TABLE OF CONTENTS
DECLARATION ..................................................................................................................... i
APPROVAL ............................................................................................................................ ii
DEDICATION ....................................................................................................................... iii
ACKNOWLEDGEMENT .................................................................................................... iv
LIST OF ABBREVIATION .................................................................................................. v
ABSTRACT ........................................................................................................................... vi
CHAPTER ONE ..................................................................................................................... 1
INTRODUCTION .................................................................................................................. 1
1.1 Background to the study ..................................................................................................... 1
1.1.1 Historical perspective ...................................................................................................... 1
1.1.2 Theoretical perspective ................................................................................................... 2
1.1.3 Conceptual perspective ................................................................................................... 3
1.1.4 Contextual perspective .................................................................................................... 3
1.2 Problem statement ......... .' .................................................................................................... 4
1.3 Purpose of the study ........................................................................................................... 6
1.4 Specific objectives ............................................................................................................. 6
1.5 Objectives ........................................................................................................................... 6
1.6 Research question ............................................................................................................ 6
1.6 Research Hypothesis: ......................................................................................................... 8
1.7 Scope of the study .............................................................................................................. 8
1.7.1 Geographical scope ......................................................................................................... 8
1.7.2 Time scope ...................................................................................................................... 8
1. 7.3 Content scope .................................................................................................................. 8
1. 8 Theoretical scope ............................................................................................................... 8
1.9 Significance of the study .................................................................................................... 9
CHAPTER TWO ................................................................................................................. 10
LITERATURE REVIEW .. , ................................................................................................. 10
2.0 Introduction ...................................................................................................................... 10
2.1 Theoretical review ............................................................................................................ 10
2.2 Conceptual review ............................................................................................................ 10
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2.3. Internal control systems and performance ...................................................................... 12
2.4 Related review .................................................................................................................. 14
2.5 Segmentation of Duties and financial performance ......................................................... 14
2. 6 Authorization and approval and financial performance ................................................... 14
2.7 Budgeting and financial performance .............................................................................. 15
2.8 Management Integrity and financial performance ........................................................... 16
2.9 Competent Personnel and financial performance ............................................................ 16
2.10 Proper Record Maintenance and financial performance ................................................ 16
2.11 Proper Safeguarding of Assets and financial performance ............................................ 17
2.12 Internal Auditing Principles and financial performance ................................................ 17
2.13 Pre-numbered Document and financial performance .................................................... 17
2.14 Separate Record Keeping and financial performance .................................................... 17
2.15 Insure asset and bond key employees ............................................................................ 18
2.16 Record of Cheques drawn .............................................................................................. 18
2.17 Maintenance of Bank Accounts ..................................................................................... 18
1.18 Property Remuneration System and financial performance ........................................... 18
2.19 Independent checks and proper valuation performance ................................................. 19
2.20 Various types ofinternal Control Systems (ICS) ......................................................... 19
2.20.I Preventive control: ..................................................................................................... 19
2.20.2 Detective control: ........................................................................................................ 20
2.20.3 Corrective control: ... : .................................................................................................. 20
2.21 Limitation of the Internal Control System .................................................................... 20
2.21.1. Lack oftraining/communication ................................................................................ 21
2.23. Measures of financial performance ............................................................................... 2I
CHAPTER THREE ............................................................................................................. 24
RESEARCH METHODOLOGY ....................................................................................... 24
3.0. Introduction ..................................................................................................................... 24
3 .1. The Research design ....................................................................................................... 24
3.2. The Study population ...................................................................................................... 24
3.3. Sample design ................................................................................................................. 24
3 .4. Sampling procedures ....................................................................................................... 25
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3 . 5. Sample size ...................................................................................................................... 25
3. 6. Data collection instruments ............................................................................................. 25
