EFFECT OF ACCOUNTING AND INTERNAL CONTROL SYSTEM IN DEPOSIT MONEY BANKS OPERATION
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EFFECT OF ACCOUNTING AND INTERNAL CONTROL SYSTEM IN DEPOSIT MONEY BANKS OPERATION
1.2 STATEMENT OF PROBLEM for Chapter One of The Effect of Accounting and Internal Control Systems in Deposit Money Banks
Despite the role that commercial banks play in fostering economic growth and development, these institutions face a number of challenges. These issues include a lack of a sufficient and sound accounting system, procedures, and staff to handle bank accounting operations.
Additionally, some Bank appointees pursue academic interests unrelated to accounting and banking. Without realising that the banking industry is a professional and specialised industry, these employees who lack accounting abilities are permitted to manage and handle accounting records.
Lack of proper bookkeeping and records, inconsistent accounting procedures, and reporting practises have caused struggling institutions to struggle to survive, which has led to bank failures, financial difficulties, and/or a loss of public trust in the banking industry.
disregard for current banking policies and guidelines, causing customers to lose confidence brought about by, among other things, becoming distressed. In 1994, the Central Bank of Nigeria (CBN) imposed strict controls as a result of these considerations.
Because banking is a service sector, the calibre of services provided by banks directly affects their ability to survive through their internal control system, accounting practises, and processes.
1.3 OBJECTIVES OF THE STUDY
This study’s primary goal is to investigate the impact of commercial banks’ internal control and accounting systems. In order to effectively and efficiently achieve its objectives, commercial bank management must evaluate the control measures that they can implement within their organisations to ensure operational effectiveness and efficiency,
the accuracy of financial and management reporting, compliance with applicable accounting laws and regulations, the prevention of fraud, intentional errors in accounting records, misappropriation, and embezzlement of the organization’s assets, and the prevention of fraud.
As a result, the study aims to:
(i) Examine if internal control systems in commercial banks are adequate or not relevant.
(ii) Analyse how internal control elements (prevent controls and defect controls) affect the management effectiveness and efficiency of commercial banks.
To ascertain the degree to which accounting internal control and the effectiveness and efficiency of operations in Commercial Banks are correlated.
(iv) To assess whether internal controls and accounting assure adherence to relevant laws and regulations.
(v) To decide how much reliance should be put on the internal control and accounting systems in commercial banks.
(vi) To recognise and assess the ongoing issues with the internal control and accounting systems, as well as the extent to which these issues impact the banks.
(vii) To make helpful suggestions and recommendations on how to enhance the internal control system, accounting practises, and processes of commercial banks in order to be better able to handle upcoming issues.
1.4 RESEARCH QUESTIONS
Some of the following research questions would be addressed and clarified in the research work:
(a) Are the accounting and internal control systems confident that mistakes and frauds can be found with a fair amount of promptness, and are the control methods, as prescribed and put into action, effective in avoiding and deterring significant mistakes and fraud in the accounting system?
(b) Can the accounting and internal control systems of Nigerian commercial banks be relied upon?
(c) Does the accounting, internal control, profitability, and liquidity of Nigerian banks have any significant relationships?
(d) Does the degree of compliance of commercial banks with their internal controls, applicable legislation, and accounting procedures correlate favourably?
(f) Do internal controls and accounting systems help management make decisions?
RESEARCH HYPOTHESES
The following hypothesis was developed, empirically investigated, and based on the results, suitable recommendations were made:
1. HO: Commercial banks in Nigeria’s accounting and internal control systems cannot be relied upon.
Hi: The Accounting of Commercial Bank in Nigeria may be relied upon.
2. HO: The accounting, internal control, profitability, and liquidity of Nigerian banks have no meaningful link to one another.
Hi: The profitability and liquidity of Nigerian banks have a significant relationship with accounting internal control.
3. HO: Banks’ accounting and internal control systems do not guarantee adherence to relevant laws and regulations.
HI: The internal control system for the bank’s accounting assures adherence to all applicable laws and regulations.
4. HO: The internal control system and accounting do not assist management in making decisions.
HI: The Internal Control System and accounting support management’s decision-making.
1.6 SCOPE OF THE STUDY
In order to test the research study’s hypothesis, some degree of potential risk or error was tolerated.
At one degree of freedom, a level of significance of 5% or a 95% confidence level is allowed.
A 50% frequency of each choice is also anticipated. The following decision rule is used by the researcher when making decisions.
If the calculated value of the statistical test is higher than the tabulated critical value, reject the null (Ho) hypothesis.
(ii) Decision Rule Two: If the statistical test’s calculated result is less than the tabulated critical value, accept the null (Ho) hypothesis.
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