INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Internal control system acts as an independent appraisal activity within an organization for the review of accounting, financial, and other operations as a basis of service to management. Internal control helps improving the efficiency and profitability of the business. Proper review and appraisal of policies is essential. Audit procedures should be periodically performed on a cycle basis so that all individuals will know that the activity may be subject to audit.Auditing involves the independent examination of an expression person in accordance with the terms of engagement and the observance of statutory regulations and professional requirement (Okolie, 2008).  According to Milichamp (2003) the primary objective of an audit is to produce a report by the auditor of his opinion of the truth and fairness of financial statement, so that any person reading and using them can have belief in them. Management control has to do with management function aimed at achieving defined goals within an established timetable, and usually understood to have three components which include; setting standards, measuring actual performance, and taking corrective action. Management Control according to Wikipedia definition is one of the managerial functions like planning, organizing, staffing and directing. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in a desired manner.

According to modern concepts, control is a foreseeing action whereas earlier concept of control was used only when errors were detected. Control in management means setting standards, measuring actual performance and taking corrective action. A typical process for management control includes the following steps: actual performance is compared with planned performance, the difference between the two is measured, causes contributing to the difference are identified, and corrective action is taken to eliminate or minimize the difference. The industrialization and dynamism of modern administration has created a vacuum to be filled by qualified and competent auditors. Auditing is a system that links management and the actual field of administration (Onu-chukwu, 1985). Internal audit is an independent function of auditing records, appraising the procedures and organization of a business and reviewing the effectiveness financial stability of the system of the internal checks with the aim of establishing a systematic disciplined approach that will aid in the evaluation of and improvement of the effectiveness of risk management, control and governance processes. Primarily, the internal audit function is to provide independent assurance over the internal controls and risk management of the Local Government council.

The system of internal check, audit or control in force in any undertaking is very important to the internal auditor because his task is to satisfy himself that the system is kept up to an efficient standard and also keep the system abreast of changes as are required. Onu-chuku (1985), described internal control as an independent appraised function established within an organization to examine and evaluate its activities as a service to the organization. Internal audit is concerned with the liability and adequacy of the accounting system through reliability and integrity of financial and operations information, effectiveness and efficiency of operation and material usage, compliance with laws, regulations, policies and procedures, adequacy and effectiveness of risk management frame work. The productivity of the internal audit system has to do with the extent to which the internal audit function has assessed and affected the administrative activity of the council. Corporate management has become complex in recent times. The emphasis on decentralization, increasing use of delegation of authority and even in volume of trade has made the art of management so complex and intriguing that only managers who master the modern scientific method of management can cope with the increasing demands scientific method of management can cope with the increasing demand required by the poison. 

To assess the complexity of the art of management, in the current increasing wake of business fraud, embezzlement and the cash squeezes which has crippled many companies because of the Structural Adjustment Programmes (SAP) and its attended foreign exchange and raw materials security. In order to cope with the current situation and keep their business profitable, management has to look more inwardly, to increase the profitability of the company and to keep the overall activity of the company under control.  This can only be achieve through good effective internal control system of which internal auditing is a major problems and performance of every department in the company. As representative of top management, the internal auditor is interested in determining whether each branch or department has a clear understanding of its assignment whether it is adequately stated, maintains good records, protects cash and inventories and other assets properly, co-operates with other departments and in general carries out effectively the functions provided for it in the overall plan and organization of the business.