Internal Audit System and Financial Performance of Local Governments: A Case of Mbale City
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Date
2024-08-11
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Uganda Christian University
Abstract
This study focused on internal audit systems and financial performance of local governments; a case of Mbale City. The study was guided by the following specific objectives; to find out the effect of audit environment on financial performance of Mbale City, to ascertain the effect of risk assessment on financial performance of Mbale City, to ascertain the effect of internal control activities on financial performance of Mbale City, and to establish the moderating role of human factors in the relationship between internal audit system and financial performance of Mbale City. The research employed a cross-sectional survey research design, using a sample of 170 respondents. Simple random sampling
and purposive sampling techniques were used to select the respondents and data was collected using questionnaire and interview guide. The findings indicate that internal control activities were the strongest predictor of financial performance of Mbale City (β=0.202 and p=0.013). Audit environment was the second strongest predictor of financial performance of Mbale City (β=0.098 and p=0.311).
Finally, risk assessment was the least predictor of financial performance of Mbale City (β=0.068 and p=0.491). It can be concluded that audit environment, risk assessment, and internal control activities all have a positive and significant effect on financial performance. The study recommends that organizations should ensure the independence and adequate resourcing of the internal audit unit, implement robust risk assessment frameworks, and regularly review and update internal control policies to improve financial performance. Additionally, fostering a positive organizational culture that values transparency and accountability, along with providing training and development opportunities
for staff, can enhance overall financial performance.
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Postgraduate Research