Internal Control System and Financial Performance of Abrah Supermarket Mbale City

Abstract

The study investigated the effect of internal control system on financial performance of Abrah supermarket. Internal controls were looked at from the perspective of, Internal Audit, segregation of duties and organization plan whereas Financial performance focused on Liquidity, budget performance, Accountability and Reporting as the measures of Financial performance. The Researcher set out to establish the causes of persistent poor financial performance from the perspective of internal controls. The research was conducted using both quantitative and qualitative approaches using Survey, Correlation and Case study as Research Designs. Data was collected using Questionnaires, interviews, observation as well as review of available documents and records targeting basically Finance Officers, Heads of Departments, Management Committee members and Finance and Accounts staff as respondents from a population of 100 employees in Abrah supermarket. The study found that management of Abrah supermarket is committed to the control system, actively participates in monitoring and supervision of the activities of Abrah supermarket, all the activities of the organization are initiated by the top level management, that the internal audit department is efficient, is equally staffed, conduct regular audit activities and produce regular audit reports although the few reports produced by the internal audit department address weaknesses in the system. It was further revealed that there is a clear separation of roles, weaknesses in the system are addressed, and there is a training program for capacity building in the organization. However, the study also found out that there is information sharing and adequate security measures to safeguard the assets of Abrah supermarket. It was also noted that there is enough cash to meet intended obligations effectively as and when they fall due, It was however, revealed that all revenues and expenditures are properly classified, and that assets of Abrah supermarket have generally increased. The study established a significant relationship between internal control system and financial performance. It also recommends that Abrah supermarket should establish and manage knowledge/information management system to enable all parties within Abrah supermarket to freely access and utilize the official information. There should be a strategy to improve the generation of additional finance for Abrah supermarket. The Study therefore concludes that internal control system do function although with hiccups and that there is a significant relationship between internal control system and financial performance of Abrah supermarket.