Internal control systems and financial performance of commercial
Abstract
This study was about the relationship between internal control systems and financial
performance of Equity bank using a case study of Masaka Branch. The study was guided by
the following research objectives; To find out the effect of risk assessment on the financial
performance of Equity Bank, To assess the effect of control environment on the financial
performance of Equity Bank and to find out the effect of control activities on the financial
performance of Equity Bank. A population of 50 personnel was chosen from which a sample
of 44 respondents was selected. All respondents were reached but 43 of 44 distributed
questionnaires were collected and used. A correlation case study design was used. The
respondents were selected randomly and purposively. Primary data was collected using the
Questionnaires with support from an interview guide. Data was analyzed using SPSS package
and descriptive, correlation and regression analysis were carried to establish relationships
between the variables. Findings revealed that there was a significant positive relationship
between the entire study variables, risk assessment, control environment, control activities
and performance of Equity bank. Risk assessment explaining sixty five percent Control
environment explaining forty one percent and control activities fifty nine percent. The study
concluded that there is both high positive and moderate relationship between risk assessment
control environment and control activities. Based on the findings it is recommended that
Equity Bank Masaka should upgrade their internal control design and pay attention during
recruitment of staff as this could be a red flag to identifying fraud, strengthen the approved
ethical code of conduct, ICT-department to give authorization rights to the right people and
management should seek staff opinion in designing the risk management policy.