ASSESSMENT OF INTERNAL CONTROL SYSTEM IN ETHIOIPA INSURANCE CORPORATION

Abstract

The study aimed to assess whether there is an effective internal control, identify areas of deficiency, and there to indicate areas of emphasis to improve the internal control in Ethiopian insurance corporation.To achieve the objectives the survey method is employed in mixed approach. The population of this study is the employees of EIC. All the six branches of EIC were taken to be sample in which 420 employees are the total population. Among these population sample size of 120 were taken based on the approach of Dixon C and B .Leach (1978). Key informants were taken to be managers of the six districts purposively. Questionnaire was distributed to 120 respondents, from them 115 have returned the questioners and in-depth interview was held with key informants. The Data from the questionnaire was analyzed using simple statistics such as frequency percentage and mean using SPSS results. Using both approaches of research the internal controls in EIC were not effective enough to achieve the control objectives. The result indicates that the risk assessment component of internal control is notpracticed in EIC. There is also inadequate control environment, control activities and inadequate flow of information and communication in EIC. Generally, the study has implied that EIC needs an improvement in its internal control system.Finally the researcher recommended that the human power of EIC has to understand the policies, regulation and procedures in the corporation. Moreover, it was recommended that there should be a clear line of responsibility, asset register and adequate documentation should be maintained in EIC, Good information flow and line of communication, control system effectiveness should be evaluated against clearly established criteria financial authorities to take corrective controls in a repeated failure of the system.