The study determines and establishes the connection between internal auditing and internal control systems on financial performance in an Institution of higher learning in Nigeria. Internal controls were look at from the perception of Control background, Internal Audit and Control Activities whereas financial performance focused on Liquidity, responsibility and Reporting as the trial of financial performance and internal control. Research was conducted using both quantitative and qualitative approach using Survey, relationship and Case study as Research Designs. Data was collected using Questionnaires and Interview guide as well as appraisal of available documents and records targeting essentially Deans, Associate Deans, Heads of Departments, Management Committee members, and Finance and Accounts staff as respondents from a population of 302 Nigerian. Data was analyzed using the Statistical Package for Social Scientists where conclusions were drawn from tables, figures from the enclose. The study establish that management of the institution is dedicated to the control systems, energetically participates in monitoring and supervision of the activities of the University, all the activities of the Institution’s activities are initiated by the top level management, that the internal audit department is not efficient, is understaffed, doesn’t conduct regular audit activities and does not produce regular audit reports although the few reports produced by the internal audit department address weaknesses in the system. It was however, revealed that all revenues and expenditures are properly classified, and that assets of the University have generally increased. The study established a significant relationship between internal control system and financial performance. The investigation recommends competence profiling in the Internal Audit department which should be based on what the University expects the internal audit to do and what appropriate number staff would be required to do this job. It also recommends that the institution establishes and manages knowledge/information management system to enable all parties within the institution to freely access and utilize the official information. There should be a strategy improve the generation of additional finances for the University. The Study therefore concludes that internal control systems do function although with there is a significant relationship between internal control systems and financial performance in an Institution of higher learning.
1.1 Background to the study
Auditing has been introduced for a years in different forms of development following the progression of accounting. When the records were permitted after the reading of public, When government’s officials precise with their honesty. When the ownership of the companies started his business from different units from different management, then owner required more protection of their investments increasing the use of the auditors. Auditors always searching the fraud of errors in accounts, in management, in internal control of the companies and then determine the actual condition of financial statements and the earning of the enterprise, entity, companies etc. However the acceptance of auditing is an practical regulation is not oldest and after the development of similar concepts and techniques with in the audit form such as the use of sampling, the study of the internal control environment, use of the internal control environment and the risk assessment, is when more focus to the hypothetical and conceptual framework of auditing it is been constant.
The concept of the theories in the public science from the viewpoint of” theory as an ordering framework” indicates as theory allows the use of practical data and their relationship to calculate and explain experimental events.
Cooper and Shindler define theory as “a set of systematically interrelated concepts, definition and proposition that are advanced to explain and predict the phenomena (1998).
Flint (1988) stated that there is a matter of public accountability demanding an independent audit for its demonstration with clear definition and objective, base on proof that only skilled auditors collect, calculate it, and evaluate it against the standards, which generate economic or social benefit (as cited in Moizer, 1989).
Internal auditing is a self-determining, idea assurance and consulting activity designed to include value and get better an organization’s operations (Institute of Internal auditors (IIA), 1999). The scope of internal audit should be to cover the systematic review, and appraising and reporting on satisfactoriness of systems of managerial, financial, operational and budgetary controls and their reliability in practice (ACCA Internal Audit bulletin, 1999). Douglas (1988:25) defines the internal function as .an independent appraisal function established within an organization to examine and
evaluate the effectiveness, efficiency economy of management’s control system.’’ He further described internal audit function, as a service to an organization that provides management with reassurance that internal control systems are adequate for the needs of business and are operating satisfactorily.
Financial Performance is various defined and in this study, it is restrained to how financial funds are controlled and utilized through efficient plan management like as internal auditor, financial analyst and accountability to attain organization goals. The presentation is how skilled, competent, reliability and honesty the organizational members are at utilizing the open resources and procedures to carry out tasks, duties and responsibilities and operations to achieve organizational goals, (Arvery and Murphy, 1998, Magaghan, 1987).
Employee attitude are non financial measures such as job satisfaction, employee commitment and psychological contracts (Kaplan and Nortion, 2010). Job satisfaction is a delightful or positive affecting state resulting from ones job or job experience, (Winter 2004). Employee satisfaction, assurance is the mental attachment feel by the person for the organization, Meyer (Herscovitch, 2001).
Despite the existence of trained and qualified staff, with internal audit function and employee attitude in National Agriculture Education Accreditation Council (NAEAC) of Nigeria charged with responsibilities of advising management on issues of policy and regularization compliance, accountability, financial reporting, safeguarding of assets, prevention of fraud and on economic and efficient use of resources. However National Agriculture Education Accreditation Council (NAEAC) of Nigeria have continued to experience incidences of budget deficits, unpaid utilities, cash payment to employees and tax arrears, unbalanced for funds, non compliance with policies and procedures and mismanagement of funds.
There is must for National Agriculture Education Accreditation Council (NAEAC) of Nigeria to make a well unswerving human resource HR of high uprightness, honestly, experienced, reliable and responsible, liable and trustworthy who view rules and policies and hold on to internal audit function employees benefit , financial performance of the organization and aim at achieving organization goals.
National Agriculture Education Accreditation Council (NAEAC) of Nigeria have continued to register financial misconduct even when there are guiding principle for the use of funds by for instance qualified Audit staff, qualified financial analyst, to give advice management on issue of financial performance and financial accountability. This seems to put institutions at risk of financial insufficiency and therefore collapse to operate as estimated targets. There is also a clear lack of studies which bring out employee contributions of employee attitudes to financial performance in public Universities.
