GOVERNMENT CONTROLS AND PERFORMANCE OF   DECENTRALISED GOVERNMENTS IN UGANDA: A CASE STUDY OF GULU MUNICIPALITY

BY

                                               ANNAH MUNENE ABEHO

12/MPA/3/031

A  DISSERTATION SUBMITTED TO THE SCHOOL OF MANAGEMENT
SCIENCE IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
 OF THE AWARD OF THE DEGREE OF MASTERS 
IN PUBLIC ADMINISTRATION 
OF UGANDA MANAGEMENT
INSTITUTE 
 JANUARY, 2015

DECLARATION

I Annah Munene Abeho (Ms) declares that to the best of my knowledge this research work is original and has neither been presented nor been published for any other degree to any University before.

Name………………………………………………….
Registration Number: 12/MPA/3/031

Sign……………………………………….. 
Date…………………………………………..

APPROVAL

The Research Report has been submitted with knowledge and approval of my supervisors

Dr. Karrim Ssesanga 
Signature …………………………………       Date…………………………….

Dr. Keefa kiwanuka
Signature …………………………………       Date…………………………….

DEDICATION

This research work is dedicated to my late mother and father whose foundation was paramount in my education career upon which I am continuing to build. 

ACKNOWLEDGEMENT

 I do express my most sincere gratitude to my supervisors Dr. Keefa Kiwanuka and Dr. Karrim Ssesanga for the constructive criticism, suggestion, guidance, tolerance, dedication and encouragement throughout the writing and final supervision of this dissertation. Their contribution was the pillar I based on throughout to finish this dissertation. These great scholars and educationists gave me the tips that helped to sharpen my skills as far as constructing a research topic, statement of the problem and conceptual framework is concerned. Without them, this piece of work you are reading would not be in existence.

I wish to extend heartfelt thanks to my classmates at Uganda Management Institute whose presence gave me encouragement to carry on. My indebtedness goes to Dr. Basheka Benon who taught me research methods. 

For all those I have not mentioned, I say thank you.

 
TABLE OF CONTENTS 
DECLARATION
APPROVAL
DEDICATION
ACKNOWLEDGEMENT
TABLE OF CONTENTS
LIST OF TABLES
LIST OF ABBREVIATIONS/ ACRONYMS
ABSTRACT
CHAPTER ONE:INTRODUCTION
1.1 Introduction
1.2 Background to the study
1.2.1 Historical background
1.2.2 Theoretical background
1.2.3 Conceptual background
1.2.4 Contextual background
1.3 Statement of the problem
1.3 Study purpose
1.5 Objectives of the study
1.6 Research questions
1.7Research Hypotheses questions
1.8. Conceptual Framework
1.9 Scope of the Study
1.10 Significance of the study
CHAPTER TWO:LITERATURE REVIEW
2.0 Introduction
2.1 Theoretical Review
2.3 Internal Control and Performance
2.3.1 Internal Auditing and Performance
2.3.2 Accountability and Performance
2.3.3 Challenges of Internal Audit in relation to Performance
2.4 Summary of the Literature Review
CHAPTER THREE:METHODOLOGY
3.1 Introduction
3.2 Research design
3.3 Study population
3.4 Sample size and Selection
3.5 Methods of data collection
3.6 Data collection methods
3.6 Data collection instruments.
3.7 Quality control of data collection
3.7.1 Validity
3.7.2 Reliability
3.8Data Analysis techniques
3.8.1 Quantitative data analysis
3.8.2 Qualitative data analysis
3.9 Measurement of Variables
CHAPTER FOUR:DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.0 Introduction
4.2 Description of respondents’ background
4.2 Respondents by category
4.3 Respondents by gender
4.4 Respondents by age
4.5 Respondents by their level of education
4.6 Respondents according to their functional areas
4.8. Accountability and Performance
CHAPTER FIVESUMMARY, DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
5.3 Discussion
5.3.1 Research question one: Accountability and performance in Gulu Municipality
5.3.3 Research question three: Challenges of the internal audit function in relation to performance in local governments
5.4 Conclusions
5.5 Recommendations
5.6 Areas for further research
References
APPENDICES
APPENDIX 1
QUESTIONNAIRE FOR ALL MUNICIPALITY STAFF
APPENDIX 2
INTERVIEW GUIDE FOR TOWN CLERK
KREJCIE, MORGAN AND ROBERT SAMPLE SIZE (S) TABLES (1970) FOR THE GIVEN POPULATION SIZES (N)

