Accounting information systems, risk management practices and financial reporting in local governments in Uganda : a case of north Bukedi sub region

Abstract

The study investigated the mediating effect of risk management practices in the relationship between accounting information system and financial reporting in North Bukedi LGs. The study was guided by the following objectives: to determine the effect of accounting information system on financial reporting; to assess the effect of accounting information system on risk management practices; to examine the effect of risk management practices on financial reporting; and to establish the mediating effect of risk management practices in the relationship between accounting information system and financial reporting. The study was rooted on the contingency theory. A cross-sectional research design was adopted using a quantitative approach. The study targeted a population of 84 LGs with a sample of 70LGs were selected. 60 LGs responded and fully returned completed questionnaires indicating 85.7% response rate. The questionnaire was used for data collection. The data collection tool was tested for both the reliability and validity and the questionnaire items was found valid. Frequency distribution table, correlation, regression, SPSS V.22, and process macro V3 were used for results analysis. Regression findings showed that accounting information system positively and significantly affect financial reporting; the study findings also showed that accounting information system positively and significantly affect risk management practices; the study further revealed that risk management practices positively and significantly affect financial reporting; the mediation effect of risk management practices in the relationship between accounting information system and financial reporting was found to be partial. The study concluded that to enhance financial reporting, accounting information systems need the support of risk management practices, particularly when procedures are in place to identify, assess, and reduce risks in LGs. Therefore, the study suggested that LGs should implement and oversee the execution of thorough training programs and ongoing professional development centered on the essential use of accounting information systems to improve the quality of financial reporting. The trainings should also be adapted to meet the needs of different employee categories within the LGs.