Internal Control Systems and Fraud Prevention in Local Governments in Uganda: the Case of Sironko District Local Government
Author: Fred N. Nakisa
Supervisor: Henry Waiswa Richard , Felix Awogbemi
The study sought to examine the effect of Internal Control Systems (ICS) on prevention of fraud in Local Governments in Uganda using Sironko District Local Government as a case study. The specific objectives of the study were to; find out the effect of the control environment by management on fraud prevention; assess the effect of segregation of duties of management and employees on fraud prevention; find out the effect of conducting risk assessment by management on fraud prevention; and find out the effect of monitoring the internal controls on fraud prevention in Sironko District Local Government. The study adopted a descriptive research design with both quantitative and qualitative approaches. The study targeted 108 people who included the following categories: employees of Sironko District Local Government in the departments of Administration, Finance and Audit, Technical Services, Production and Human Resources. The sample size of the study was 85, having been obtained from the population using the Sloven formula. Data was collected from the respondents using structured questionnaires and face to face interviews. The collected data was analyzed using descriptive and inferential statistics. The findings of the study indicated that the control environment accounts for only 4.3% of fraud prevention; the segregation of duties accounts for only 3.0% of fraud prevention; risk assessment accounts for only 3.5% of fraud prevention; and monitoring internal controls accounts for only 3.9% of fraud prevention. The study concluded that control environment control environment had an insignificant effect of control environment on fraud prevention; Segregation of duties had an insignificant effect of segregation of duties on fraud prevention. Risk assessment had an insignificant effect of risk assessment on fraud prevention and monitoring of internal controls also had an insignificant effect of monitoring internal controls on fraud prevention in Sironko District Local Government. On the whole, the study concluded that internal controls in Sironko District had an insignificant effect that only account for 3.7% of fraud prevention. The study recommended, among others; that management of Sironko District should continue to design effective internal control systems by ensuring that adequate asset listings is done by management, capital assets purchased are approved by appropriate level of management and asset numbering is done to show location and protection of the assets. The management of Sironko District should ensure that it strengthens strategies aimed at improving organizational performance in all categories of staff and this should continuously be used to ensure that performance levels are satisfactory.