Internal Controls and Fraud Prevention in Non-profit Organizations: A Survey of Selected Churches in Lagos, Nigeria

Abstract

This paper examines the importance of internal controls in the operation of churches in Nigeria. This research is driven by the arguments that non-profit organizations particularly the ecclesiastical arm lack internal control as a result they end up failing in their responsibilities. Different scholars are of the opinion that internal controls play a vital role in preventing the misapplication of resources. The research was designed to investigate the issue of controls and frauds by assessing whether churches have effective internal controls and if such can prevent fraud. This was done by obtaining information through questionnaires from one hundred (100) randomly selected respondents who are church workers, from which hypotheses were formed, and relevant statistical tools applied and conclusion derived that internal controls are in place in the administration of churches but only few of them have experienced staff   knowledgeable about controls. It is noted that internal controls in these churches are based on trust and not on the basic accounting principles hence they are not in a position to maximize the effectiveness of internal controls to their advantage. This study would be of benefit to churches as it would provide a guideline upon which their assets will be secured. Based on the findings, the study concludes that despite the trace of internal control in place, churches need to work particularly on the authorization and personnel controls to avoid incidence of fraud.