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ABSTRACT

There is a need for strong internal control system in manufacturing organization to make sure that organization assets are safe guarded. Considering the importance of internal control to life Breweries limited Onitsha the researcher deems it necessary to study the effectiveness of internal control. Officers of the organization were interviewed and their records were also examined related tools were also reviewed by the researcher. The researcher revealed that the organization applies internal control measures though weak, because of the nature of human beings. The researcher recommends that the company should review their operation, measure applied and improve in their system of internal control by training their staffs and changing the corrupted ones.

CHAPTER ONE

INTRODUCTION

Internal control is defined by the consultative committee of accounting bodies in the united kingdom as a whole system of controls, financial an do otherwise established by the management in order to carryon the business of the enterprise in an orderly and efficient manner, ensure adherence to management polices, safeguard the asset and secure as far as possible the completeness and accuracy of his records. The individual components of an internal control system are known as “control” or internal control.

According to J.C Ezeh Apil 2001 he defined internal control system as a whole system of control financial and otherwise, established by the management in order to carry on the business of the enterprise in an orderly and efficient manner, ensure adherence to management policies, safe guard the asset and secure as far as possible the completeness and accuracy of the records.  The individual components of an internal control system are known as “control or internal controls”. Internal control by J.C. Ezeh can also be seen in the following definitions they are:

i.    As a whole system.

ii.   Established by the management.

iii.  Ensure Adherence to management policies.

iv.  Safeguard the assets.

v.   Secure completeness.

vi.  Accuracy of the records.

Internal control as a whole system, can be seen as a single procedure (e.g a clerical officer Y, check the calculations done by a clerical officer z) or as a whole system. The whole system should be more than some of the parts. Internal control system are established by the management, either directly or by means of external consultants, internal audit or accounting personnel external auditors may be asked to advice on the establishment of system.Finally by J. C. Ezeh internal control refutes to the entire system of controls in an enterprise and is not limited to accounting information. Millichamp A.H of 1991 defined internal control as a whole system of control finance and otherwise established by the management in order to carry on the business of the enterprise in an orderly and efficient manner ensure adherence of management policies and completeness and accuracy of records. Oknowko I. E of 1994 in his own definition of internal control he defined it as that which comprise the plan of an organization and all of the coordinated methods and measure adopted, within a business to safeguarded its assets, checking accuracy and reliability of the accounting records, promotes operation efficiency and encourage adherence to management policies.Control is necessary to assure that management policies and directives are properly adherence to.

Management is far removed from the scene of operation in the typical large industry and personal supervision of employers is an impossibility. As a substitute, management must rely on various control techniques to implements its decision and goals.The responsibility for establishing and maintaining an adequate system of internal control lies with management to decide the extent of the internal control system which is appropriate to the enterprises.  It depends on nature size and volume of the enterprise and the geographical distribution of the enterprise and many other factors.  Management has recognized internal control as a valuable tool in effectively carrying out its responsibilities and auditors have pressed for improvement in internal control to their effects to be of assistance to management as well as to permit education in audit work made possible by the concomitant increase in the creditability of the accounting records.

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