Internal controls, organizational culture and financial accountability in Uganda :

Abstract

Financial accountability was crucial for individuals, businesses and government entities alike, to manage their financial sources and expenditures prudently, without it, there would be endless financial problems. Despite the extensive researches carried out on the effects of internal controls on financial accountability Ong’gunya & Kalenzi, (2019); Bainomugisha et al., (2023). Most researchers have focused on internal controls and financial accountability in government public hospitals, higher institutions of learning and foreign countries Adeyemi & Olarewaju, (2019). This calls for further research on why there is lack of compliance with internal controls and financial accountability in local governments in Uganda. A cross-sectional research design was adopted for this study. Primary data was collected from a sample of 70 local governments from North Bukedi sub region with 65 local governments responding giving a response rate of 92%. Closed-ended questionnaires were used to collect data and SPSS was used to analyse data. The correlation results revealed that internal controls positively and significantly affect financial accountability. In addition, the study indicated that internal controls had a positive and significant effect on organization culture. The findings further showed that organization culture, positively and significantly affects financial accountability. Whereas the regression results showed, internal controls had a significant and positive effect on financial accountability, a unit change in internal controls causes a unit change in financial accountability. Internal controls and organisation culture, the results showed that internal controls had a significant and positive effect on organization culture, implying a unit change in internal controls causes a unit change in organisation culture. Organisation culture and financial accountability, the results showed that organisation culture had a significant and positive effect on financial accountability, a unit change in organisation culture causes a unit change in financial accountability. Finally, the results showed that organisation culture partially mediates the relationship between internal controls and financial accountability. It was therefore recommended that, district local governments in Bukedi North Sub Region needed to align organization cultures with internal controls in order to enhance financial accountability, through training their staff regularly on the importance of internal controls and financial accountability. The study was anchored on the agency and accountability theory. The agency theory prescribes the process of establishing and managing organizations, businesses and entities where one person (principal) defines the duties to be performed by another person (agent) with the objective to make the best use of the principal’s interest. The accountability theory is justified for making people to feel accountable for their actions or inactions towards others and for the processes by which decisions and judgment have been reached.