The Impact of Internal Security Controls on Cash Management Mukwano Group of Companies Limited.

Abstract The thesis is about the effect of Internal Security Control Systems (ICS) on cash management of a given organization where in these case Mukwano Group of Co. ltd., was the major organization evaluated. The primary purpose of the study was to examine and evaluate the impact of internal security controls on cash management established by the management of the Mukwano Co. ltd., Kampala main branch with the aim of suggesting corrective measures that can be adopted to ensure that the systems are effective and efficient. The researcher applied a survey research designing carrying out this research work which enabled the researcher to collect as many views as possible concerning internal controls in cash management in Mukwano Group of Co. ltd, Kampala. The research design was chosen because of its suitability in data collection. The sampling size used by the researcher was 50 participants, where 20(twenty) were its management and 30(thirty) its employees. The data source used was from both primary and secondary sources. Primary data was obtained by use of questionnaires while secondary data was by use of document study such as journals and websites. The findings of the study show that the (ICS) of Mukwano Co. ltd., are strong and efficiently working and this explains why the company as enjoyed a tremendous success over these years. Secondly we can say this is due to its size in the organizational structure. The larger the company the more the effectiveness in its internal security controls system. The recommendations of the study were; that the management of Mukwano Company should ensure that there is proper rotation of employees. Mukwano Company should ensure that all cheques are written in full names of the company, they should ensure that there is proper segregation of duties, and should ensure that there is proper authorization of all transaction by the responsible official so as to avoid fraudulent activities within the company.

TABLE OF CONTENTS

~eclaration

~pprova1

edications

cknowledgements iv

ist of tables

ist of figures

ist of acronyms ~ii

bstract

able of contents ix

HAPTER ONE: INTRODUCTION 1

1.0 Introduction 1

1.1 Background to the study 2

1.2 Statement of the Problem 3

1.3 purpose of the study 3

1.4 Objective of the study 4

1.4.1 The general objective of the study 4

1.4.2 Specific Obejective 4

1.5 Research Question 4

1.6 Significance of the study 4

1.7 Scope of the study 5

ix

1.7.1 Geographical scope .5

1.7.2 Subject scope 5

1.7.3 Time scope

1.8 The conceptual Framework 6

HAPTER TWO: LITERATURE REVIEW 7

2.0 Introduction 7

2.1 Organization of the study 7

2.2 Review of Related literature and other Research’s Work 7

2.2.1 The concept of Cash Management and ICS 7

2.2.2 Understanding Internal Controls 8

2.2.3 Elements of ICS 9

2.2.4 Types of ICS 9

2.3 Objectives of Internal Controls 10

2.4 Means of Achieving Effective Internal Control 11

2.5 Organization Structure 13

2.6 The Effect of Organization Size on Internal Control 13

2.7 Establishment of an Effective System of Internal Control 14

2.7.1 Proper Authorization 14

2.7.2 Separation of duties 15

2.7.3 Cash and Bank Reconciliation 15

2.7.4 Audit

x

~HAPTER THREE: METHODOLOGY 17

3.0 Introduction 17

3.1 Research Design 17

3.2 Research Population 17

3.3 Sampling and Sampling Procedure 17

3.3.1 Procedures 17

3.3.2 Sample Size 18

3.3.3 Subject Selection 18

3.4 Instruments 18

3.4.1 Interviews 18

3.4.2 Questionnaires 18

3.5 Data Analysis 19

3.5.1 Editing 19

3.5.2 Coding 19

3.6 Ethical Consideration 19

3.7 Limitations of the study 20

IAPTER FOUR: PRESENTATION, INTERPRETATION & ANALYSIS OF

r4~DINGS 21

4.0 Introductions 21

4.1 Categorization ofrespondents 21

4.2 The cash controls in place 22

4.2.1 Books of accounts kept in Mukwano Co.Ltd .23

4.3 Response on segregation of duties 24

4.4 Response on proper authorization of transactions 25

4.5 Response on internal security controls system & cash management 27

HAPTER FIVE: SUMMARY, CONCULUSION AND RECOMMENTATION,

5.0 Introduction 29

5.1 Summary 29

5.2 Conclusion 30

5.3 Recommendations 30

5.4 Areas of further studies 31

EFERENCES 32

PPENDICES 34

Questionnaires A 34

Questionnaires B 37

Introductory Letter C 40