THE EFFECT OF THE INTERNAL CONTROL SYSTEM ON THE PERFORMANCE OF THE DEPARTMENT OF FINANCE IN KAMPALA INTERNATIONAL UNIVERSITY IN KAMPALA-UGA

TABLE OF CONTENTS

DECLARATION ........................................................................................................................ i

APPROVAL ............................................................................................................................. ii

DEDICATION ......................................................................................................................... iii

ACKNOWLEDGEMENT ........................................................................................................ iv

LIST OF TABLES ................................................................................................................. viii

LIST OF ACRONYMS ........................................................................................................... .ix

ABSTRACT .............................................................................................................................. x

CHAPTER ONE ........................................................................................................................ 1

INTRODUCTION ..................................................................................................................... !

1.1 BACKGROUND OF THE STUDY ............................................................................................... I

1.3 OBJECTIVE OF THE STUDY: .................................................................................................... 3

1.3.1 General objective of the study .......................................................................................... 3

1.3.2 Specific Objectives of the Study ...................................................................................... 3

1.4 RESEARCH QUESTIONS ........................................................... ··········· .......................... ····· .... 3

1.5 SCOPE OF THE STUDY ............................................................................................................ 4

1.6 CONCEPTUAL FRAMEWORK .................................................................................................. 4

CHAPTER TW0 ....................................................................................................................... 6

LITERATURE REVIEW .......................................................................................................... 6

2.1 INTRODUCTION ..................................................................................................................... 6

2.3 TO EVALUATE THE IMPORTANCE OF FINANCIAL INFORMATION AND COMMUNICATION OF INTERNAL CONTROL ................................................. 9

2.4 TO ASSESS THE RELATIONSHIP BETWEEN THE RISK ASSESSMENTS OF ICS AND THE PERFORMANCE OF THE COMPANY ........................................ 12

2.5 SUMMARY OF THE CHAPTER ................................................................................................ 14

CHAPTER THREE ................................................................................................................. 15

METHODOLOGY .................................................................................................................. 15

3.1 INTRODUCTION ................................................................................................................... 15

3.2 STUDY DESIGN ................................................................................................................... 15

3.3 STUDY POPULATION ........................................................................................................... 15

3.4 SAMPLE SIZE ................................................................................................................. 16

3.4 SAMPLE SIZE ................................................................................................................. 16

3.5 SAMPLING TECHNIQUES ................................................................................................ l6

3.6 DATA COLLECTION METHODS ...................................................................................... 17

3.6.1. Interviews ................................................................................................................ 17

3.6.2. Questionnaire ........................................................................................................... !?

3.6.3. Documentary Review .............................................................................................. 18

3.7 RELIABILITY AND VALIDITY OF DATA COLLECTION ..................................................... 18

3.8 DATA PROCESSING AND ANALYSIS ............................................................................... IS

3.9 SUMMARY OF THE CHAPTER .......................................................................................... 19

CHAPTER FOUR ........................................................................................................... 20

DATA PRESENTATION AND ANALYSIS ................................................................. 20

4.1 INTRODUCTION ............................................................................................................. 20

4.2 BIOGRAPHICAL INFORMATION ...................................................................................... 20

4.2.1 Gender and Position of the Respondents .................................................................. 20

4.2.2 Educational Level Attained ...................................................................................... 21

4.2.3 Age group of Respondents ....................................................................................... 21

4.2.4 Work experience in Kampala International University ............................................ 22

4.3 RESEARCH QUESTION ONE: WHAT EXTENT THAT THECONTROL ENVIRONMENT OF lCS PREVENTS FRAUD AND COMPLIES WITH THE FINANCIAL PERFORMANCE OF THE UNIVERSITY........23

4.3.1 Emphasizing oflnternal control system in KIU ....................................................... 23

4.3.2 The Regularity of Audits and Spot Checks in Kampala International University ... 24

4.3.3 Does KIU have procedures to identify accounting problems? ................................. 24

4.3.4 Internal control activity and protection of assetsin KIU ........................................... 25

4.3.5 Internal control andSpecific audits of Accounting in KIU? ..................................... 26

4.3.6 Procedures for preparing financial statement in every consolidated entity in KIU .. 26

4.3.7 Exceptions and their dealings in KIU ....................................................................... 27

4.3.8 The KIU'saccountability procedure for each department? ....................................... 28

4.3.9 Information management and it's attention in KIU .................................................. 28

4.3.10 financial control restrictions in KIU ....................................................................... 29

