WEST VISAYAS STATE UNIVERSITY

COLLEGE OF BUSINESS AND MANAGEMENT

Iloilo City

Part Three, Significance of the Study, cites the benefits that may be derived

from the findings of the investigation.

Part Four, Definition of Terms, cites the research terminologies for purposes of

clarity and understanding. The terms are defined both conceptually and operationally.

Part Five, Delimitation of the Study, specifies the scope of the study.

Background and Theoretical Framework of the Study

The nature of theft and fraud can be found in any workplace. It has occurred

and continues to occur whether it's a non-profit entity or a large corporation. Companies

could lose millions to dishonest employees, and less than half of the victimized

businesses recoup any of their losses. According to Antonillas and Maciado (2014), small

companies are most vulnerable, usually due to weak internal control. All managers need

to be aware of the business risks in their area of responsibility. To reduce such risk, both

managers and employees should understand the principles of internal control to

safeguard the business in carrying out business activities and assessing other

companies' activities.

Ludwig von Bertalanffy (Systems Theory) wrote that a system is a complex of

interacting elements and that they are open to, and interact with their environments. He

proposed systems theory which treats an organization as a system. A system can be

either closed or open, but most approaches treat an organization as an open system. An

open system interacts with its environment by way of inputs, throughputs, and outputs.

An organization is also a system with parts such as employees, assets, products,

resources, and information that form a complex system (Grimsley, 2017). Managers who
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 WEST VISAYAS STATE UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
Iloilo City

understand systems theory recognize how different systems affect a worker and how a

worker affects the systems around them. A system is made up of a variety of parts that

work together to achieve a goal. Systems theory is a broad perspective that allows

managers to examine patterns and events in the workplace. This helps managers to

coordinate programs to work as a collective whole for the overall goal or mission of the

organization rather than for isolated departments (Hawthorne, 2017).

Management is ultimately responsible and should assume ownership of the

system. Leadership and direction should be provided by the management team and

each department is responsible for specific internal control policies and procedures. All

employees have some responsibility as it is developed by people to guide people with a

means of accountability.

According to Accounting Institution of Certified Public Accountants (2014),

effective internal control reduces the risk of asset loss, and helps ensure that plan

information is complete and accurate, financial statements are reliable, and the plan’s

operations are conducted in accordance with the provisions of applicable laws and

regulations. When internal control is effective, it has reasonable assurance that the plan

is achieving its financial reporting objectives. When it is not effective, it will have less or

no such assurance.

Internal control and risk management are critical in the process of setting and

achieving operational, strategic, compliance and reporting objectives. Risk management

identifies threats to the organization, while internal controls are designed to provide

reasonable assurance regarding the achievement of operational objectives, such as the

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 WEST VISAYAS STATE UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
Iloilo City

effectiveness and efficiency of operations, accurate and reliable financial reports, and

compliance with applicable laws and regulations (Maddaux, 2015).

The conceptual framework of the study is represented in Figure 1.

INDEPENDENT VARIABLE DEPENDENT VARIABLE

Personal factors Extent of practice of internal
control system in selected money
 Age
remittance centers in Iloilo City.
 Sex
 Length of service

Figure 1. Assessment of managers on the extent of practice of internal control system in

selected money remittance centers in Iloilo City as influenced by certain identified
personal factors.

Statement of the Problem and Hypothesis:

The primary concern of this study was to determine the extent of practice of

internal control system in selected money remittance centers in Iloilo City.

Specifically, the study sought to provide answers to the following questions:

(1) What is the extent of practice of the internal control systems in selected

money remittance centers in Iloilo City as assessed by managers when taken as an

entire group and when classified according to age, sex, and length of service?

(2) Are there significant differences in the extent of practice of the internal

control systems in selected money remittance centers in Iloilo City as assessed by

managers when they are taken as an entire group and when classified according to age,

sex, and length of service?

