The impact of internal controls on financial performance of local governments in Uganda :

Abstract

This study examined the impact of internal controls on financial performance. The study was guided by the following objectives notably, to examine the effect control environment on financial performance, to assess the effect of control activities on financial performance, and to examine the effect of monitoring on financial performance. The study used a cross sectional research design, and a quantitative approach. Data was collected from 128 employees from different departments as a target population with the sample size of 92 employees from different departments. Data was collected with the aid of closed ended questionnaire and statistical package for social sciences was employed for analysing data from which frequency tables, descriptive statistics (mean and standard deviation), reliability, validity, correlation, and regression results were obtained. The study findings revealed that there is a positive and a significant effect of control environment on financial performance; control activities on financial performance; and monitoring on financial performance. The study concludes that there is a strong predictive power that the dimensions of internal control contribute towards enhancing financial performance in PDLG. Finally, the study recommends that efforts to improve on the financial performance of local governments depend on internal control (control environment, control activities and monitoring).