Effects of Internal Control systems on the Financial Management of the Public Sector Hospitals: A case of Naguru Hospital

Abstract

The study aimed at examining the effect of internal control systems on financial management of public sector hospitals, using a case study of Naguru Hospital. The period of focus was between 2013 -2016. The study was informed by the Agency theory. A cross sectional study design was used, and qualitative and quantitative approaches were applied. From a population of 200 respondents, a sample size of 133 respondents was selected using census and simple random techniques. Data was elicited using questionnaire, interview and documentary review. Data analysis was performed using inferential (mean), and descriptive statistics that included Pearson correlation coefficient and regression analysis. A response rate of 82% was obtained from which key findings were obtained. The key findings included; a positive score for control environment (.401**), control activities has a positive relationship (.563**) and ICT has a positive relationship (.422**), with financial management. Findings of the study revealed that control environment, control activities and information and communication play a very important role on the financial management of the hospital by stopping embezzlement of cash, inflated prices and fictitious transactions. Study recommendations included that processes and procedures involved in implementing internal control systems should be observed and followed as they are laid down in the hospital manuals so as to have proper financial management. Conduct more continuous internal controls awareness through training; review its staff code of conduct where disciplinary fall; plan, budget and hire more specialized personnel, so as to safe guard the hospital finances and also to increase donor’s confidence for continued inflow of funds.