Chapter 7: Evaluating the Internal Control System in Deposit Money Bank

Abstract

Effective internal control systems are very important in the detection and prevention of fraud Aguota (2002) cited in Idogei, et al. (2017), stated that internal control is a gamut of measures that seek to detect errors, fraud and irregularities to ensure that all transactions are correctly processed and ensure that all assets are safeguarded through restriction of access to authorized persons only. He emphasized that the internal control system enables work to be performed by a person and any omission or error can be traced to that person and to make the work of the auditors easier. Mayo and BPP (1988) defined internal control as the measure taken by an organization to protect its resources against wastes, fraud, inefficiency, ensuring accuracy and reliability in accounting and operating data, security compliance with organizational policies and evaluating the level of performances in all divisions of the organizations. The committee of sponsoring organizations (COSO) (1994) defined internal control as a process effected by an entity’s board of directors, management and other personal designed to provide reasonable assurance regarding the achievement of objectives concerning the reliability of financial reporting, effectiveness and efficiency of operations and compliance with applicable laws and regulations