-Title page
-Table of content

1.0 General description of the study
1.1 Problem statement
1.2 Purpose and relevance of study
1.3 Scope and limitation of study
1.4 Relevance research questions and hypothesis
1.5 Definition of key/operational
1.6 Historical background

1.0 General background/concept
2.1 Administrative controls
2.2 Controls over computer operators
2.3 Internal control and the external auditor
2.4 Evaluating system of internal control
2.5 Internal check
2.6 Management control
2.7 Internal auditing
2.8 Necessity of internal control
2.9 Impact of internal control system

3.0 Comprehensive summary
3.1 Conclusion
3.2 Recommendation


An organization consists of people interacting collectively to achieve a specific goal. By joining an organization, individual subject themselves to control in order to made their collective effort feasible. The word “control” is often preceded by a modifier to specify the underlying control problem, for example inventory control, quality control, financial control, production control and management control.
Control can be expressed in three way: as a system as a managerial function and as a process. System theorists have a described a management control system as a Cybernetic” system in which information is obtained from source with the system –feed-back and made possible the alteration of the system towards, goal. As a managerial function. Control seeks to anticipate, plan and take corrective action as needed. Control as a process make sure that intended result are consistently achieved.
Control according to Henry Fayol, consist of verifying whether everything occurs in conformity with plan adopted, the instruction issued and principle established. Perhaps a good definition of control is the process through which managers assure that actual activities conform to planned activities.

Control method refers to the means of implementing a control system in organizations. The methods can be grouped under the following heading: pre action control, steering control, Yes/No or screening control and post action control
Pre-action control is also called pre controls ensure that necessary plan is made for available of resources before embarking on any action. When the time occurs the plans must ensure that the requisite resource will be available.
Steering control or feed forward controls are designed to detect and correct deviation from standard before a particular sequence of action is completed, the use of computer in quantity control is an example of steering control, fore more the success of this system is contingent on availability of timely, accurate and efficient data.

Yes/No control is a screening process that emphasizes on the need for specific aspects of a procedure to be approved before the operation is continued. Yes or No controls are usually more importance and widely used because the provide means of understanding.
Post action control as the name suggests, measures the results of completed action identifies the causes of deviation from the planted activities and applies finding to similar future activities.

Control process is affected by two managerial function of planning and organizing.

In fact, mutual relationship exists between planning and control, planning and control, planning and organizing and controlling.
Firstly, it is obvious the control must be based on plants. The more complete, clearer and integrated the plans are more effectives is the control secondly since the purpose of control is to measure activities and take action to ensure plan are accomplished, it is necessary to know where in an enterprise who is responsible for deviation and taking corrective actions, this calls for a well designed organization structure.
Meanwhile, control systems are essentially the same and involves the following three steps:
i.        Establishing standards
ii.       Measuring performance against standards
iii.      Correcting undesired deviation from standards and plan.
Control methods can be group into three categories
i.        Constant controls are used constantly in an organization. They include self control group control and rules
ii.       Periodic control methods are used periodically e.g. Management Information System (MIS) external audits and budgets
iii.      Occasional controls, one time control methods such as special reports, personal observation and project control.
Internal control is the whole system of control, financial and otherwise established by management in order to carry on the business of the company in an orderly manner safeguard it assets and secure as far as possible the accuracy and reliability of its records.
As the bones that hold the body together, internal control caught across
the following
*        Organization /Segregation of duties
*        Plant and Machinery
*        Sales and Debtors
*        Purchases and Creditors
*        Stock and Bills
*        Cash and Bank Balance

However, internal control in practice embraces both internal check and internal audit. Therefore, the introduction of internal check and internal audit in each of the function above consist the whole system of internal control. Hence, these three i.e internal control, internal check and internal audit are interlock and cannot be separated nor any one of them

undermined if the company’s operation were to run efficiently and
effectively. Primarily the overall objective of internal control is to maintain standard ways of operations in order to achieve the organizational goals. Therefore, for any business enterprise wanting to success profitably safeguard its assets and secure as far as possible the validity, and reliability of its records, it is imperative for it to have a standard and good internal control system of management.

