Abstract:
The study was set to examine how internal control systems improve financial management in local governments in Uganda, the study focused on Busia District Local Government as a case study. The study objectively concentrated on how Busia district has ensured that accounting and financial policies and procedures are adhered to for effective financial management; how Busia district has ensured that there is efficient management of resources and how Busia District LG has ensured that financial transactions are properly authorized to avoid misallocation of funds.
The study used a population of 70 selected from Busia District LG and a sample of 60 respondents was selected using Neumann’s formula (2000). Descriptive design was employed and both quantitative and qualitative approaches of data collection were used. Data were analyzed using descriptive statistics, Pearson correlation, coefficient, regression analysis, and analysis of variance (ANOVA); where the statistics proved that r2=.760; significance level was found and the hypothesis testing proved that there is a positive relationship between internal control systems and finance management in Busia District Local Government.
The study findings revealed that Busia district has ensured that accounting and financial policies and procedures are adhered to for effective financial management and control; the district has efficient managed resources and financial transactions are properly authorized to avoid misallocation of funds.
The study recommends that Ministry of Local Governments should monitor and supervise Local Governments to ensure that the accountants comply with accounting regulations and requirement as provided by the Institute of Certified Public Accountants to ensure proper implementation and compliance with accounting standards and principles. Local Governments should develop a mechanism to incorporate relevant feedback from the various stakeholders into their internal control system
