# The Effectiveness Of Internal Control Systems In Banks

## Introduction

Private banks nowadays use control systems on their business especially on their vault. Internal control is a wide term with a wide coverage. It covers the control of the management system in order to carry on the business of the enterprise in an orderly and efficient way by having an automatic check and balance overall the transaction. It is not just for security but also on the main purpose of the bank – keeping the numbers in check.

## Method

Data were collected through primary and secondary to measure the relationship between two variables. The primary method used by the proponent is questionnaires which is distributed to regular employees of participating banks. In case of data analysis and evaluation, univariate as well as bivariate analysis methods were used. In the univariate analyses mean, standard deviation, percentages were used to prove the data. The proponent used Univariate Analysis. It is the simplest form of quantitative or statistical analysis. The analysis is carried with a description of a single variable and its attributes of the applicable unit of analysis. Univariate Analysis proves the pattern of response to the variable and describes each variable on its own. Univariate descriptive statistics can summarize large quantities of number data and show patterns in the raw data.

## Results

The result has a 2. 96 mean value that is moderately supportive to effectiveness of internal control system in private bank. The risk assessment variable it is observed that it has a mean value of 3. 05 and 100 respondents have given their responses moderately. For accounting, information and communication has 3. 16 mean value and out of 50 respondents 30 have fallen under moderately supportive criteria. That means 96% of respondents accept fact that accounting, information and communication procedure is in moderate level of effectiveness.

## Analysis

The 2. 96 mean can be concluded that the control environment within private bank is in moderate level of effectiveness as there are 90 employees fallen under moderately supportive level. While the result on risk assessment means evaluating the risk when planning and approving new products or activities, using of new technologies such as laser lamps, cash counter machines, security system for computers, adequate training programs to the employees and job rotation procedure among employees would be in the moderate level of effectiveness. Lastly for accounting, it implies that accounting procedure within the bank, technological measure adopting in the bank security such as alarm bell on safes, technological failures prevention, convenience of communication method implementation around the bank such as weekly meetings, memos, intercom system etc. , and line management accountability are in moderate level of effectiveness.

## Discussion

Refers that all independent variables as one variable and support moderately in the effectiveness of internal control system. The Study on effectiveness of the internal control system in Private Bank was based on the independent variables; control environment, risk assessment, accounting, information and communication, control activities and self-assessment. In the univariate analysis of data, control environment that is organizational structures, policies and practices for human resources, authority and responsibility of private bank is in moderate level of effectiveness. Overall discussion on variables means that concerning the all independent variable as whole. The overall analysis has 3. 05 mean value and 100% of respondents are accepting that all variables support moderately in effectiveness of internal control system.

29 April 2020

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