Internal control systems and financial management in Uganda:

Abstract

This study aimed at determining the impact of Internal control systems on financial management of Kapchorwa District Local Government with the study objectives; To establish the effect of control activities on the financial management, to investigate the effect of information systems on financial management and to establish the impact of Internal audit on financial management in Kapchorwa District Local governments, in Uganda. The study utilized the Agency theory as suggested by Jensen & Meckling (1976) which was developed from the economic theory postulated by Alchain and Demsetz in 1972 and further advanced by (Jensen & Meckling. In addition to that, the study applied a cross-sectional research design and quantitative approach. The study had a target population of 35 employees in Kapchorwa District Local Government and collected data from a sample size of 32 respondents as guided by Krejcie and Morgan (1970). Data was collected using close ended questionnaires. Furthermore, data analysis was done using statistical package for social sciences (SPSS) version 20 from which frequency tables, descriptive statistics, reliability, validity, correlation and regression results were obtained. The study findings showed that internal control activities (adj R xi 2 = 0.738, p < 0.01), Information Systems (adj R =0.788, p< 0.01) and internal audit (adj R2 = 0.884, p < 0.01) have a positive and significant effect on financial management. Based on the findings of the study, the researcher therefore concludes that Internal control activities, Information systems and Internal audit have a positive and significant relationship with financial management. The study also concludes that strict adherence to approval and authorization systems in place helps to control fraud related issues hence a positive attitude on financial management. The study therefore, recommends that Kapchorwa District local government should adherence to approval and authorization activities within the organization to help to control fraud related issues. Furthermore, internal control monitoring activities should be put in place to help evaluate results.