Internal Control System In Manufacturing Industries

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
i. 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.
ii. 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.
Internal control comprises the whole system of financial and other controls established and operating within an organization including internal check, internal audit and all other control established.
What is to be noted about internal control is that it is established by management and it relates to the entire system of controls in an organization not limited to accounting matters.
Therefore within an organization, a control is seen as any action taken by management to enhance the likelihood that established objective and goals will be achieved.
Therefore different types of internal control producers such as in organization which should defined and allocate responsibility and identify lines of reporting segregating of audits, physical custody of assets, authorization and approval automatically and management through these area of control a kind of internal audit and internal check is maintained.
Evaluation of internal control is carried out by management in a way of test such as compliance test and substantive test.
Internal control has been of important to any management because of its objective in any organization for organization to suicide the management needs consistency and effectiveness of internal control producers.

1.1 BACKGROUND OF THE STUDY
Life Breweries company limited Ontisha is a private limited liability company with above forty (40) shareholders including some separates partners.
It is a joint venture between Nigeria owning 70% and 30% Cofrica (French company based in France) having 30%. The company was incorporated on March, 8 1974 of the factory block took of immediately after incorporated and was almost completed in 1982. By 1983, the office block’s were completed and handed over to the company on August 3rd 1983.
The company is located at the head Bridge Industrial Area Fegga Layout Onitsha.
The share capital has since been increased to 22 million. The company is a Brewery and other drinks are producing like Life Continental Lager Beer, 60cl contents, Gimtonic 20cl content and Pineapple Savannah 30cl content

1.2 STATEMENT OF PROBLEM
The need for proper system of internal control in manufacturing organization cannot be over emphasized but most manufacturing organization have neglected this, result to poor performance of organization. The system of internal control needs to be properly organized and maintained.

1.3 PURPOSE OF THE STUDY
1. To find out whether there are internal control measures in Life Breweries Limited Ontisha.
2. To find out whether there are strong internal control procedures
3. To examine the method of internal control procedures
4. To make useful recommendation on how management can source internal control problem.
5. To identify various problems encountered by the organization in applying their internal control producer.

1.4 SIGNIFICANT OF THE STUDY
It is a known fact that the company cannot exist or perform well without internal control. The researcher deems it necessary to study the effective consistency and efficient internal control system and measures in manufacturing organization. Organization such as life Breweries ltd Onitsha will achieve the organizational goals. Further researcher will also benefit from this work and also the public in general.

1.5 STATEMENT OF HYPOTHESIS
Hypothesis may be defined as declaration state of a relationship between two variable used for better understanding of the problem of study.
Ho: Weak internal control system of life Breweries Onitsha has resuited in law profit ability of the organization.
Hi: Weak internal control system of life Breweries Onitsha has not resuited in low profitability of the organization.

1.6 SCOPE OF THE STUDY
The scope of this study is limited to what is obtain at life Breweries limited Onitsha it does not cover all manufacturing organization.
The researcher studies the system of internal control in the areas of the organization assets.

1.7 LIMITATION OF THE STUDY
In this project the researcher encountered some problems which limited the researcher work.
Such problems are time factor and difficulty in terms of finance.
In terms of time the researcher did not have enough time, the time in which he is expected to end his work is too short which did not enable him to do thorough study and analysis of the study.
Another limitation factor which the researcher had was difficulty in terms of finance, knowing difficult for the researcher to pay constant visit to the organization finally the researcher was unable to interview some of the organization staff before concluding this work.

1.8 DEFINITION OF TERMS
ASSETS: Asset can be defined (fixed) as those items that cannot be easily comrade into cash but used in the company for a longer period.
Current assets are those items which can be commented to cash within an accounting fear or within the operating cycle.
INTERNAL AUDIT: This is an independent appraised activity within the organization for the review of operation as a service to management. It is a management control which functions by measuring and evaluating the effectiveness of the other controls.
INTERNAL CHECK: It is management control tools which ensure that the same individual does not write up a book of account and balance it.
COMPLIANCE TEST: This is a test which seeks to provide audit evidence that internal control procedures are being applied as prescribed. The main aim of this is to discover whether there are any deviation from the prescribed system which many have material effect on the reliability of the records as a basis for the accounts compliance test are also known as procedure test.
SUSTAINING TESTS: These are tests of transactions and balances and other procedure such as analytical review, which seek to provide audit evidence as to completeness, accuracy and validity if the information contained in the accounting records or in the financial statement. Sustenance test are also known as weakness test.
ADULT: The independent examination of and expression of opinion on, the financial statement of an enterprise by an appointed auditor in pursuance of the appointing and in compliance with any recurrent statutory obligation.