Internal control system and financial management of district local government :

Abstract

This study aimed at examining internal control systems and financial management in PDLG. Internal control systems are integral components of the management processes of public sector organizations. They are established in order to provide reasonable assurance that ensures financial operations are carried out transparently and accountably in the most effective and efficient way to the benefit of the stakeholders. The internal control system is analyzed using variables of control environment, monitoring controls and control activities. The study was anchored on contingency theory of management and the agency theory. The main objective of the study was to examine the effect of internal control systems on financial management in PDLG. The descriptive research design was adopted from a sample of 33 employees working in local government where quantitative method was applied in data collection and analysis. The descriptive design was suitable because it addresses major objectives and research questions proposed in the study adequately. The study gathered primary data which was established through questionnaires to randomly selected employees from local government. The use of questionnaires was recommended since it guarantees confidentiality to the respondents. Descriptive statistics was used in the data analysis and information presented in statistical forms. Correlations and linear regression analysis were also used to analyze the relationship between ICS and FM. The study realized that control environment, monitoring activities and control activities as indicators of ICS, have a significant influence on financial management in local government. Therefore, the study recommends that ICS in the local governments need to be improved mostly on implementation of physical controls, effective formalized human resource policies, approval and segregation of duties to ensure accountability of organizational resources be upheld.