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The old English adage has it that ‘the taste of the pudding is in the eating’, and so it is with the appraising of the internal control system of the Nigerian Agricultural, cooperative And Rural Development Bank Limited, Akamkpa Branch, which necessitate a case study to be conducted inorder to establish to what extent the system of internal control installed by the management is working.

It is known that the success or failure of any business depends upon the ways and manner by which the business is conducted, the rules that were developed to run the firm and how far these were consistent with the type and nature of the business. Inorder to ensure efficiency, effectiveness and profitability, the operations of the business must be installed to suit its structure and control the firm’s resources.

There can be no effective internal control without an adequate plan of the organization. This involves the separation of a company’s operation into appropriate divisions and sub-divisions, the appointment of persons to assume responsibility therefore, the establishment of clear lines of responsibility between each division and sub-division and the board of directors, and the overall co-ordination of the company’s activities.

The objects of financial and accounting control procedures are to ensure that the funds and property of the company are kept under proper custody and may not be improperly applied, either by error or intents,; that expenditure may be incurred  only after authorization and is properly accounted for, and that all revenues are properly accounted for and received in due course of time.

The achievement of these objects involves a suitable division of duties, the establishment of an appropriate accounting system and the institution of forms of internal checks on day-to-day transactions which operate continuously as part of the routine system, whereby the work of one person is proved independently or is complementary to the work of another, the object being the prevention or early detection of errors or fraud.

This overall planning and its practical operation is included under the title of internal control system. The concept of internal control function  has therefore assume an important position in the minds of management whose responsibility it is to establish a sound and efficient system in view of the failures which has been experienced in the entire economy.

Internal control system is therefore, the whole system of controls, financial and otherwise, established by the management inorder to carry on the business of the enterprise in an orderly and efficient manner, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and accuracy of its records. (the Association of certified Accountants 1980: P. S204-1)

While in practice this management technique has been accepted as a working tool for the control of activities within the operational realm of the business, how then can we ascertain its existence, soundness in principle and effectiveness in operation? The companies and Allied Matters Act’ 1990 of the country has made it mandatory for companies to have their accounts audited year by year.

In co-operation and collaboration with this, the authorities of the Accountancy Profession have put up some regulatory rules to govern the conduct of their members. As a matter of good practice, auditors are required, among other things, to ascertain and test for any system of control in force at the onset of each audit.

It is against this background that the researcher has chosen to conduct this research, and was partly informed by the requirements for award of the Bachelors of Science degree in Accountancy. The research work is thus planned to cover five chapters. As part of the research, the objectives and significance of having a functional internal control system will be highlighted, followed by the benefits an organization would derive if the internal control system was functioning well. The research method to be used covers description and analytical presentation. Also, the method of collating data would be obtained through questionnaires which would be analyzed using simple percentage and shown in a tabular format.


The need to stem the tides of business failure in the economy has caused company’s directors to look inwards into the management of their various companies. Business failure especially in the banking sector has recently been the talk of the town. The embarrassment and despair caused by this unfortunate event have made company’s directors to sit up.

The Government on its own part has not got it easy. There has been the crying need for the government to look into the problems of some of the financial institutions going distressed. The Nigerian central Bank, the Apex Bank, recently pulled its weight and with the power at its disposal caused commercial banks in the country to increase their share capital to a stated minimum amount.

This was meant to generate enough confidence in the minds of the banking public so as to stabilize the functioning of this important institution. Distrust in the efficient operation of our financial institutions has cause many people to keep their unused funds in their houses with the unfortunate consequence of becoming victims of the wicked minds of the under-world.

Poor job arrangement can cause errors of omission or commission, and fraud may be perpetrated where one officer carries out an operation from start to end without the intervention of the action of another staff.

For example, Imoh Akpan (2004: 243) states that: “In banking industry, fraud is frequently committed by a loan officer and a borrower, where they connive to lend and borrow a bank’s money for a non-excising project or one which they know is incapable of repaying the loan. This agreement, he said, stipulates an agreed percentage of the borrowed money to be paid to the collaborating officer. Combined with other fraud devices such as payment against unlearned effects and impersonation, the unsecured or fraudulent loan causes financial leakages and distress. Financial flows are distorted, resulting in misdirected  allocation”.

As such, the need to carryout this study becomes highly necessary as these fraud, errors and irregularities have caused the organization huge financial losses, low returns and poor image. With this in view, the researcher was encouraged to carryout her search into the Nigerian Agricultural, Co-operative and Rural Development Bank (NACRDB) Limited, Akamkpa Branch, in order to find out whether or not the system of internal control is sound in principle and effective in operation.

Step were then taken to appraise the various segments of the organization with a view to ascertaining the extent to which the activities of the business were guided by the rules, procedures and regulations as set up and applied in the conduct of the day to day affairs of the establishment.


