INTERNAL CONTROL SYSTEM AND FINANCIAL PERFORMANCE OF FOOD AND BEVERAGES FIRMS IN NIGERIA

Internal Control System

Abstract

The study investigated the relationship between internal control system and financial performance of listed food and beverages firms in Nigeria with its dimension as audit control activities, and financial performance as well. Interpretive Philosophy and cross-sectional survey design was adopted for the study. The study population was based on six (6) food and beverages firms in Nigeria, using census sampling technique study sampled the 6 firms for the study, while 110 respondents from various departments such as Finance and Accounts, Procurements, Internal Controls, Quality Assurance, Marketing & distribution were sampled for the study. Copies of questionnaire was used for data gathering. Descriptive statistics and Spearman’s Rank Order Correlation Coefficient, statistics was used for data analysis. The result of the study showed that internal control system and its dimension of audit control activities have a very strong and positive relationship with Financial Performance measures of Market share, profitability and operation efficiency. The study concluded that internal control system significantly affects financial performance as such an effective and efficient control system is needed in firms for effective operations. The study recommends among others that the management should ensure that there are adequate controls in the system, so that enhanced financial performance can be achieved; Where there are existing internal controls, they should ensure that they are efficient and effective and engage in regular reviews so that lapses can be identified and corrected; Management should focus more on the establishment of audit controls, risk assessment and monitoring aspects of internal control system in the firms; Management of the firms as well as regulators should consider the size of the food and beverage firms and its operations as well as how the organizations are categorized, total assets, turnover and number of employees as these could affect the level of establishment of internal control system; they should constantly watch their total turnover level as a way of ensuring the effectiveness or otherwise of its control system and financial performance indicators so that the internal control measures would not be undermined.