This Theory was selected for this study only because “Internal control is one of many mechanism used in business to address the agency problem” (Jensen and Payne 2003) and again “studies have shown that internal control reduces agency costs” (Abdel-khalik 1993; Barefield etal. 1993).
Accountability needs to be accurate and timely so as to aid decision making. It should be noted that International Financial Reporting Standards (IFRSs) emphasize timely production of financial reports. Ideally end of year financial statements should be produced within three months following the end of the period to which the financial statements relate. With Nigeria National Agriculture Education Accreditation Council (NAEAC), this has never been the case. Financial statements have often been produced after more than six months.
1.2 Problem statement
Nigeria National Agriculture Education Accreditation Council (NAEAC) has been in existence for over 7 years. Their continued involvement in the affairs of the Institution in their supervisory capacity has ensured continuity and faster rise, growth and prosperity to the extent of becoming one of the leading yet youngest Universities in the country and the region at large.
The University has since its inception had management of the highest qualifications, quality and dedication. Management meets regularly (weekly) to review the affairs of the Institution and to direct the strategic path of the University and to ensure continued goal congruence. Systems have evolved over time and all the departments and units of the institution have undergone positive transformations. Internal controls have been put in place to ensure safe custody of all university assets; to avoid misuse or misappropriation of university assets and to detect and safeguard against probable frauds. The university employs world class professionals to fill all the keys departments and units. This is ensured by the transparent and open system of selection and recruitment aided by the ably staffed Human Resource department of the institution. All departments and units are adequately staffed with qualified and competent staff. Continuous on job training and Continuing Professional Development courses (CPDs) have always been given greatest priority with great budget allocation for these trainings. The University records and accounting systems have been refined overtime. The records managers match internationally recognized professionals. The University accounts and records are audited by professionally trained and recognized auditors with international reputation. The University has always had an internal audit department to help in compliance with the internal policies and procedures. However despite all the above efforts, the University still struggles with Liquidity problems, financial reports are not made timely, accountability for the University financial resources is still wanting, frauds and misuse of institutional resources have been unearthed and a number of decisions made have not yielded the expected results. This research will therefore attempt investigate the persistent poor financial performance from the perspective of internal controls which has hitherto been ignored.
1.3 Purpose or General Objective
The purpose of this research is to determine, examine and establish the relationship between internal auditing, internal control systems and financial performance in an Institution of Higher Learning in Nigeria.
1.4 Objectives or Specific Objectives
Internal controls in an organization are normally instituted to provide practical assurance about the achievement of the entity’s objectives with regard to reliability of the financial reporting, financial performance, in internal auditing, effectiveness and efficiency of operations and compliance with applicable laws and regulations.
These will ultimately translate into improved financial performance. The study will therefore attempt to establish the relationship between internal control systems and improvement financial performance in an Institution of Higher Learning in Nigeria. In particular the researcher will focus on the following specific objectives:
- Determine and examine the functionality of Internal Control systems in an Institutions of Higher Learning in Nigeria.
- Determine and examine financial performance of an Institution of Higher Learning in Nigeria.
- Determine and examine the relationship between internal control systems and financial performance in an Institution of Higher Learning in Nigeria.
- Determine the relationship between internal control and internal audit.
- Determine the performance of internal control and internal audit in Higher education of Nigeria.
1.5 Research Questions
To achieve the above desired objectives the following research questions will be used:
- What is the role of Internal Control Systems in Institutions of Higher education in Nigeria?
- What is the financial presentation of Institutions of Higher education in Nigeria?
- What is the relationship between internal control systems’ functionality and financial performance in a Higher education in Nigeria?
- Which system is adopted for the performing of internal auditing?
- What is the relationship between internal auditing and internal control in Higher education in Nigeria?
1.6 Research Hypothesis:
The following research hypotheses are basically resulting from the existing literature but superior to go with the situation are given below:
H1: Internal Control background Vs Financial Performance.
There is a relation between the control situation and the financial performance of Institutions of Higher Learning in Nigeria.
H2: Internal Audit Vs Financial Performance
An effective internal audit function is related with the financial performance of Institutions of Higher Learning in Nigeria
H3: Control Activities and Financial Performance.
Functionality of Internal Control activities and financial performance of higher Institutions of Learning are related.
1.7 Significance of the study
The results of the study will help identify gaps within the systems of internal control in Institutions of Higher Learning in Nigeria. It is also the researcher’s belief that invaluable benefits to management and those charged with governance in Institutions of Higher Learning will emerge on how to streamline the systems of internal controls thus ensuring improved financial performance and ultimately ensure attainment of the Institutional objectives. The study will also add to the existing knowledge bank regarding internal controls
1.8 Scope of the study
The research will focus on the effectiveness internal auditing and the internal control system in National Agriculture Education Accreditation Council (NAEAC). In Nigeria National Agriculture Education Accreditation Council (NAEAC) have several accredited institutions, centers and affiliated institutions.
All project works, files and documents posted on this website, projects.ng are the property/copyright of their respective owners. They are for research reference/guidance purposes only and the works are crowd-sourced. Please don’t submit someone’s work as your own to avoid plagiarism and its consequences. Use it as a guidance purpose only and not copy the work word for word (verbatim). Projects.ng is a repository of research works just like academia.edu, researchgate.net, scribd.com, docsity.com, coursehero and many other platforms where users upload works. The paid subscription on projects.ng is a means by which the website is maintained to support Open Education. If you see your work posted here, and you want it to be removed/credited, please call us on +2348159154070 or send us a mail together with the web address link to the work, to firstname.lastname@example.org. We will reply to and honor every request. Please notice it may take up to 24 - 48 hours to process your request.