Internal control is define as the whole system of internal control, financial and otherwise established by management in order to carry on the business of the enterprise in an orderly manner and efficient, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and the accuracy of records. - Dr. Kwame Aveh. (Auditing page 82-83, 2010) The individual components of an internal control system are known as controls or internal controls. Internal controls includes all policies and procedures adopted by the directors and management of an entity to assist in their objective to achieve as far as possible the orderly and efficient conduct of the business including adherence to management internal policies, safeguard of assets, prevention and detection of fraud and error, the accuracy and completeness of accounting record and timely preparation of reliable financial statement. An internal control is of a great importance to every organization because of its impact on the management of its resources especially finances. It is evident that where there are no rules controlling how a thing is to be done, that very thing is done anyhow and the best of it is not attained, this is exactly what effective internal control systems is about . For the purpose of our studies, financial management will mean the application of an organization’s financial resource (money) on activities meant for its usage. It is the proper use, the effective and efficient use of financial resources or simply put the expedient use of financial resources. 1.1.2 OBJECTIVES OF INSTITUTIONS.
The sole aim and objective of most organizations is to make profit. The theory of a firm, also states that “the firm tries to maximize its profit operate” it goes further to explain that this definition is too stark to be useful in many circumstances, particularly where a problem facing the firm has important dynamic elements and where risk is involved. A richer version of the theory assumes that the firm tries to maximize its wealth or value in the books of Edwin Mansfield, W. Bruce Allen, Neil A. Doherty and Keith Welgelt (managerial Economics Theory Application and cast 5th Edition pg11 p.2). This means, individuals and entities set up business with the aim maximizing their wealth. Even a nonprofit making organization also tries to maximize their wealth so that they can operate in to the foreseeable future period. An institutions is however likely to succeed in maximizing its wealth and value thereby operating into the foreseeable future period if its internal controls are functioning well and has a sound financial management. It is therefore important for measures to be put in place to ensure that financial sanity in institutions are maintained, but effective internal control systems is the key to this success. The proper management of resources (financial) in institutions is a true reflection that the institutions have effective controls systems in place. Where management policies are ignored and procedures adopted by directors are unenforced, objectives are not attained. It is not far from certain that, there is a positive correlation between effective internal controls and proper financial management- in that in the presence of effective controls, financial management is also effective, the opposite is true.
1.2. The problem statement.
Just as in every environment there are rule that governs it, and that the sanity of every environment depends much on how the environment is able to enforce those rules. There must be a reason why things go the way they go and a justification for that, assumptions may not always be true, there should be a study into the relationship existing between elements before their conclusions can be properly drawn. This study seeks to find out the effect of internal control on financial management in the private senior high schools and the Public senior high...