It is a known fact the management of every organization expects high degree of performance from their staff for this expectation to true, it is essential that manager establishes reliance on the internal control system. The system will enable the business to the company to carried out in an orderly manner. It will also facilitate quick identification of non compliance, in order to promote proper and adequate system of internal control within an organization, there should be proper internal check whereby on single task is executed from its beginning to its conclusion by only one person. Likewise, there should be a good internal audit (which is an integral control system). Effective internal control improves employee’s skill moral and knowledge which otherwise can result to sloth, irresponsibility and other misdemeanor of staff. Improper internal control system can also lead to poor management performance, liquidity problem and low turnover which will eventually have adverse effect on the profitability of an organization. In short one to the major problems of most organization in Nigeria is how to design and maintain a proper system of internal control which this researches work intends to investigate its necessity in the manufacturing industries. Also, to evaluate its soundness and adequate and impact on profitability in the manufacture industries.

The purpose of this project is to study critically, examine and evaluate the following:   
*        Identify the general approach of internal control system in manufacturing industries.
*        Examine the necessity of internal control system in manufacturing industries, a case study of Flour Mills of Nigeria Plc.
*        Evaluate the impact of good internal control system in business profit.
*        Serve, in partial fulfillment for the award of Ordinary National Diploma (OND) in Accounting.
          The relevance of study: The study will be multiple importance. This could be assessed in relation to such groups as students proprietors/managers of manufacturing, the polytechnic authorities and other interested outsiders with respects to students, the project will serve as a reference material for further study on the topic and for political knowledge required in this direction. Also, the study will assist proprietor/managers of manufacturing organization to detect their weaknesses and loopholes and able to takes corrective measure at the appropriate time in order to maximize their profit or to maximize the wealth of their shareholder/owners.
          In addition, the project will serve as an assets to the polytechnic in that information contained there could only be drudged based on proper authorization, which may require financial consideration.

The study is to focus on the necessity of internal control system which covers all types of internal control system, viz financial control, management/personnel control, internal audit and internal check within the
manufacturing organization with a particular reference to Flour Mills of
Nigeria Plc. The study will perform tests and review the internal control
system, the internal check that are already existing in the organization, there will also be work study on the operation of the following departments: finance and administration, production warehousing, distribution and marketing, security and internal control department.
However, there are also limiting factors association with the research work, it is foreseen that the research will be limited by financial constraint as the major limiting factors. Other areas follow:
i.        A lot of problems may be encountered in the collection the data to lack of cooperation by the staff, also in the administration of questionnaire.
ii.       The questionnaires may be delayed on so many occasion due to the crowded schedules of some member of staff.
iii.      Another limiting factor will the problem of insufficient time and probably clashes of appointment hours with lectures.

The following are examples of research question 1 came up with:
a.       Is internal control system necessary in manufacturing industries?
b.       Is there a relationship between a good internal control system and profitability in the manufacturing industries?
c.       Is internal control system reduces fraud and errors in the manufacturing industries.

          The testing of the following hypothesis will be carried out in the course of the research work.
a.       That internal control system in necessary in manufacturing firms
b.       That a good system of internal contributed positively to the profit ability in the manufacturing industries.
c.       That internal control system reduces fraud and errors in manufacturing industries.
At this juncture, it is necessary for me to define some certain terminologies associated with internal control system. And these are clearly stated below.
a.       Internal control system: The English Institute defines internal control as those control, not only internal check and internal audit, the whole system of controls, financial and otherwise, established by management in order to carry on the business of an organization in an orderly manner, safeguard it assets and secure as far as possible the accuracy and reliability of its record “it may therefore be said that internal control is an umbrella beneath which  include financial control internal checks, internal audit and non financial controls.
b.       Manufacturing industries refer to the combination of many firms where raw materials (import) are being concerted into finished products (output) or to the next stages of production.
c.       Profitability refers to the net income or gained to business entity.
d.       Error refer to unintentional act committed by the staff of an organization in the course of performing their assigned duties.
e.       Fraud refer to the intentional act committed by the staff of an organization in the course of discharging their assigned duties due to their dishonesty/criminal deception.
          The Flour Mill of Nigeria Plc, which was incorporated on 29th September,  1960 as a private limited liability company and was converted to a public company in November 1978. the shares are currently quoted on the Nigeria Stock Exchange.
          The principal activities of the group during the year as following: flour million contract million, operation of the bulk, cement handling facility at Apapa, sale of bulk and bagged cement, manufacturing and marketing of woman polypropylene sack; blending, sale and distribution of fertilizer; and the management of the Mills of Nigeria Mills Company Plc, Calabar, Maiduguri Flour Mill Limited and Sunrise Flour Mills Limited, Enugu Mill Limited.

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