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EFFECTS OF INTERNAL CONTRAL OVER PURCHASES ON PERFORMANCE 1.0 INTRODUCTION 1.1 Background to the study According to ……………………………. Internal controls arête rules and the procedures adopted by the management of an organization. They are designed to provide reasonable assurance regarding the achievement of the achievement of reliability of financial reporting, efficiency and effectiveness of operations and compliance with applicable laws and regulations . According to …………………….. Internal controls are
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  EFFECTS OF INTERNAL CONTRAL OVER PURCHASES ON PERFORMANCE1.0 INTRODUCTION1.1 Background to the study According to ……………………………. Internal controls arête rules and the procedures adopted by the management of an organization. They are designed to provide reasonable assurance regarding theachievement of the achievement of reliability of financial reporting, efficiency and effectiveness of operations and compliance with applicable laws and regulations . According to …………………….. Internal controls are establis hed in order to carry on organisations activitiesin anordarly and efficient manner. Effective and efficient internal controls in an organization enhanceperformance. Although UEDCL has internal controls in place, it has not been performing as expected(New Vision 2003). The control on purchasing especially at the inspection and selection stages in UEDCLwhere week according to its staff, allowing some poor quality items into the organization these itemshave affected the performance of UEDCL as shown by the companys re-introduction of load shedding inSeptember 2002 indicating that it was unable to supply electricity to all its customers at the same timeand its profits fell from 31, 176 515 in 2001 to 28, 910,388 in 2002. This could be attributed to theinternal controls on the purchases in the organization.The organization operates a centralized purchasi ng system where all departments’ requirements are processed through one purchasing section. The purchasing officer heads the section with assistancefrom other employees within the purchasing department, whose duties are monitored by the purcahingofficer. According to …………………. C ontrols over purchases ensure that items of right quality and quantity arepurchased at the right time. Therefore for an organization to run efficiently it needs controls onpurchases to ensure that goods are ordered under proper authorization, when necessary, of the rightquality and quantity to enhance its performance.1.2 Statement problemDespite the internal controls put in pl ace by UEDCL management the company’s performance has declined over the past year.According to its staff there is poor inspection of items received and no tendering process showing thatthe controls at the selection and inspection stage are not satisfactory. This allows some poor qualityitems and less quantity than are required into the company which could be the cause of its poorperformance. This poor performance is shown by the reduction in net profit and re-introduction of loadshedding, which implies that the organization is unable to supply electricity to all its customerseffectively.Table showing the performance in terms of profits of UEDCL in the past two years.  Year 1 Year 2Net profitSource: - Income statement of UEDCL1.3 Purpose of the studyThe purpose of the study was to evaluate the effects of internal control over purchases on performanceof the organization1.4 Objectives of the studyThe study is aimed at achieving the following objecti ves.a)   To find out how effective the internal control procedures are on purchases of the organization.b)   To establish the relationship between internal control on purchases and the performance of theorganization.c)   To establish the relationship between budetery control and purchases.1.5 Research questions In order to address the research objectives the following questions where used as a guide’  a)   How effective are internal control procedures over purchases of the organization?b)   What is the relationship between internal controls over purchases on the performance of theorganization?c)   What is the relationship between budgetary control and purchases?1.6 Scope of the studyGeographical scopeThe research was carried out in UEDCL Kampala head offices located on Kampala road.Area scope.The study covered general staff and three departments, which included the purchases departmentaccounts department and the stores department.Subject scope.The study focused on the purchasing process.1.7 Significance of the study  a)   The research will help the organization by identifying the area where the internal controls overpurchases are weak or do not exist and there relationship to performance.b)   TheSource: - Income statement of UEDCL
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