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The impact of internal control on the performance of financial institutions in Ghana performance Banks in Ghana with reference to UT Bank Ghana Ltd.

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This contain all the available findings from the survey conducted in Ghana
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  CHAPTER ONE 1.0   INTRODUCTION The study assessed the impact of internal control on the impact of internal control on the  performance of financial institutions in Ghana performance Banks in Ghana with reference to UT Bank Ghana Ltd. The chapter dealt with the background of the study, problem statement, research questions, research objectives, significance of the study, limitations of the study and finally the organization of the study. 1.1   BACKGROUND OFTHE STUDY The Banking sector is currently enjoying lot of benefits from technology, as banks in Ghana today continue to draw product along the lines of technology such as electronic banking which includes e-statement ;visa service ;e-banking and mobile banking. This is as a result of globalization and advancement in the use of technology which has become an emerging trait of the Ghanaian banking sector. Over the years, the financial sector has receive massive growth regarding their operation and activities within all areas in the country and even beyond the domestic borders which is as a result of improved mean of business through globalization and advancement in technology. Following the emerging trend of advancement in technology and globalization especially with internet related business activities, fraud increasing risk associated with businesses in Ghana, there is the need for proper maintenance of effective control system. Understanding the concept of internal control is essential for developing and understanding of its impact on the performance of an organization.  The internal control system of an entity is rigorously correlated to the structure adopted by management to direct the activities and operations of the organization, or to what is referred as the entity’s corporate go vernance. In every good corporate governance there should exist proper remuneration/ incentives to trail company’s interest and objectives as well as stakeholders in order to ensure effective monitoring, thereby encouraging firms to utilize resources more effectively (OECD principle of corporate governance). Most recent financial scandals in the United States and Europe emphasized that when those charged with governance do not act in the interest of stakeholders and do not identify, there is always the ne ed to evaluate and respond to the company’s risk or in a different way, they do not incentive the incentive the set-up of internal control systems companies in general is put at risk. Basel accord (Basel 111 ) provides universal regulatory standards with regards to bank capital adequacy, stress evaluation and market liquidity risk. The accord agreed as per the decision of the committee on banking supervision in 2010 was to encourage banks to put in place internal controls and supervision to ensure that depo sitor’s monies are safeguard.  As a result of the credit crunch, the United State of America encourages nations and stakeholders to place more emphasis on their internal control systems and internal auditing duties as well as risk management (Mercer University, 2010). Banks in recent time focus their energy more on internal control and risk management as it has a significant influence on the performance of the company and the Banks as well. Judging from the   credit crunch that hit the world economy, it’s a c lear indication of system failure in the quest of the organization to accomplish its profit making agenda and overcome competition in the industry, the world forgot about internal controls and risk management.  The financial crises which was prevalent among developed countries over the years has received an alarming rate among developing countries of which Ghana is inclusive. This to a large extent affected the inflow such as grants and loans extended to us by foreign donors and first world countries. The recent judgment debt of 90 million dollars awarded against the National Investment Bank to Dominion Corporate Trustees Limited which was formally known plc, it is an offshore company established in the UK, which may send the bank into liquidation is a clear indication of a failure in Internal Control System. (Citifmonline.com February 21, 2013). However, the banking industry in Ghana has regressed from dominance in a highly regulated sector into a large market focused one. There has been considerable improvement in the regulators and institutional framework over the years, yet financial institutions in Ghana is challenged to be one of the deepest financial crisis in the world history (Business and financial Times 3/2/2009 pp.14). Liquidation of bank for Housing and Co-operative Bank are cases of how lapses within internal control could be lead to the affluence and subsequent collapse of a financial institution. The internal controls and risk management which forms the principal purpose to ensure effectiveness and efficiency and efficiency of operational activities, reliability of financial information, compliance with rules and regulations and sustainable business growth has been incorporated into the routine activities of the bank in Ghana. However, Anderson, (2008) defined internal control as a process affected by an organization structure, work and authority flows, people and management information systems designed to help the organization accomplish specific goals or objectives. It is a means by which an  organizations resorce are directed, monitored, and measured. It plays an essential role in  preventing and detecting fraud and protecting the organizations resources assets. The Bank of Ghana The central bank of Ghana in performing the regulatory role has identify measures to help regulate the functioning of the financial institutions to improve on the effectiveness of their internal control system risk management. As a result of ‘ internal controls to fight corruptions, Ghana has passed various legislations to reduce the risk of misstatement, fraud and mismanagement of both corporative and government resources .the government in 2003 passed the Financial Administration Act (Act 654), the procurement Act (Act 663) and the internal audit agency Act (Act 658) ’ . Most banks in Ghana now have internal control department, compliance and Control department ,internal audit as well as risk management department, this is to ensure that risk is identified as quickly as possible and mitigated. 1.2   STATEMENT OF PROBLEM The growth and development of the financial service sector can be attributed to effective and efficient management of it credit and operational issue, in modern business of banking it is imperative that banks channel their efforts in identifying risk, evaluating and mitigating them in order to enhance their performance. By setting objectives, management can then identify risks to the achievement of those objectives. In order to adressBy setting objectives, management can then identify risks to the achievement of those objectives. To address those risks identified management of organizations and for that matter banks may implement specific internal controls. We can therefore say that, risk to some extent is mitigated by ensuring internal controls are put in
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