LIST OF TABLES 
Table 3.1:  Sample size and sampling procedure……………..……………….………….……..38
Table 3.2: Content Validity Index…………………………………………….. ………..…...….42
Table 3.3: Cronbach's Alpha Reliability Coefficient for Likert-Type Scale test ………...…..….43
Table 4.1: Distribution of respondents according to job category ……………………………...47
Table 4.2: Distribution of respondents according to gender……………………………………..48
Table 4.3: Distribution of respondents according to age……………………………………...…48

Table 4.4: Distribution of respondents according to their highest level of education ……...…...49
Table 4.5: Distribution of respondents according to their functional areas………………...……49
Table 4.6: Distribution of respondents according to their job experience...……………………..52
Table 4.7: Summary statistics on role of internal auditing in local governments…...…………...53
Table 4.8: Summary statistics on respondents’ self-rating on internal auditing ………………58
Table 4.9: Summary statistics on respondents’ self-rating on accountability …………...……...61
Table 4.10: Pearson’s Correlation Co-efficient between internal auditing and accountability.....66
Table 4.11: Regression analyzing the relationship between the internal auditing and accountability…………………………………………………………………………………….66
Table 4.12: Summary statistics on respondents’ self-rating on challenges of internal audit 
function in Gulu Municipality?......................................................................................................68

LIST OF FIGURES 

Figure 2: A conceptual framework illustrating the relationship between the study variables…………………………………………….……………………………………………14

LIST OF ABBREVIATIONS/ ACRONYMS

TC		-                 Town Clerk
CBO		-                 Community Based Organizations
IA 		-                 Internal Audit
IAR	           -                 Internal Audit Report
LG	 	-                 Local Government 
LGA	           -                 Local Government Act
MOFPED	-                 Ministry of Finance, Planning and Economic Development
NGOs		-                 Non Government Organization
OAG	           -                 Office of the Auditor General
 PRS		-                 Poverty Reduction Strategies

ABSTRACT

The study was carried out in Gulu Municipality. The study focused on investigating the relationship between government controls and performance of decentralized governments in Uganda with Gulu Municipality as a case study. The study was based on the following research objectives; to find out the relationship between accountability and performance in local governments; to examine the relationship between internal auditing and performance in local governments; & to establish the challenges of internal audit function in local governments. The study employed a case study research design and both quantitative and qualitative approaches.  In total, a sample of 73 respondents were chosen who included Town Clerk and his deputies, Accounts officers and Chief Finance Officer, Internal auditor, other Municipality employees and support staff. In collecting the data, the researcher used both secondary and primary sources.  Data collection methods used were; questionnaires and interviews, and was analyzed using Pearson correlation coefficient and regressions.The findings revealed that: there is a positive significant relationship between accountability; and performance in Gulu municipality, internal auditing and performance of Gulu municipality are significantly positively related. The employees of the Municipality are always held accountable for their action. When they fail to perform their duties diligently, they are brought to book.  In conclusion therefore; a) the role of an internal audit department is to help the municipality achieve its strategic objectives. It does this by helping administrators to identify and control the factors that can threaten their ability to achieve their goals. b) The findings revealed that internal audit unit lacks valuable resources to enable it accomplish all the tasks it is supposed to accomplish. The independence of the internal audit unit has been interfered with by a section of the stakeholders. It was recommended that; i) the audit process needs to be governed in a more effective manner so that risks of substandard audits can be minimized and/or their effectiveness enhanced. The two key measures in this regard are the reporting structure of the internal audit to ensure their independence and the performance of audits according to some audit standards, preferably the standards of internal audit.

