An Evaluation of the Effectiveness of Internal Audit Control in Ensuring Public and Private Sector Integrity and Accountability (A Case of Ghana Agric. Development Bank and the Fan Milk Industry-Ghana)
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Fostering integrity and combating fraud and corruption in the public and private sector is a challenge for government and public administrations, particularly in times of economic crisis. To succeed, executives in public and private administration must be equipped with appropriate, effective and efficient instruments. How can internal control and internal audit contribute to safeguard integrity and prevent fraud and corruption? This research work is assessing the effectiveness of internal control in the public and private sector. Thus, the study was to underline the importance of a well-organized internal control systems for ensuring the safe and soundness of the banks activity and private enterprises and by the stability of the banking system, and the private enterprises as a whole for the purpose of paying responsible and reliable tax to the government. The main objective of the research was to critically analyse the adequacy of internal control system of banking institutions and private enterprises This study made use of both primary and secondary data. Information was gathered from interviews, questionnaires, publications, journals, magazines and electronic medium. To facilitate interpretation of the information; frequency charts have been useful to present data.The interviews and questioning focused on the following key issues: Does the existing internal control framework provide internal audit with a sound basis upon which to fulfill its fraud and corruption responsibilities?
• Do the internal audit mandate and reporting lines enable it to fulfill it fraud and corruption responsibilities?
• What are the advantages and disadvantages of having a function separate from internal audit charged with prevention, detection and investigation of fraud and corruption?
• Where there is an entity separate from internal audit charged with prevention, detection and investigation of fraud and corruption, what factors are necessary such that both may fulfill their respective roles in mitigating risk of fraud and corruption?
• What other instruments are necessary for internal audit to be efficient in mitigating risk of fraud and corruption. E.g., in terms of independence, existence and composition of audit committee, system to ensure follow up to recommend solutions etc.
• Does the internal control system for accounting and financial reporting include specific procedures to reduce the risk of errors and fraud in your institution or organization?
• Do internal control activities for accounting and financial reporting include procedures to protect assets (risk of negligence, error, and internal or external fraud)?
• Suggestion to improve internal control systems in your bank or enterprise? Suggestion to improve auditing system in the private enterprise to foster tax payment? This study also, evaluated the control environment and monitoring activities components of Internal Control Systems of Ghanaian Banks using COSO‟s principles and attributes of assessing the effectiveness of internal control systems. A five point Likert scale was used to measure respondent‟s knowledge and perception of internal controls and the bank‟s internal control system effectiveness. Responses ranged from strongly disagree to strongly agree, where 1 represented strongly disagree (SD) and 5 represented strongly agree (SA). Statistical Package for Social Sciences (SPSS) was used to analyse data and presented in the form of means and standard deviations for each question and each section of the questionnaire. The study found out that, strong controls exist in the control environment and monitoring activities components of the internal control systems of banks in Ghana. The two components were highly rated by respondents with average means of 4.72 and 4.66 respectively. The study recommended that boards of banks in Ghana should not be complacent about the findings but should work hard to ensure continuous ongoing and separate internal control monitoring to ascertain that controls really exist and are functioning properly.
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