internal control systems and financial performance. a case study of kabale municipal council, kabale district

Description

The study aimed at assessing the relationship between Internal Control System and financial performance of Kabale Municipal Council, Kabale District. Specific objectives were: to examine the effect of risk assessment on financial performance of Kabale Municipal Council; to determine the effect control activities on financial performance of Kabale Municipal Council; to examine the effect of control environment on financial performance of Kabale Municipal Council; and to examine the effect between monitoring on financial performance of Kabale Municipal Council. The study used a descriptive research design, specifically focusing on correlation analysis of study data. A sample size of 169 was estimated from a population of 300 study units. Data was collected through questionnaires and interviews, and analyzed with the aid of SPSS. The study found that risk management has a significant statistical effect of financial performance (Beta =.349; sig. <.05) and so is control environment’s effect on financial performance (Beta = .201; sig. <.05). On the other hand, control activities did not have a significant effect on financial performance (Beta = .103; sig >.05), likewise monitoring did not have significant effect on financial performance (Beta = .192; sig. >.05). Generally, internal control system accounted for 50.7 percentage change in the financial performance of Kabale Municipal Council. It was concluded that internal control systems significantly affect financial performance of local governments. Therefore, Local government officials especially those entrusted with the mandate of financial control, should strictly uphold internal control system for better financial outcomes. This study can be used by both public and private organizations to improve their internal controls for high financial performance.