CHAPTER ONE
INTRODUCTION 
1.1 Introduction
This study investigated the relationship between government controls and performance of decentralized governments in Uganda:  A case study of Gulu Municipality. In this study government controls was the dependent variable and performance was the independent variable. This chapter presents the background of the study, statement of the problem, study purpose, study objectives, research questions, significance of the study, scope of the study and conceptual framework.  
1.2 Background to the study 
This sub section presents the background divided into four perspectives, the historical, theoretical, conceptual and contextual.
1.2.1 Historical background

Gupta (2005) showed that the system of accounting and auditing of state revenue and expenditure became sophisticated under the Hindu kings who gave detailed instructions on accounting for the State funds in 12th century. In 1100-1135 AD an exchequer was ascribed in the United Kingdom during the reign of Henry where regular system of accounting and auditing of state transactions for the 12th Century were revealed.

Industrial revolution of 18th Century resulted in gradual increase of business undertakings, railway constructions, banks and other joint companies started trading together. This increased inter- governmental transactions that necessitated government regulations of these institutions and a need for an independent auditing started gaining ground with individual auditing firms starting to emerge. (Gupta, 2005)
According to the National League of Cities in USA (NLC) report “City Fiscal Conditions in 2005,” American municipalities continue to be faced with key fiscal challenges in their administration of public services (Pagano & Hoene, 2006, p. 1). Although NLC’s 2005 survey yielded a more positive outlook on the financial condition of municipalities, the findings also indicated a growing concern over ongoing and prospective fiscal challenges for municipalities. Among those challenges is soaring mismanagement of public finances in organisations. And fund misappropriation (Fitch, 2006, p. 3). 

Internal auditing in developing countries faces numerous problems. Weak institutions, capacity constraints (financial, technical, human resources) and inadequate budgeting techniques, together with unfavourable external factors such as macroeconomic instability and dependency on donor funding, prevent budgets from working effectively and delivering the desired outcomes. However, the observed poor practices are not necessarily rooted exclusively in poor formal Public Financial Management systems. In fact, many developing countries (usually under pressure from international donors, in particular the World Bank and the IMF) have come with up to date international standards of ensuring that finances are managed efficiently.

In Uganda the existing structure of the audit function is such that the duties are supposed to be carried out to provide an independent external audit of government functionaries including ministries, all courts, district administrations, town municipal councils and all parastatals bodies as prescribed by Parliament. Supreme Audit Institutions (SAIs) play a key role in promoting accountability, and transparency in the budget process and in uncovering issues such as the misappropriation of funds and corruption. They oversee the management of public funds and evaluate the credibility and quality of the reports dealing with the use of public funds by the government. To be able to play this role, SAIs need to be able to act independently from the executive in order to provide an impartial analysis of the execution of the budget by the government (Suuna, 2009).

Regulation 104 of the Local Government (Finance and Accounting, Uganda 2007) provides that every district, city, municipal town council shall have an internal audit whose responsibilities are set out in section 90 (1) of Local government Acts CAP 243 and detailed in the internal audit manual 2007. In developing countries in particular decentralization has been as a palliative for a large number of governance problems, and as such many countries have instituted a wide variety of reforms that have devolved  various functions to lower levels of government. A mini-cottage industry has sprung up to analyse these reforms, with a large amount of controversy over their outcomes (Bardhan and Mookherjee 2006; Treisman 2007). Uganda’s post-colonial history has been notoriously tumultuous, most prominently due to the misrule of Idi Amin in the 1970s and a brutal civil war in the early 1980s. After President Museveni came to power in Uganda in January 1986, however, he and his ruling National Resistance Movement (NRM) enacted a wide range of reforms at all levels of government and society. One of the most prominent initial reforms has been the introduction of the Local Council (LC) system of local government,4 which incorporates five levels ranging from the village (LCI) to the district (LCV). Elections to the LCIs began in 1987, alongside indirect elections to the other tiers; by the mid 1990s, however, the central government had both created a system of regular and direct elections at the local level and reassigned local government power from centrally-appointed technocrats to locally elected politicians. Further reforms that decentralized both financial decision-making and power over local public land to district governments meant that, by the late 1990s, district leadership positions had become quite powerful within their jurisdictions (Green 2005: 330). The Ugandan government initiated an ambitious decentralization reform in 1992, which represents an example of full-fledged devolution with the transfer of far-reaching responsibilities to local governments.

