The Effect of Internal Control on Financial Performance Case Study Centenary Bank Entebbe Branch

Abstract

This paper seeks to find out how the different commercial banks manage the internal controls using Centenary Bank Entebbe Road Branch as a case study; this paper will focus on commercial banks in Uganda. The internal control objectives include; control environment, risk assessment and control activities and how they affect financial performance of the organization. Internal controls help a company to have controls designed to make operations effective and efficient. They also ensure that all transactions are promptly and properly recorded at the correct amount in the appropriate accounts and in the proper accounting period so as to permit preparation of financial statements in accordance with relevant legislation and accounting standards hence improving on the organization’s welfare and reduction on the rate of fraud in the financial sector. Hence there is a close relationship between internal control on financial performance since controls still help the organization to ensure errors and irregularities are avoided or made apparent.

A cross sectional survey was used in the course of the study. Both qualitative and quantitative data was gathered in order to establish the relationship between the independent and dependent variables, so as to examine how internal controls are used in Centenary Bank and therefore account for the performance levels. The study comprised of 35 employees in centenary bank. Simple random approach was used during the study. Purposive sampling was also used to select only respondents for the researcher to attain the purpose of the study. Data was collected using both primary and secondary sources. After collecting data, the researcher organized well-answered questionnaire, data was edited and sorted for the next stage. The data was presented in tabular, bar graphs with frequencies and percentages. The researcher used Statistical Package for Social Sciences (SPSS) to analyze the relationship between the variables under study.

Therefore I intend to find out how commercial banks can use the internal controls systems so as to maintain the financial performance of the banks including control fraud and monitoring employees and how they should carry out their activities so as to achieve the desired goals and activities.

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