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.