 However, several shortcomings, such as low levels of accountability, insufficient human and financial resources, corruption, patronage, and central resistance to decentralisation, constrain the proper implementation of the reform, putting improvements in participation and efficiency at risk and ultimately jeopardising the intended impact on poverty. The current decentralisation reform was officially launched in October 1992 through a presidential policy statement.3 It was first enshrined in the Local Government (Resistance Councils) Statute of 1993 and later in the Constitution of 1995 and the Local Governments Act of 1997. The local government system is formed by a five-tier pyramidal structure, which consists of the village (LC1), parish (LC2), sub-county (LC3), county (LC4), and district (LC5) in rural areas, and the village (LC1), ward or parish (LC2), municipal division, town, or city division (LC3), municipality (LC4), and city (LC5) in urban areas.4 The district and the city5 are the highest local government levels, while the sub-county, municipality, municipal division, town, and city division are referred to as lower local government levels. The remaining entities are classified as administrative units. The enactment of the 19997 local government Act was the beginning of local governments in Uganda, although the law was amended in 2001, it remains the key law in regulating the operations of local governments in Uganda today. In order to empower local governments to fulfill their responsibilities, they are entitled to levy, charge, and collect local taxes and fees, and to receive a number of intergovernmental grants. With regard to taxes and fees, district and urban local governments are allowed to impose property tax, several forms of non-tax revenue (market dues, trading licenses, parking fees, education contributions, etc.), and until fiscal year 2005/0610 graduated personal tax. According to the law, proceeds from local taxes and fees are retained locally and shared between different levels of local government and administrative units but not with the centre.

However the auditing function in local governments in Uganda covers local council three, municipalities, cities and district. Internal auditors ensure that resources are optimally used and to ensure that the local government activities are done in accordance to the prescribed procedures, rules and regulations for economy, efficiency and effectiveness.  
The Local Governments’ Internal Audit Manual (2007) defined internal audit as an independent, objective assurance and consulting activity designed to add value and improve organizations operations. It helps the organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risks management, control and governance process. 

Internal audits in local governments offer a continuous internal evaluation and advisory service to all council’s establishment and departments. It reviews effectiveness and adequacy of internal control, reliability of financial and other management information, effectiveness of accounting procedures, extent to which councils assets are safe guarded from losses, optimal use of council’s resources, compliance with Local Government Act CAP 243 and Local Government Finance and Accounting Regulations (2007).

Regulations 12 of the Local Government (Finance and Accounting , Uganda 2007) outlines the duties of the head of internal audit among which are to audit revenue collection to ensure that all moneys due to the administration are collected and banked or otherwise accounted for in terms of regulations and internal audit manual audit procurements procedures and payments to ensure that all goods are properly ordered, procured, examined and paid for in terms of these regulations and to ensure the value for money have been achieved.

Section 90 (2) of the local government Act Cap 243 shows that the head of internal audit department shall prepare quarterly reports and shall submit them to the council giving a copy to local government public accounts committee. The internal audit reports are supposed to be regular, guide councils on the general management of finances in order to ascertain whether value for money is achieved and to sound a signal wings are going wrong. 

Goddard & Masters (2002) noted that institutions carry out internal auditing activities at all levels and in all functions which include; procedures used to adequately receive, record and deposit revenue and asset practices to prevent the fraudulent receipt and dispose of resources; security measures to prevent unauthorized access to buildings, property, files or information systems; accounting systems and data processing  procedures used to accurately record information; and the organizational decision-making structure to assure appropriate levels of policy review and approval.

Internal auditors have the freedom to select areas of audit.  In order to operate effectively, independence principle should be observed and thus an internal auditor should at all times have direct access to all department heads, Accounting officer and the council and organizations records and information.