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 WEST VISAYAS STATE UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
Iloilo City

In view of the aforementioned problems, a null hypothesis was advanced:

There are no significant differences in the extent of practice of the internal

control systems in selected money remittance centers in Iloilo City as assessed by

managers when they are taken as an entire group and when classified according to age,

sex, and length of service.

Significance of the Study

The results of the research may be significant to these sectors:

Money Remittance Centers. This study will determine the extent of practice

of the money remittance center of their internal control systems. Under their care, they

may develop further their standing policies in order to protect the assets of the business

and promote efficient operations. The findings could help their organization or company

improve their service and formulate advantage from other money remittance centers in

terms of internal control.

BSBA students. The students taking up the Bachelor of Science in Business

Administration may also benefit from the outcome of this study. The findings may make

them aware of to what extent do the money remittance centers implement their internal

control systems and the importance of each components. It will also be helpful for them

as future entrepreneurs someday.

Teachers. The results of this study may be beneficial to the teachers in

providing new insights and information that can be discussed in class.

Future researchers. Lastly, the results of the study will give insights to the

future researchers who wish to conduct related studies.

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 WEST VISAYAS STATE UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
Iloilo City

Definition of Terms

For clarity and precision, important terms used in the study are given their

conceptual and operational meanings:

Extent--the measurement or amount of the archival materials themselves. It is

the linear measurement, page count, number of rolls, reels, cassettes, or number of

data files (National Archives, 2016).

As used in this study, extent refers to the degree to which the internal control

system of money remittance centers is practiced.

Practice--in complex domains involves the orchestration of understanding, skill,

relationships, and issues of identity and power to accomplish particular activities with

others in specific environments (CPC, 2017).

As used in this study, practice referred to the extent of implementing the internal

control system in the business.

Iloilo City--the capital city of the province of Iloilo in the Philippines. It is the

regional center and the main economic hub of the Western Visayas region (Funtecha,

2006).

As used in this study, Iloilo City referred to the place where the researchers

conducted their study.

Internal control--activities or procedures designed to provide reasonable

assurance that operations are “going according to plan” (DiNapoli, 2007).

Same meaning was adopted in the study.

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 WEST VISAYAS STATE UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
Iloilo City

Money remittance--a payment or service where funds are received from a

payer, without any payment accounts being created in the name of the payer or payee

(Gardner, Beale, Zimmerman, & Reiner, 2016).

As used in this study, money remittance referred to the service used for the

transmission of money.

Delimitation of the Study

The main purpose of this study was to determine the managers’ assessment of

the extent of practice of internal control systems in selected money remittance centers

in Iloilo City which includes Palawan Pawnshop, Smart Padala, Cebuana Lhuillier,

Western Union, M Lhuillier, RD Pawnshop, Villarica Pawnshop, Henry Lhuillier, and LBC.

The participants were the 30 selected managers directly involved in money

remittance centers in Iloilo City. Purposive sampling was used in choosing the

participants in the study. The participants were grouped according to certain variables

such as age, sex, and length of service.

The descriptive method of research was used in the study. A researcher-made

data-gathering instrument was verified by the experts in the field of business and was

utilized to obtain the needed data. Questionnaire-checklists consist of two parts: Part

One (1) Manager’s Profile and Part Two (2) Internal Control Questionnaire.

This study was conducted from June 2017 to March 2018 in Iloilo City.

Frequency count, percentage analysis, mean, standard deviation and rank were

used as descriptive statistics. The null hypothesis was tested with Mann-Whitney U-test

and Kruskal-Wallis One-Way Analysis of Variance. Statistical computations of the data

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 WEST VISAYAS STATE UNIVERSITY
COLLEGE OF BUSINESS AND MANAGEMENT
Iloilo City

were availed of through Statistical Package for the Social Sciences (SPSS) and Microsoft

Excel Software. The 0.05 alpha level was the criterion for the acceptance or rejection of

the null hypothesis.