3. 6. I. Questionnaires .............................................................................................................. 26
3. 6 .2. Interviews ..................................................................................................................... 26
3.6 .3. Observation .................................................................................................................. 27
3 .6 .4. Documentary review .................................................................................................... 2 7
3. 7. Data sources .................................................................................................................... 27
3. 7. I. Primary data ................................................................................................................. 2 7
3. 7 .2. Secondary data ............................................................................................................. 27
3. 8 Data analysis .................................................................................................................... 28
3 .9 Reliability and Validity .................................................................................................... 28
3.10 Ethical consideration ...................................................................................................... 28
CHAPTER FOUR ................................................................................................................ 29
PRESENTATION, INTERPRETATION AND FINDINGS ............................................ 29
4.0 Introduction ...................................................................................................................... 29
4.1 Demographic characteristics ............................................................................................ 29
4.2.1. Response on authorization on financial performance ofNansana municipality .......... 34
4.2.2. Response of budgeting on financial performance ........................................................ 35
4.2.3. Response on effect of internal control system on financial performance .................. 3 5
4. 3. Presentation of other findings ...................... : .................................................................. 3 6
4.3.1 Some ofthe internal control procedures for the types of internal control systems ....... 36
4.3.2 Problems that have been faced in the course of implementation of internal control
systems in nan sana municipal council. .................................................................................. 3 7
4.3 .3 .1 Control over disbursement of cash ............................................................................. 3 7
4.3 .3 .2 Vote book ................................................................................................................... 3 8
4.3 .3 .3 Contro 1 over paid documents ..................................................................................... 3 8
4. 3. 3 .4 Internal contro 1 over cash ........................................................................................... 3 8
4.3 .3 .5 Physical control .......................................................................................................... 3 8
CHAPTER FIVE .................................................................................................................. 39
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ...................................... 39
5. 0 Introduction ...................................................................................................................... 3 9
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5.1 Summary .......................................................................................................................... 39
5.2 Conclusion ........................................................................................................................ 40
5.3 Recommendations ............................................................................................................ 41
5.4 Limitations and suggestions for further studies ............................................................... 42
REFERENCES ..................................................................................................................... 44
APPENDICES ...................................................................................................................... 46
APPENDIX 1: RESEARCH INSTRUMENTS ..................................................................... 46
ABSTRACT This study is a result of an academic research entitled "internal accounting control systems and performance of local government in Uganda. On the effects of Internal cOntrol systems and financial performance, the objective of the study is To determine the effect oflnternal Control systems in local government in Uganda. To find out the effect of Segmentation of duties on financial performance of local government in Uganda, to establish the effect of authmization on financial performance of and To find out the effect of budgeting on financial performance of commercial bank descriptive date collection techniques was used. Researcher targeted a total of 159 but the actual sample responses were 150.The findings found out that out of 150 respondents chosen for thestudy, majority of the respondents were aged between 31 years to 36 years, who made the total of 33% of the respondents. Other age groups individually comprised of27%, 20% 13% and 7% who in total made a t0tal of 100%. out of 150 respondents, who were randomly selected to answer the questionnaires, 60 of them were males and 90 of them were females. This shows that 40% of the respondents on the questionnaires were male while 60% of the respondents were females. Out of the 150 respondents, fifty (50) were singles, seventy (70) were married and thirty (30) were divorced. In terms of percentage, the respondents may be represented by 33%, 47% and 20% respectively. Of these respondents, 7% certificates, 20% posses diplomas, 47% have degrees qualification, 20% have masters and 6% posses other profesiona1 courses such as CPA. Segmentation of duties affects financial performance of local government in Uganda, it reveals that out of 150 respondents which represent 100%. 60 of them strongly agree that segmentation of duties greatly affect financial performance and it represents 40%, 50 agree with percentage of 33%, 5 were not sure whether segmentation of duties affects financial performance at 3% while 25 strongly disagree, 10 disagree with percentage of 17% and 7% respectively. Authorization affects financial performance oflocal government in Uganda; it reveals that out of 150 respondents which represent 100%. 90 of them strongly agree that authorization greatly affect financial performance and it represents 60%, 30 agree with percentage of 20%, 15 were not sure whether authorization affects financial performance at 10% while 5 strongly disagree,10 disagree with percentage of3% and 7% respectively. Budgeting affects financial performance of local government , that is to say N ansana municipality, it reveals that out of 150 respondents which represent 100%. 100 of the~ strongly agree that budgeting greatly affect financial performance and it represents 67%, 30 agree with percentage of20%, 5 were not sure whether authorization affects financial performance at 3% while I strongly disagree, 14 disagree with percentage of 1% and 9% respectively. In conclusion Segmentation of duties. The researcher recommends that local government institutions must segregate duties such that tasks performed by different people can easily be identified, Separation of accounting and custody of assets: An employee who had custody of an asset or an access to an asset lets say cash should not maintain the accounting records of that asset, this alms at reducing temptation to that particular employee. This may also be sorted out by increasing the number of employees so as to facilitate the separation of duties
