ABSTRACT This study set out to investigate the impacts of intemal control on cash flow management, using the case study of pride microfinance limited. According to the Committee of Sponsming Organization (COSO) Framework, everyone in an organization has responsibility for intemal control to some extent. Virtually all employees produce information used in the intemal control system or take other actions needed to affect control. Also, all personnel should'be responsible for communicating upward problems in operations, noncompliance with the code of conduct, or other policy violations or illegal actions. Each major entity in corporate govemance has a pmiicular role to play: Management: The Chief Executive Officer (the top manager) of the organization has overall responsibility for designing and implementing effective intemal control. More than any other individual, the chief executive sets the "tone at the top" that affects integrity and ethics and other factors of a positive control environment. This study will be conducted with specific objective, to find out the relationship between intemal control system and cash management, also investigate the effectiveness of the intemal control methods on cash management. The study will address research questions on the impacts of intemal control on cash flow management. A case study will be adopted as the basic research design but frequency supported by others such as qualitative and explanatory. The study purpose will sample a population of fifty employees from top management, financial and accounts depmiment, staff and other employees of the organization. The study will use both primary and secondary data obtained from the available sources and findings from p!imary sources will be collected using questionnaires, interviews, and observations will be processed using frequencies, and percentages will be used as key tools to identify the relationship of variables. The basic findings were that pride micro finance limited are currently using the intemal control system in managing its cash flow.
TABLE OF CONTENTS
DECLARATION ............................................................................................................................. i
APPROVAL .................................................................................................................................... ii
DEDICATION ............................................................................................................................... iii
ACKNOWLEDGEMENT ............................................................................................................. iv
TABLE OF CONTENTS ................................................................................................................ v
ABSTRACT ................................................................................................................................... ix
CHAPTER ONE ............................................................................................................................. 1
INTRODUCTION ........................................................................................................................... !
1.0 Background of the Study ........................................................................................................... 1
1.1 Statement of the Problem .......................................................................................................... !
1.2 Purpose of the Study ................................................................................................................. 2
1.3 Objective of the Study ............................................................................................................... 2
1.4 Research Questions ................................................................................................................... 3
1.5 The Scope of the Study ............................................................................................................. 3
1.5.1 Study scope ............................................................................................................................ 3
1.5.2 Geographical scope ................................................................................................................ 3
1.6 Significance of the study ........................................................................................................... 3
1. 7 Conceptual fi·amework .............................................................................................................. 4
CHAPHER TWO ............................................................................................................................ 5
LITERATURE REVIEW ................................................................................................................ 5
2.1 Introductions ............................................................................................................................. 5
2.2 Methods of intemal control. ...................................................................................................... 5
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2.2.1 Organization ........................................................................................................................... 5
2.2.2 Segregation of duties .............................................................................................................. 6
2.2.3 Authorization and approval. ................................................................................................... 6
2.2.4 Arithmetic and accounting ..................................................................................................... 6
2.2.5 Physical restrictions ............................................................................................................... 6
2.2.6 Management; .......................................................................................................................... 6
2.2.7 Personnel. ............................................................................................................................... 7
2.2.8 Supervision ............................................................................................................................. 7
2.2.8 Acknowledgement of performances ....................................................................................... 7
2.2.9 Budgeting ............................................................................................................................... 7
2.3 lntemal control measures .......................................................................................................... 7
2.4 Positive impacts of intemal controls ......................................................................................... 8
2. 5 Cash Management. .................................................................................................................... 8
2.6 lntemal controls on cash ........................................................................................................... 9
2.6.1 Intemal controls on Receipts .................................................................................................. 9
2.6.2 Controls on Receipts by post.. ................................................................................................ 9
2. 7 Intemal control on payment. ..................................................................................................... 9
2.7.1 Controls on payments in the bank ........................................................................................ lO
2.7.2 Controls on cheque payments .............................................................................................. 10
2. 7.3 Controls on cash payments ................................................................................................... 10
2.8 Intemal controls on balances ................................................................................................... 10
2.8.1 Cash balances ....................................................................................................................... 10
2.8.2 Bank balance ........................................................................................................................ 11
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CHAPHER THREE ...................................................................................................................... 13
METHODOLOGY ........................................................................................................................ 13
3.1 Introductions ........................................................................................................................... 13
3 .2 Research design ....................................................................................................................... 13
3.3 sample and sampling design .................................................................................................... 13
3.3 .1 Target population ................................................................................................................. 13
3.3.2 Sample size ........................................................................................................................... 13
3.3.3 Sampling design ................................................................................................................... 13
3 .4 Data Collections ...................................................................................................................... 14
3.5. Data collections instmments .................................................................................................. 14
3 .5 .1 Questiom1aires ...................................................................................................................... 14
3.5.2 Interview method ................................................................................................................. 15
3.5.3 Observation method ............................................................................................................. 15
3.6 Data processing ....................................................................................................................... 15
3.7 Constraints during data collection ........................................................................................... 16
CHAPTER FOUR ......................................................................................................................... 17
PRESENTATION, INTERPRETATION AND ANALYSIS OF FINDINGS ............................. 17
4.1 Introduction ............................................................................................................................. 17
4.2 Gender of Respondents ........................................................................................................... 17
4.3 Qualifications of the Respondents .......................................................................................... 18
4.4. The organization has an internal audit department/ section ................................................... 19
4.5: The organization has written policies and procedures for all its operations .......................... 20
4.7. All cash due to the organization is received by authorized personnel ................................... 22
4.8 All cash received in 10 above is properly recorded ................................................................ 23
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4.9. People who receive cash are different from those who record cash receipts ......................... 23
4.1 0. There are regulations sufficient to bank accounts personnel access to custody of cash
received ......................................................................................................................................... 24
4.11. All cheques and proceeds of cash sales are held in locked drawers and access to these is
limited ........................................................................................................................................... 25
4.12. Totals of cash received are balanced against general and subsidimy ledger records; and
related credits to sales accounts receivables or other accounts as appropriate ............................. 26
4.13. All disbursements are duly authorized by officers in charge offinance .............................. 26
4.15 The company has an established internal leading system ("I owe you") .............................. 27
4.16 All cheques disbursement is duly signed by authorized personnel.. ..................................... 28
4.17. There are limits on disbursements ........................................................................................ 29
CHAPTER FIVE ........................................................................................................................... 30
DISCUSSION OF FINDINGS & SUMMARY, CONCLUSION, RECOMMENDATIONS AND
SUGGESTIONS ........................................................................................................................... 30
5.1 Introduction ............................................................................................................................. 30
5.2 DISCUSSION OF FINDINGS ............................................................................................... 30
5.3 SUMMARY ............................................................................................................................ 32
5.4 CONCLUSION ....................................................................................................................... 34
5.5 RECOMMENDATIONS ........................................................................................................ 35
5.6 RECOMMENDATIONS FOR FURTHER STUDY .............................................................. 36
TIME FRAME .............................................................................................................................. 37
REFERENCES .............................................................................................................................. 38
APPENDIX 1 ................................................................................................................................ 39
INTERNAL CONTROL QUESTIONAIRE ................................................................................. 39
