Abstract:
This study focused on the role of internal control on financial performance in public institutions in Rwanda with reference to Rwanda Environment Management Authority (REMA). The specific objective was to establish the relationship between internal control systems and financial performance in public institution in Rwanda. Internal controls were looked at from the perspective of Control Environment, Internal Audit and Control Activities whereas Financial performance focused on Accountability and Reporting as the measures of Financial performance. Conceptually, a framework was developed by the researcher from the available literature relating the internal control and performance The Researcher set out to establish the causes of persistent poor financial performance from the perspective of internal controls.
The research was conducted using the entire population (Census method) because the finance department, audit, coordination of projects & finance department of the Single Project Implementation Unit (SPIU) is composed by a small number of staff which is ten. They have been selected basing on the role they play on internal controls and financial performance. Data was collected using Interview guide as well as review of available data.
Data were analyzed using the COSO Internal control integrated framework, a model that was instrumental in evaluating the current situation of internal control system. The study found that management of the institution is committed to the control systems, actively participates in monitoring and supervision of the activities of REMA, all the activities of the Institution‟s activities are initiated by the top level management.
The study found that the internal audit doesn‟t conduct regular audit activities and doesn‟t produce regular audit reports.
The study established a significant relationship between internal control system and financial performance. The study recommends competence profiling which should be based on what the organization expects the internal audit to do and what appropriate number staff would be required to do this job.
