Impact of internal controls on the financial performance of public sector universities in Uganda: a case study of Makerere University
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Date
2026-05-25
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Uganda Christian University
Abstract
In this study, the effects of internal controls on the financial performance of public sector universities in Uganda were evaluated, considering Makerere University as the case institution. The rationale behind conducting this study was driven by the repeated complaints that have emerged in the recent Auditor General's reports concerning unauthorised spending, procurement anomalies, delays in payment to suppliers and employees, and non-follow-ups on auditor general's
recommendations in the public sector universities in Uganda. Based on Agency Theory, Systems Theory, and Stewardship Theory, the study was informed by four specific objectives, which include: evaluating the effects of risk assessment procedures; determining the effects of control activities; examining the effects of monitoring and evaluation techniques; and evaluating the effects of the control environment on the financial performance of Makerere University.
The research methodology used in this study involved the use of a descriptive case study research design, and it was quantitative in nature. The data collection tool used in this research was a structured questionnaire that was designed on a five-point Likert scale. It was distributed to a sample size of 73 respondents selected using proportional stratified sampling technique from the Finance, Internal Audit, Procurement, and Administration departments of the University. Out of the total number of 73 respondents who received the questionnaires, 65 responded to the questionnaires representing an overall response rate of 89.04%. Descriptive statistics revealed that most of the participants agreed that all four components of internal controls existed (RA: 3.928; CA: 3.848; ME: 3.798; CE: 3.858), with financial performance averaging at 3.732. On correlation, there existed a statistically significant positive correlation between financial performance and risk assessment (r = 0.510, p < 0.01), monitoring and evaluation (r = 0.494, p < 0.01), and control activities (r = 0.366, p < 0.01). There existed a positive but non-statistically significant relationship between financial performance and control environment (r = 0.233, p = 0.062). The regression analysis results show that the model is statistically significant (F(4, 60) = 18.739, p < 0.001), with all four components collectively accounting for 55.5% of the variance in financial
performance (R² = 0.555). The four independent variables each have significant unique effects on financial performance, namely: monitoring and evaluation (β = 0.451, p < 0.001), risk assessment (β = 0.383, p < 0.001), control activities (β = 0.259, p = 0.005), and control environment (β = 6 0.182, p = 0.043). This means that all four null hypotheses were rejected. It is important to note that while control environment is not significantly associated with financial performance when considered alone, it does contribute significantly to the regression model. The findings revealed that internal controls significantly improve financial performance in Makerere University when applied in an all-inclusive manner, with the greatest influence being monitoring and evaluation. The study recommends the creation of an enterprise risk management system, enhancing the Internal Audit Department, follow-up of audit recommendations, use of integrated financial information systems, and maintenance of a good ethical tone at the top. Keywords: Internal Controls, Risk Assessment, Control Activities, Monitoring and Evaluation, Control Environment, Financial Performance, Public Universities, Makerere University, Uganda, COSO Framework.
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Undergraduate