There is barely any organisation in our society today that cannot be associated with one type of fraud or the other. Manufacturing industries, banking industries etc have all experienced a high propensity of fraud in recent time. In fact, activities of fraudsters in our organisations are highly unpredictable and their methods of operations keep changing. The case and issue of fraud in Nigerian economy has taken a different dimension, which if not attended to would cause a wreck in the total economic potentials. Fraud is not only found in the private sector of the Nigerian economy but also the public sector. As a matter of fact, the motive (for almost all aspirants) behind serving in a public office is to go and fraud to enrich themselves. Cases of frauds are found to arise due to complete absence of internal auditing services to check transaction and policies laid down, duties are not adequately segregated as a single persons starts and completes a transaction etc. The meaning of this is that the funds which could have been used by an organisation in the generation of employment through expansion and diversification programmes would have been cornered by a selfish individual who uses his position in the organization authority or intelligence to embezzle money. If this end is not properly monitored, then the future of the Nigerian economy would be in shamble. There is therefore he need to give a serious attention to the design of internal control measures that would help to curb the activities of fraudsters. From a more professional perspective and according to auditing guidelines published by the institute of chartered accountancy (England and Wales). Internal Control System is defined as “the whole system of control, financial and otherwise, established by the management of an enterprise in an orderly and efficient operations to secure it assets, ensure compliance with management polices and secure as far as possible the completeness, and accuracy of the records. Conclusively, Internal Control System are prescribed practices which the management of an enterprises develop, and adopted in order to facilitate the smooth and efficient running of an enterprises of order and mainly to the present in all the operations of the enterprise and for security of its assets. The types of controls available as contained in the appendix to the operation auditing guideline on internal control, with reference to the appendix are ten (10) types of control management could use in controlling its organisations. They are as follow:
i. Organisation control
ii. Authorization and approval
iii. Segregation of duties
iv. Arithmetic and accounting control
v. Supervision control
vi. Personal control
vii. Management control
viii. Acknowledgement of performance and
ix. Budgeting control
The beauty of any control is for it to actually work efficiently and effectively in practice. So, it is not enough to design a control but to make sure that it functions as planned. The meaning of each would be explained and it area of application are explained below:
1. Organisation Controls
This is a control set up by the management which involves having a plan of organisation which should defined and allocate responsibility where a specified person is in charge of a particular function who might be called the responsible who is their responsible and automatically answerable for that function. This control also ensure that line of reporting are known meaning that an employee should the precious powers delegated to him, the extent of his authority and to whom he should report. Example the correct operation of internal control may be delegated by the board of specific management personnel and to internal audit department.
2. Authorization and Approval
This control emphasized the need for all transaction to be first of all be authorized or approval by an appropriate person. Examples are that credit sales must be approved by the credit control department, all overtime done as required by the management be approved by the department manager or works manager and perhaps all returnable and non returnable gate posses must be approved by two or more management personnel.
3. Segregation of Duties
This control is self explanatory as it preaches the procedure where no single person should be responsible for the recording and processing of a complete transaction of the glaring advantages that the involvement of several people the risk of international manipulation or accidental error and increase the element of checking errors.
4. Physical Control
The is control called physical as it involves on intelligent deliberate actions to safeguard the assets of a company, keep a highly confidential business information in a restricted safe equipment or place and above all to give full protection to all the assets of the company be it financial or otherwise.
5. Arithmetical and Accounting Control
These are control in the recording function which checks that the transaction have been fully authorized and that they are included and correctly recorded with accuracy. Procedures in the control include checking the arithmetic accuracy of records, the maintenance and checking of total, reconciliation, controls account etc. For example, where this control is in operation all purchases involves are checked by the purchase invoice section of accounting department being prelisted by that section before sending them to the computer department for processing. Notable to be mentioned as an example of this control is where there is clerk in the accounting department comparing the income purchases invoices with copy order forms and goods inward notes.