Internal Control Systems and Financial Performance of National Water and Sewerage Corporation in Fort Portal City, Uganda

Abstract

The problem of study was the decline in financial performance of NWSC Fort portal City branch, characterized by low revenue, increase in illegal water connections, low bills collection ratio and decline in new water connections. The concept of financial performance has undergone significant evolution throughout history, influenced by changes in business practices, accounting standards, and the evolving needs of stakeholders. The study aimed at examining the relationship between internal control systems and financial performance of NWSC Fort portal City. The study adopted a quantitative approach of data collection and analysis in which a correlational research design was adopted. The study population consisted of 130 staff of NWSC Fort portal branch, from which 98 staff were sampled as per the sample size using stratified random sampling. Data was collected using a self-administered questionnaire. Quantitative data were analyzed using both descriptive and inferential statistics with the help of Statistical Package for Social Sciences (SPSS) version 25. Regression analysis was conducted to test model fitness and determine the extent to which the independent variable (internal controls) predict predicts the dependent variable (financial performance). The study found out that there is a positive and significant relationship (r= 0.751**, P<.01) between control environment and financial performance of NWSC Fort portal City; a moderate positive relationship (r= 0.486**, P<.01) between control activities and financial performance of NWSC Fort portal City and a significant weak positive relationship (r = 0.599**, P<.01) between monitoring and financial performance of NWSC Fort portal City. The study concludes that control environment is a key predictor, while control activities and monitoring are moderate or fair predictors of the financial performance of NWSC Fort portal City. The study also recommended that the government of Uganda and the general management of NWSC headquarters in collaboration with the administration of NWSC Fort portal branch should improve control activities in NWSC Fort portal City by putting much more efforts in authorization, verifications and segregation of duties so as to improve financial performance, which can be through establishing clear lines of authority in authorization of release and usage of the branch’s funds and for clearly designed activities by accounting for the funds.