Regulation 28 of local government (public procurements and disposal of public assets, regulations 2006) indicate that the head of internal audit department of a procuring and desposing entity in accordance with a local governments Act shall audit procurement and disposal procedures and payments   to ensure that goods, services and works are properly ordered, recurred examined and paid for in accordance with these regulations and local governance (Finance and Accounting) regulations.

The intent of internal auditing is to minimize the potential loss, misuse or unauthorized use of the Organization’s assets, resources or equipment. But with all these in place, internal controls help an entity in achieving the objectives but cannot automatically ensures an entity’s success (Institute of corporate governance of Uganda, 2000). 
Hunt & Carey (2000), observed that many local governments in Uganda are surrounded by non transparent, corrupt deals leading to substandard services that injure public while high level executives embezzle millions of public funds and received additional millions in bonuses for the shoddy results that eventually leave services in a fiasco. Kato (2010), local governments are a failure due to the misconception and unrealistic expectation that internal controls can ensure an entities success. For example Kayunga district failed to account for Global Funds in 2007/2008 (Auditor General’s Report), yet all the internal controls were in place in form of controlled environment, controlled activities, information and communication, monitoring procedures, but still did not achieve the service objective.

1.2.2 Theoretical background
The study was guided by the agency theory. The first scholars to propose, explicitly, that a theory of agency be created, and to actually begin its creation, were Stephen Ross and Barry Mitnick in 1935. The theory was in 2002 improved by Lonnar. However both Ross and Barry later explored the theory in detail and each took his own dimension leading to two different sub theories.   Ross is responsible for the origin of the economic theory of agency, and Mitnick for the institutional theory of agency, though the basic concepts underlying these approaches are similar. Indeed the approaches can be seen as complementary in their uses of similar concepts under different assumptions. In short, Ross introduced the study of agency in terms of problems of compensation contracting; agency was seen, in essence, as an incentives problem. Mitnick introduced the now common insight that institutions form around agency, and evolve to deal with agency, in response to the essential imperfection of agency relationships: Behavior never occurs as it is preferred by the principal because it does not pay to make it perfect. But society creates institutions that attend to these imperfections, managing or buffering them, adapting to them, or becoming chronically distorted by them. 

The agency theory has been recently improved by Lonarr (2002). According to Lonarr (2002) agent (manager) undertakes to perform certain duties for the principal (investor) and the principal undertakes to reward the agent (Jensen and Meckling, 1976). According to this theory, the role of the auditor is to supervise the relationship between the manager and the owners. A gap expectation occurs when the distribution of the responsibility is not well defined. The responsibility of every part is well defined in the regulation. The manager and the owners have to realize that the auditor does not have responsibility of the accounting, but only see that the auditing is done properly (Andersson and Emander, 2005).
It is argued that in a corporation, in which share ownership is widely spread, managerial behavior does not always maximize the returns of the shareholders (Donaldson and Davis, 1991). The degree of uncertainty about whether the agent will pursue self-interest rather than comply with the requirements of the contract represents an agent risk for an investor (Fiet, 1995).  Given that principals will always be interested in the outcomes generated by their agents, agency theory demonstrates that accounting and auditing have an important task in providing information and this task is often associated with stewardship, in which an agent reports to the principal on the companies’ events (Ijiri, 1975). The demand for auditing is sourced in the need to have some means of independent verification to reduce record keeping errors, asset misappropriation, and fraud within business and business organizations. However, a survey conducted by the Auditors in the Ministry of Finance have revealed that the auditors believe that the auditor’s work would be used as a guide for investment, valuation of companies, sometimes in predicting bankruptcy and most times cracking on to cases of fraud in local governments. There are four conditions in the business environment which create a demand for an independent audit. They are: (1) Conflict of interest, (2) Consequence, (3) Complexity and (4) Remoteness. 
1.2.3 Conceptual background

Various definitions have been put forward to the key concepts of this study. Millichamp (2002:349), defined auditing as an activity carried by the auditor when he verifies accounting data determines accuracy and reliability of accounting statements and reports upon his efforts. It is essentially an activity carried out by an independent person with the aim of reporting on the truth and fairness of the financial statements. Juan (2006), defines internal auditing as  a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria and communicating the results to interested users.” For purposes of this study internal auditing will refer to operational efficiency, financial reporting and investigating fraud. 

