Internal Control and Financial Performance of Manufacturing Industries in Mbale District, Uganda, a case study of Elgon Springs Mineral Water Company.

Abstract

The study examined the effect of internal control on financial performance of manufacturing firms in Mbale from which Elgon springs mineral water Company was used as a case study. The research also capitalized on three objectives which require establishing the effect of controlling environment, control activities, and 1isk assessment on financial performance. In this study, internal control was used as an independent variable whereas financial performance as a dependent variable. The stndy employed stratified, simple random and purposive sampling techniques to draw representative samples and a sample size of 32 respondents was determined fi"om a population of 35 members using Krejcie and Morgan table. Closes-ended questionnaires with eight point Iikert scale were used to obtain response. During this research data was carefully collected, classified and analyzed using frequency tables and data was summarized using graphs and charts. The findings of the study revealed that there is a relationship between internal control and financial performance. This is because the three indicators of internal control researched on showed that on average, over 85% of the respondents believed that an effective adaptation of control environment, control activities and risk assessment would ensure effective financial perf01mance to manufacturing fi1ms. Finally, the researcher suggested some recommendations which included an improved effort by management of manufacturing firms to foster internal control through monitoring accountants, strengthening ethical code of conduct and professionalism, improving employee 'integrity, separation of staff roles and installation of an accounting system that permits works of accounting team to be monitored by others.