The main objective of this study is to appraise the internal control system of Nigerian Agricultural, Cooperative And Rural Development Bank (NACRDB) Limited, Akamkpa Branch, with a view to seeing whether the system as installed is sound in principle and effective in operation.

Generally, the study was carried out in pursuit of the following objectives”

To examine the nature of internal control system in the Nigerian Agricultural, Cooperative And Rural Development Bank Limited, Akamkpa Branch. To identify the different type (s) of control system established by the Bank. To identify the problems, which undermine the effective working of internal, control system in the Bank. To examine the effect of these problems on asset protection. To make recommendations for the effective operation of the internal control system in the Bank. RESEARCH QUESTIONS.

The following research questions were developed for the study:

What is the nature of internal control system of Nigerian Agricultural, Cooperative And Rural Development Bank (NACRDB) Limited, Akamkpa Branch? What types of management control system is used in the NACRDB Limited, Akamkpa Branch? What are the problems that undermine the effective working of internal control system in the Bank? What effect has these problems on asset protection of the bank.


Research hypotheses developed for this study were as follows:

There is no significant difference in the nature of internal control system adopted by Nigerian Agricultural, Co-operative And Rural Development Bank Limited. There is no significant influence of internal control system on the firm’s asset profile.


This study is intended to help in the efficient management of our businesses by instilling into the minds of management the need to have an efficient and reliable system of internal control.

It is therefore hoped that:

The study would help the Nigerian Agricultural, Cooperative and Rural Development Bank Limited, Akamkpa Branch, in knowing to what extent its internal control system is consistent with the aims and objectives of its business. The study would re-awaken management interest in its effort to protect assets and safeguard the records. The study would act as a spring-board for future scholars and other researchers wishing to direct their investigative work into this field of study.


The appraisal of the internal control system of the Nigerian Agricultural Cooperative and Rural Development Bank Ltd, Akamkpa Branch, would require a study to be conducted which will disclose the extent to which management has discharged its responsibility in seeing to it that a sound and effective system of internal control operates in the organization.

This will involve a look at the plan of the organization by which the operations of the business is split up into divisions and subdivisions and responsible staff allocated to assume responsibility with the board of directors taking care of the overall co-ordination and control of the organization.

The study is also directed to seeing how far the objectives of financial and accounting procedures were achieving their aims by ensuring that funds and property of the business are kept under proper custody and may not be improperly applied, either by error or intent.

The study is limited to the Nigerian Agricultural, Cooperative and Rural Development Bank Limited, Akamkpa Branch in the Cross River State of Nigeria, and was conducted strictly to appraise the functioning of internal control system for the period of two years; 2005 and 2006. The research is also limited to the information obtained from the Bank Manager, questionnaires and the ones obtained from the relevant literature.

Other Limitations of this research were:

Lack Of Funds: The prevailing financial constraints have posed limiting factor on the researcher’s ability to meet the financial obligations of this research work. Time Limit: Ordinarily, a well developed research ought to take a considerable time, say 1-2 years. But as a result of constant break in the school system, there has been a reduction in time required to carryout the research. Hence, this study was done relatively within some few months, and the scope could not be far and extended as originally intended.


The birth of the Nigerian Agricultural, cooperative And  Rural Development Bank (NACRDB) Ltd, as the single largest development finance institution in Nigeria followed the successful merger of the former people’s Bank of Nigeria (PBN), the defunct Nigerian Agriculture And Cooperative Bank (NACB) Ltd, and the risk assets of the family Economic Advancement programme (FEAP) in October 2000.

The Akamkpa Branch of the People’s Bank of Nigeria was established on the 6th of March, 1989 and was commissioned for operation on 3rd October 1989, with a pioneer manager by name Mr. Robert Bassey who served between 1989 and 1993. The Branch, in keeping with the status of its parent body had to change its name also to reflect its Father, the Nigerian Agricultural, Cooperative And Rural Development Bank Limited,. Akamkpa Branch.

Since this change in October 2000, the management of the Bank had passed into the hands of two (2) able bodied managers.

Mr. Odungide J. Odungide is currently piloting the affair of this great financial institution. The Akamkpa Branch which situates at No.5 Government Secondary School Road, in Akamkpa, covers two (2) Local Government Areas of the cross River State of Nigeria.

The activities of the Branch are carried out by eight (8) Staff and these include; one manager who is the head of operations, Accountant, Supervisor and Supportive Staff. The Bank Board’s mandate encompasses savings mobilization, and the timely delivery of affordable credit to meet the funding requirement of the teaming population on the agricultural Sector of the Nigeria Economy.


ACCOUNTING: Accounting is defined as the art of recording, classifying and summarizing in a significant manner, and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the results thereof. (Ebrim 1996 : 2)

ASSETS:  Assets are those economic resources of a firm having future period benefit and expressed in money terms. (Udoh 2004 : 35)

AUDIT: An audit is the independent examination of, and expression of opinion on, the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligation. (The Association of Certified Accountants 1980 : 3).

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