Internal control systems and financial performance of metropolitan, municipal and district assemblies in Ghana

Abstract

The purpose of the study was to investigate the influence of internal control systems (ICSs) on financial performance of Metropolitan, Municipal, and District Assemblies (MMDAs) in Ghana using quantitative approach. The design used was descriptive survey. The study population was coordinating directors, finance officers, head of internal audit units, chief executives, and budgets officers of MMDAs in Ghana. They were 360 in number, and the census method was used to capture all of them. Questionnaire with a reliability coefficient of .789 was the instrument used. Out of the 360 questionnaire print-outs administered, the study was able to retrieve 325 of them. Frequency, percentage, mean, standard deviation, Pearson product moment correlation, and linear multiple regression analysis were used to analyse the data. The study revealed that there are ICSs at the various MMDAs in Ghana; however, the effectiveness of it could not be described as very strong but rather satisfactory. Also, it was realised that whenever staff perceive the assemblies’ ICSs as effective, it will translate into a significant increase in the financial performance of the assemblies. It was recommended that management should review the assemblies’ ICSs to ensure that the objectives of the MMDAs are achieved significantly, particularly risk assessment, monitoring of control, and information and communication systems practices of the company. Also, management of the assemblies should ensure that there is regular monitoring of the internal control activities at the local level in order to unearth potential lapses, abuse and wrongdoing and also ensure that those at the local level prudently manage resources under their control.