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BY;
Name ID No
1. Melkamu Tenaw………………...........BER/002/11
2. Liyuwork Alemu……………. ……….BER/093/10
3.Ifa Abayaa……………....…………….BER/083/10
Contents
CHAPTER ONE.................................................................................................................................................... 1
1. INTRODUCTION.............................................................................................................................................. 1
1.1 Background of the study.......................................................................................................................... 1
1.2 Statement of the problem........................................................................................................................ 2
1.3. Research question................................................................................................................................... 2
1.4 Objective of the study.............................................................................................................................. 2
1.4.1 General objective.............................................................................................................................. 2
1.4.2 Specific objectives............................................................................................................................. 2
1.5. Significance of the study.......................................................................................................................... 3
1.6. Scope of the study................................................................................................................................... 3
1.7 Organization of the paper........................................................................................................................ 3
CHAPTER TWO................................................................................................................................................... 4
REVIEW OF RELATED LITERATURE...................................................................................................................... 4
2.1 INTRODUCTION........................................................................................................................................ 4
2.2 What is information technology?............................................................................................................. 4
2.3. Functions of Information......................................................................................................................... 5
2.4 components of information technology................................................................................................... 5
2.5. Principles of internal control apply to most business enterprises............................................................5
2.6 Internal Control........................................................................................................................................ 6
2.7 Objective of internal control.................................................................................................................... 7
2.8 COMPONENTS OF INTERNAL CONTROL SYSTEM...................................................................................... 7
2.9 Internal Control in Banks.......................................................................................................................... 9
2.10 The Effect of Internal Control................................................................................................................. 9
CHAPTER THREE............................................................................................................................................... 10
Research Methods........................................................................................................................................... 10
3.1 Research design..................................................................................................................................... 10
3.2. Research Approach............................................................................................................................... 10
3.3. Target population, Sampling techniques and Sample size.....................................................................10
3.4. Data type and source............................................................................................................................ 10
3.5Methods of data collection..................................................................................................................... 11
3.6. Data Analysis and Presentation............................................................................................................. 11
INTRODUCTION
This chapter Includes about the general introduction of the study. And also includes statements of the
problem, objective of the study, significant of the study , scope of the study and organization of the study.
The introductory part that deals some defination about the research
Now a day companies depend highly on technology, especially information technology because
it saves time and money as well as it helps to perform tasks with speed and accuracy. For
example: -in bank to perform internal control and provide service to customer information
technology plays a great role in questioning well. Information technology gets the attention of
the business unit in order to perform internal control and providing service in good manner.
Information technology is a set of tools, process and methodologies (like: -coding
/programming, data communication data conversion storage retrieve system analysis and
collect process and present information in broad sense includes office automation, multimedia,
telecommunication information technology process transactions uniformly and eliminate the
human error that occurs in manual system. technology is advantageous to perform routine
tasks with speed and accuracy. As a result, information technology is an important tool for
banks internal control system even if it has its own limitation. Due to these reason banks are
running with technology that innovates in new for operating easily. since banking plays an
important in the economy development of any nations by mobilizing money from same excess
reserve make un available from the public deposit to the demand area .Therefore banks must
have internal control system with the help of information technology to assure the entities
objective as well as to meet the interest of the customer these study will investigate how the
use of information technology affects the internal control systems of Dashen Bank (phile H,
2003).
1. Does Dashen Bank use information technology for effective internal control?
2. How Dashen Bank improve its general activity by using information technology?
3. How can Dashen bank reduce in adequate information technology process to make
appropriate internal control?
1. To assess how Dashen Bank use information technology for internal control.
2. To assess how Dashen Bank improve its general activity by using information technology.
3. To find out the way how Dashen bank reduce inadequate information technology process to
make appropriate internal control.
CHAPTER TWO
2. REVIEW OF RELATED LITERATURE
2.1 INTRODUCTION
Many organizations have fail because poorly control computerize information system
(rittenberg Et Al2005) information technology system is vital for every financial area of an
organization. Data and information are the life blood of accounting. Information system
capture, organizes, analyze and disseminate data and information throughout modern
organization. Virtually no companies on the modern business handle their accounting without
the support of information technology system (Turban etal 2003.)
