EFFECT OF INTERNAL CONTROL SYSTEM ON ORGANIZATIONAL PERFORMANCE

Abstract

Internal controls are policies, procedures, practices and organizational structures effected by an entity's board of directors, management and other personnel. Internal control is designed to provide reasonable assurance that an organization’s business objectives and goals will be achieved and the reliability of financial and management reporting in compliance with applicable laws. Internal control system over the years has played a prominent role in monitoring and ensuring the performance of organizations. The responsibility for the prevention and detection of fraud and errors rests with directors through the implementation and continued operation of adequate accounting and internal control systems. This study aims to shed light on how internal control system affect organizational performance in manufacturing companies in Nigeria. The research design that was employed in this study is survey design. Primary data was collected using structured questionnaires. Collected raw data was cleaned and edited for completeness and consistency. Data was analyzed by use of the multiple linear regression. Statistical Package for Social Sciences (SPSS, v. 21) was used to aid in quantitative data analysis in this study. The results were presented in tables. The output for this study was presented using descriptive statistics like the mean score and standard deviation. The independent variables are three of the five element of internal control system, they include risk assessment, control activities and information and communication system. However after the hypothesis have been tested, the result shows that risk assessment, control activities and information and communication system significantly affect organizational performance.