THE EFFECT OF INTERNAL CONTROL ON THE ACCURACY OF FINANCIAL STATEMENTS

ABSTRACT The relationship between internal controls and the accuracy of financial statements is direct and significant. Effective internal controls ensure that financial data is accurately recorded and reported, which reduces the risk of material misstatements. Hence, the aim and objective of the study is to examine the effect of internal control on the accuracy of financial statements. The study used primary data collected through administration of 92 questionnaires to Polaris Bank Plc., Ede Branch, Osun State. The population of the study was 92 and questionnaires were distributed using random sampling technique. The data collected were analyzed using multiple regression analysis (SPSS) to test the hypotheses formulated for the study. The finding of the study revealed that there is a significant relationship between internal control and audit of financial statement performances. Internal controls such as management commitment, management's close monitoring, management providing feedback, correction of errors in the system, and organizational ethical values all improve the audit of financial statements. The finding of the study shows that for every 1 unit increase in internal control evaluation tools, there will be 15.8% increase in reconciliation of financial statements. The study concluded that internal control effectiveness enhances the audit of financial statement performance. The study further concluded that a good and effective internal control has a positive effect on the accuracy of financial statements of business organizations in Nigeria. The study recommends that business organizations establish and manage a knowledge/information management system within the organization so as to enable all parties within the organization to freely access and utilize official information.