To address many of the risk associated with greater reliance on information technology.
Organization often implement control specific to the information technology function. Auditing
standards describe to broad control groupings for information technology system, general
control and applicator control. General control relates to all aspects of the information
technology function, including administration, software acquisition and maintenance, physical,
and online scroll are specific to certain software application and typically do not affect all
information technology functions. Application controls help ensure the accuracy of transaction
processing (Arensetal, 2003.)
2. Data processing:-which is the place computer convert the data into information by analyzing
and synthesizing data (Jackson RA,2004)
3. General decision making information:-it is the function of summarizing the organization data
in the form of text, number, or chart to make it useful information for decision (Jackson
RA,2004)
4. Data storage: - data that is convert into information and this information produce from the
data are store in magnetic or optical storage media for future use (Jackson RA,2004).
5. Data retrieve: - the data that are store in storage are retrieve when necessary for some
application (Jackson RA,2004).
6. Data transmission: - the data that are information movement from one place to another or
one system to another we call it transmission for purpose.(Jackson RA,2004).
Security
The first principle of internal control every business owner needs to address is physical
protection and safety of personnel and assets this begins with basic security measures, such as
fencing, lighting, door locks and video surveillance (James AC, 1998).
Preventive Control
Any business in the operation will be need for internal controls that are preventive in nature.
One of the basic principles of preventive control separation of functions is also known as
segregation of duties. As an example; persons who receive payments shall not prepare deposits
or post them to account receivable (James AC, 1998).
Detective
Business requires methods to monetary and detects problems that affect the accuracy of
accounting data. Detective internal controls are design to identify in consistencies, in accuracy,
or suspicious transaction that needs to be review. Some methods of detection include un
announce inspection of accounting records, conducting physical inventory, review of computer
access and logins and intrusion detection system (James AC, 1998).
Compliance issues
The definition of internal controls is expand beyond just over sight of financial accounting and
basic security matters The General Accounting Office, Office Management and Budget and the
Tread way Commission's Committee of Sponsoring Organizations all define internal control as a
system for providing reasonable assurance of the effectiveness and efficiency of operations, the
reliability of financial reporting and compliance with applicable lows and regulation (James
AC,1998).
2.6 Internal Control
Internal control is a process affected by an entities board of directors’ management and other
personnel, designed to provide reasonable assurance regarding the achievement of the
following three categories: - reliability of financial reporting, effectiveness and efficiency of
operations, compliance with applicable laws and regulations. Internal control provides
reasonable assurance net absolute assurance, that management' objectives will be achieved.
(TimothyJ.Louwers2013).
2. Risk Assessment
Risk assessment for financial reporting is management's identification and analysis of risks
relevant to the preparation of financial statements in conformity with GAAP. Identifying and
analyzing risk is an ongoing process and a critical component of effective internal control
management must focus on risks that at all levels of the organizations and take necessary
actions to manage them (ALVINA ARENAS,2003).
3. Control Activities
Control activities are put in place by the management to make financial information authentic
and reliable. for example, debtors cannot be written off without permission financial director or
any other person given authority to right off debts, similarly, credit sales cannot be make unless
recommendation is sought from credit control department-such control an activity does not
necessary area in the nature of authorization. These activities are policies and procedures; in
addition to those include in the other for control components. To help that necessary actions
are taken to address risks to the achievement of the entities objective (ALVINA ARENAS,2003).
5. Monitoring
Monitoring activities deal with ongoing or periodic assessment of the quality of internal control
performance by management to determine that controls are operating as intend and that they
are modify as appropriate for changes in condition, monitoring is the last components of
internal control to access the effectiveness of internal control system(ALVINA ARANAS,2003).
Table The study will conduct with the eight months from title selection of the month November
and submission through various advisor consultants up to the month of June presentation of
the study findings, the eight month and their time as follows,
1: time plan
No Activities Nov Dec Jan Feb Mar Apr May Jun
1 Title
selection
2 Literature
review
3 Proposal
writing
4 Data
collection
5 Data
analysis
and
presentatio
n
6 Research
writing
7 Defense