the interest of the company and shareholders and should facilitate effective monitoring, thereby encouraging firms to use resources more effectively or efficiently. Like other organizations and their various units/departments, University strive for efficiency and transparency into their services, operations and finances. There is also growing interest among these institutions to enhance risk management through their processes and procedures so as to promote efficient services among professionals within the institution.

The most common measure over these processes and or procedures is the system of Internal Control. The Internal Control System is about such measures put in place by an Organization in order to ensure the achievement of its objectives. It is a set of policies and procedures adopted by an entity in ensuring that an organization’s transactions are processed in the appropriate manner to avoid waste, theft, and misuse of organization resources. The importance of internal control in the day to day activities of individuals and corporate organizations cannot go unnoticed as everyone experiences internal control in their daily business activities as well as in their personal lives (DiNapoli, 2007). Kirsch (2002) defined control as a set of mechanism designed in order to motivate individuals to attain desired objectives. Controls are fundamental to all organizations and these accounted for the reason why Ouchi (1979) argued that the design of organizational control mechanism should focus on achieving co-operation among individuals having divergent objectives. Internal control has different meanings to different parties and that is why it is very difficult to give only one definition of internal control system, in view of the fact that it can be seen from different angles. Cahill (2006) defined internal control as the system of internal administrative and financial checks and balances designed by management and supported by corrective actions, to ensure that the goals of the organization are achieved. According to Transparency International (2006) internal control is entrenched to guarantee transparency and avoid corruption. Corruption is defined as abuse of public office for private gains. Examples include: bribery, kickbacks and embezzlement of public fund. According to the International Standard on Auditing (ISA 400), the term internal control system means all policies and procedures (internal control) adopted by the management of an entity to assist in achieving management objectives of ensuring , as far as practicable, the orderly and efficient conduct of its business including adherence to management policies , the safeguarding of assets , the prevention and detection of fraud and error , the accuracy and completeness of the accounting records and the timely preparation of reliable financial information . The internal control system extends beyond those matters which relate to the function of accounting system. Amudo and Inanga (2009) defined internal control as a process of integrated sets of activities originated by top personnel of an organisation and embedded within all the organization`s activities to achieve goals. Puttick and Van Asch (1998) cited in Motubatse (2005) defined internal control as ‘ those methods and procedures adopted by the management of an entity to assist in achieving management ‘s objective of ensuring that the business of the entity is properly conducted in an orderly and efficient manner.’ Internal control comprises the organizational plan and all of the coordinate methods and measures adopted within a business to safeguard its assets, check the accuracy and reliability of its accounting data and promote operation. Knechel (2001) defined internal control as a process that is designed by management in order to provide reasonable assurance that the organization’s objectives are being met. Nair (2000) outlined internal control as a process that is put in place by management and stakeholders and is designed to provide reasonable assurances that the institution’s objectives are being achieved effectively and efficiently in compliance with applicable legal prescripts and that there is reliable and accurate financial reporting. University is Institution of higher learning. Reference further asserted that University is to provide educational services and counseling to the general public at the right time. To achieve this objective, institutions incurred expenditures both at capital and recurrent nature. The Internal Control System, in other organizations, is usually put in place to ensure that organization objective is achieved. The effectiveness of internal control is a determinant of the quality, performance, and efficiency of the institutions. Internal Control is a process designed and effected by those charged with governance, management, and other personnel to provide reasonable assurance about the achievement of an entity’s objectives with regard to reliability of the financial reporting, effectiveness and efficiency of operations and compliance with applicable laws and regulations. Management and operations of finances in the Nigerian Universities is a sole responsibility of the Bursary department of the institution. The Bursary department is central as far as the coordination of finances for the achievement of the institution’s objective is concern. Because the department is considered as most important, the internal control measures in place are to be adhered to, by staff of the unit. Adherence to a good set of control would encourage efficient and effective use of company resources. This implies therefore, that adhering to the internal control process shall be a measure toward achieving efficiency and quality of learning in the institutions. It is in this view the researcher want to examine the internal control effectiveness and performance in Nigeria University system.


Despite the fact that internal control system have been in existence for many years in most organization, the problem of internal management, have continued to be on the increase. Which include financial irregularities within the departments, collusion among senior or highly-trusted employees, breaches of control etc. Researcher, have affirmed that internal control set by management in most Universities has not been able to completely prevent these fraudulent occurrences because these controls have not significantly reduced the reoccurring fraud and corruption perpetuated by employees in most Universities.


The main objective of this study is internal control effectiveness and performance in Nigeria University system in south- south geopolitical zone. But for the successful completion of the study; the researcher intends to achieve the following sub-objectives;

  1. i) To identify the effectiveness of internal control system in South-South Universities
  2. ii) To examine the relationship that exist between internal control and effective performance of University system in South-South geopolitical zone

iii) To examine the relationship between effective internal control system and the efficiency of educational services in south- South Universities.

  1. iv) To ascertain if internal control has relationship with fraud perpetration in the University system in South-South geopolitical zone.


For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H0: there is no effectiveness of internal control system in South-South Universities.

H1there is effectiveness of internal control system in South-South Universities

H0: there is no significant relationship between effective internal control system and the efficiency of educational services in south- South Universities.

H2: there is a significant relationship between effective internal control system and the efficiency of educational services in south- South Universities.


It is believed that at the completion of the study, the findings will be of benefit to University system. This is because if proper internal control system is implemented in the university system, it will enhanced effective management. The study will also be of great benefit to the researchers who intends to embark on research on similar topics as it will serve as a guide. Finally, the study will be of great importance to academia’s, lecturers, teachers, students and the general public.


The scope of the study covers internal control effectiveness and performance in Nigeria University system in south-south geopolitical zone. The researcher encounters some constrain which limited the scope of the study;

AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study

TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.


INTERNAL CONTROL: Internal control, as defined in accounting and auditing, is a process for assuring achievement of an organization’s objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies.

EFFECTIVENESSEffectiveness is the capability of producing a desired result or the ability to produce desired output. When something is deemed effective, it means it has an intended or expected outcome, or produces a deep, vivid impression.

PERFORMANCE: A performance, in the performing arts, generally comprises an event in which a performer or group of performers present one or more works of art to an audience. Usually the performers participate in rehearsals beforehand. Afterwards audience members often applaud.


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