EFFECTS OF INTERNAL CONTROL SYSTEMS AND FINANCIAL PERFORMANCE IN COMMERCIAL BANKS: (A CASE STUDY OF EQUITY BANK KABALAGALA BRANCH)

ABSTRACT

·1 his study is a result of an academic research entitled ·'internal control systems and fina ncial

performance in commercial banks case study equity bank." , the objectives of the study

were to find out the effect of Segmentation of duties on financial performance of

commercial equity bank, to establish the effect of authorization on financial performance of

commercial bank and to find out the effect of budgeting on financ ial performance of

commercial bank descriptive date collection techniques was used. The resea rcher used a

sample size of 150 respondents. The researcher used Statistical Package for social scientists

(SPSS) to analyse data. From the study findings internal controls and performance of

commercial banks are inseparable terms. The respondents and interviewees were quite aware

on the influence of internal control systems on the performance of commercial banks such as

equity Bank (U) Ltd. It was v iewed that, internal control plays very important roles in the

per formance of equity Bank (U) Ltd were identified where 94% of the total respondents

concurred with the fact and mentioned roles such as it ensured business or the entity was

carried on in an efficient and orderly manner.

The conclusions were Internal control systems which relied entirely on segmentation of

duties, plans of organization, budgeting, authorization and approval, rotation or employees.

safeguarding of assets among others may be used to control frauds. embezzlement and

accounting errors that is, it ensured proper and satisfactory cash management and hence

good performance of equity Bank (U) Ltd.

On the above basis the researcher recommended that segmentation of duties should be

adopted to eliminate or minimize the chances or consequences which are likely to happen as

the resu lt of fai lure to segment the duties in equity Bank (U) Ltd 's to bring about good

performance. On budgeting the researcher recommended that equity bank should establish

authority and responsibility centres for every function to provide basis for the cost centre. an

organization plan should indicate clea rly the department or person responsible for such

function as purchasing, receiving incoming shipments, maintaining accounting records.

approving fina ncial matters and preparing the financial year budget.