EFFECT OF INTERNAL CONTROL SYSTEM ON FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS IN NIGERIA

Accounting

This study examined the effect of internal control system on financial performance of manufacturing firms in Nigeria. The objectives of the study include to examine the effect of control environment on the financial performance of manufacturing firms in Nigeria, to determine the extent to which risk assessment affect the financial performance of manufacturing firms in Nigeria, to investigate the effect of control activities on the financial performance of manufacturing firms in Nigeria, to examine the extent to which Information and Communication affect financial performance of manufacturing firms in Nigeria and to determine the effect of monitoring on the financial performance of manufacturing firms in Nigeria. The study adopted a descriptive survey design. The target population for this study is the consumer goods manufacturing companies in Nigeria. A total number of 25 consumer goods manufacturing firms listed on Nigerian Exchange Group were selected for this study. The instrument to gather data for this study is questionnaires. The data collected via the questionnaire was analyzed with the use of the Statistical Package for the Social Sciences (SPSS). Frequency and percentage were used to describe the demographic information of the respondents and to analyze the items of the questionnaire, however, linear regression was used to test the formulated hypothesis. The findings of the study revealed that majority of the respondents rated control environment as highly effective in manufacturing firms, it also revealed that risk assessment is also very effective in the sampled manufacturing firms. Moreover, the result of the study still revealed that control activities, information and communication and monitoring are all effective in the sample manufacturing firms. The study concluded that internal control system have a significant effect on the financial performance of manufacturing firms in Nigeria. Based on the findings of the study, it was recommended that manufacturing firms must improve on its risk assessment by use of appropriate tools to identify fraud- related risks.

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