Internal control components and financial performance in public institutions in Rwanda case study: Rwanda Social Security Board (RSSB)

Abstract

The study assessed the internal control and financial performance in public institution in Rwanda. The general objective of the study was to find out whether internal control plays any role in financial performance in public institution .The specific objective of the study was to determine the effect of control environment on financial performance of public institutions in Rwanda, to examine the effect of control activities on financial performance in Rwanda, to analyze the effect of risk assessment on financial performance of public institutions in Rwanda, to assess the effect of information and communication on financial performance of public institutions in Rwanda, to examine the effect of monitoring on financial performance of public institutions. The demographic information was sex, experience, education background. To accomplish objective of this study, the study used both primary and secondary data. The primary data was collected using, the distribution of 30 copies of questionnaires to the staff of finance department and internal auditor officers while secondary data was mainly found in the annual reports of RSSB from 2015 to 2017. Statistical Package for Social Sciences (SPSS) was used to analyses data. The study used descriptive research; the target population of respondent was employees in institution studied whereas the sample size was 30 employees. After collection, data was edited, coded, recorded and tabulated and Multiple regression analysis was used to show the statistical relationship of the variable .The findings discovered that there are effect of control environment on the financial performance of public institution, from regression analysis, a unit increase in control environment could result to increase in financial performance by 0.482.Risk assessment was found to have a positive significant effect on the financial performance of public institution. From regression analysis, a unit increases could result to increase in risk assessment in financial performance by 0. 001. The study examined the effect of control activities on the financial finance performance in public institution, from regression analysis, a unit increase in control activities could result to increase in financial performance by 0.213. The finding also found that net investment and net income was declined. From the findings showed that return on assets of RSSB was decreased over the three years. From 13.9% to 8.4% means that RSSB is not effectively managing its assets to generate greater amount of money. The study concludes that there is a significant positive relationship between internal control and financial performance; it concluded that RSSB solvency is still need improvement. The study therefore recommends that the components of the ICS (control environment, control activities, and monitoring) should be enhanced to further improve the financial performance of Public institutions, management should seem to be taking all the right measures to steer the organization toward improved financial outcomes. Management needs to pay close attention to its operating expenses. Management needs to identify the major cost and expenses drivers. RSSB ‘s management should reduce unnecessary expenses to increase net income in order to maintain the money to pay social security benefits to beneficiaries without delay on payment. RSSB’s management should analyze deeply before doing any investment in order to avoid risk exposure.