The role of internal control systems in financial performance of fuel companies in Uganda: A case of Gulf Africa Petroleum Corporation (Uganda) Limited

Abstract

The study about the Role of internal control in financial performance of fuel companies in Uganda; a case study of Gulf Africa Petroleum Corporation. Gapco had being experienced several challenges losing market share from 8% to 3.97%, and lastly selling 76% of share to Total (U) Ltd, The study was guided following objectives (1) To examine how Gapco (U) Ltd has provided an adequate control environment for effective operation (2) To examine how Gapco (U) Ltd has established enhanced control activities to improve liquidity. (3) To examine how Gapco (U) Ltd undertakes internal auditing for quality financial reporting.The study was guided Agency model and stewardship models. The researcher adopted both positivism and phenomenological approaches known as (combination approach), the study was longitudinal study , the duration is from {2012-2017}.the researcher employed a case study strategy,the study used a population of 40 andthe study used census. Data was collected using Questionnaires and Interview guide as well as review of available documents and records. The study found that all the activities of the company are initiated by the top level of directors and management where by directors approves the overall business strategies and significant policies based on 85% agreed rate, and board of directors establishes adequate and effective internal control systems and management implements and develops based on 67%. That the internal audit department is not efficient, is understaffed, based on 52.5% disagreed rate, internal auditors doesn’t conduct regular audit activities and doesn’t produce regular audit reports based on 47.5% disagreed rate, 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 based on 77.5% agreed rate, weaknesses in the system are addressed, and there is a training program for capacity building in the organization based on 67.5% agreed. The investigation recommends competence profiling in the Internal Audit department which should be based on what the company expects the internal audit to do and what appropriate number staff would be required to do this job.Based on the findings of the study, it is concluded that the Gapco (U) Ltd had an effective internal control system as supported by the study findings of clear separation of roles, supervision, and training, However, there are challenges in the implementation of controls especially considering that the audit function was not well, under staffed, and were not produced regular report, and audit work was not extended to the upcountry centers which clearly had affected their efficiency as revealed by this study.