4.3.11 Preventative strategies in the management ofKIU ................................................ 30

4.3.12 cash suspects in Kampala International University ................................................ 3 0

4.3.13 the valued fixed Asset of the KIU .......................................................................... 31

4.4 RESEARCH QUESTIONS TWO: WHAT ISTHE IMPORTANCE OF THE FINANCIAL

INFORMATION AND COMMUNICATION OF INTERNAL CONTROL SYSTEM FOR THE

PERFORMANCE OF THE UNIVERSITY .................................................................................... 32

4.4.2 Performance evaluation at regular intervals ............................................................. 32

4.4.3 Employees and their position of trust in KIU ........................................................... 33

4.4.4University's past experience into consideration ........................................................ 33

4.4.5Information about the key characteristics risks of KIU ............................................. 34

4.4.6Does the Universityhave crisis management plan? ................................................... 34

4.5.1 Research questions three: what the relationship between the internal Auditing system and the performance of the University ........................... 35

4.5.1 Are business risks adequately monitored ................................................................. 35

4.5.2 Level of control risk in Kampala International University ....................................... 36

4.5.3 Policies and procedures for managing the main risks in KIU. ................................. 36

4.5.4 Is there Resources to implement risk management procedures? .............................. 37

4.5.5 Risk management responsibilities in KIU ................................................................ 37

4.6 INTERVIEW GUIDE ANALYSIS ........................................................................................ 39

4.7 SUMMARY OF THE CHAPTER .......................................................................................... 39

CHAPTER FIVE ............................................................................................................... 41

SUMMARY OF FINDINGS, CONCLUSION AND ...................................................... .41

RECOMMENDATIONS ................................................................................................... 41

5.1 INTRODUCTION ............................................................................................................ .41

5.2 SUMMARY OF FINDINGS ................................................................................................ 41

5.3 CONCLUSION ................................................................................................................ 42

5.4 RECOMMENDATION ..................................................................................................... .44

5.5 AREAS FOR FURTHER RESEARCH ................................................................................... 44

References ......................................................................................................................... 46

APPENDICES ...................................................................................................................... i

APPENDIX I: QUESTIONNAIRE ...................................................................................... i

APPENDIX II: FREQUENCY TABLES ............................................................................ i 

ABSTRACT 

This study analyzed the effect of the internal control system on the performance of the department of finance in Kampala International University in Kampala -University has been done in order to assess the relationship between these variables, the research guided by objectives of the study and they are: To examine to what extent that the control environment of ICS prevents fraud and comply with the financial performance of the University, To evaluate the importance of financial information and communication of internal control system for the performance of the University, To assess the relationship between internal control's risk management and the performance of the University. To determine the pattern of change in relation to time, a cross sectional design was used, the relevant data was collected from the respondents through three different data collection tools in order to get relevant information from the field. These included, questionnaires, interviews and documentary analysis all these yielded a lot of relevant information which supported the study significantly. This study was carried out on Kampala International University in Kampala Uganda, The period of the study was 2014 to 2017, and the target populations are the whole department of finance and accounting of KIU. The researcher found that KIU established internal control system; also the study revealed that the KIU establishes procedures to identify Accounting problems, also KIU uses procedures to protect their asset, and other finding revealed that KIU establishes procedures to identify Accounting problems, also the researcher found that the University's business risks are not adequately monitored and evaluated, because of that the University can meet risks without contingency plan, also they agreed that the level of assessed level of control risk in Kampala International University is too low, and that will result uncontrollable risks in the University, also the respondents agreed that KIU doesn't have procedures for managing the main risks been defined. Based on the findings of the study the researcher suggests recommendations about K.IU should make regular Audit and, spot checks in the department of finance in the company, internal control must include specific internal Audit of Accounting, also the company must use procedures for preparing the financial statements applied in every consolidated, University's business risks must be adequately monitored and evaluated, the University should make maximum level to protect risks, KIU must have procedures for managing the main risks been defined, also KIU should locate some financial resource to implement and supervise X risk management procedures, to protect the fraud the employee should not be trusted; the University's financial past risks must be taken into consideration.