Green (2003) defines accountability as an organization’s capacity to demonstrate, answer and explain its actions. In the government sector, the key considerations in regard to accountability of public finances are discharge of all agreed commitments, the achievements of the value for money and the demonstration of a high level of financial responsibility. Bovens (2006), noted that the notion of accountability is an amorphous concept that is difficult to define in precise terms. For purposes of this study accountability will refer to financial reporting, following formal procedures, openness, submission and presentation of audit reports, publishing reports, asset security, asset utilization, acting in stakeholder interests, approvals and authorization.
1.2.4 Contextual background
The study was conducted in Gulu Municipality. Gulu Municipality is composed of 4 divisions. These include Pece division, Laroo Division, Layibi Division and Bar dege division.  Internal control plays role in preventing and detecting fraud and protecting the organization's resources, both physical (e.g., machinery and property) and intangible (e.g., reputation or intellectual property such as trademarks).However he internal control system of Gulu municipality have been criticized time and again for being weak. For example there are various queries raised Auditor general’s office regarding the accountability of public funds.  Majority of the Gulu Municipal officials appearing before the public accounts committee of parliament for example the Gulu Town Clerk and the Chief Finance Officer were detained at Gulu police station March 2012 for the failure to account for 1.3billion Uganda shillings received from central government (Ongom 2012).  Accountability has been found wanting raising many questions on the governance of affairs in the respective districts. The role of internal auditors remain questionable, external audits continue to indicate funds misappropriation, an authorized expenses and withdrawals which otherwise ought to have been identified and management advised. For instance the auditor’s report to parliament on the accountability of the funds dispatched to the districts in the financial year 2010/11 Gulu Municipality  had Uganda shillings 405,614,159 uncounted for (New Vision, Tuesday, April, 2012).Therefore the study investigated the influence of controls and performance of Gulu municipality 

1.3 Statement of the problem
In spite of existing structure of the Local government audit function, public accountability is weak, and gaps have been noted in many decentralized local governments. The magnitude of malpractices in the accountability of public finances in Gulu Municipality is on the increase in spite of having internal auditors. There are alarming cases of misappropriation of funds, incomplete vouchers, missing vouchers and unaccounted funds. During the financial years 2008/2009 and 2009/2010, there were incomplete vouchers amounting to Uganda shillings 183,134,150 missing vouchers totaled to Uganda shillings 32,800,709 and funds amounting to Uganda shillings 151,811,696 meant for road construction and health facilities were diverted in the same financial period, (Langol & Onono 2012). In the financial year 2010/2011 Gulu Municipality had Uganda shillings 405,614,159 unaccounted for (Auditor General’s Report to Parliament 2012).  There is fear that if the municipality does not strengthen its internal control mechanisms, more tax payer’s money will be lost to embezzlers hence leading to loss of public confidence in the local government. Such glaring accountability irregularities left the researcher wondering whether internal auditors have a role to play to ensure the accountability thus prompting the study.

1.3 Study purpose
The proposed study was to investigate the influence of government controls and performance of Decentralised Governments in Uganda: A case study of Gulu municipality. 
1.5 Objectives of the study
This study specifically intended to achieve the following objectives; 
i.	To examine the relationship between internal auditing and  performance of Gulu Municipality
ii.	To establish the relationship between accountability and performance of  Gulu Municipality
iii.	To establish the challenges of internal audit function in relation to accountability of Gulu Municipality
1.6	Research questions
The study attempted to answer the following research hypotheses

i.	What is the relationship  between internal auditing and  performance of Gulu Municipality

ii.	What is the relationship between accountability and performance  of  Gulu Municipality

iii.	What are the challenges of  internal audit in relation to accountability of  Gulu Municipality

1.7	Research Hypotheses questions
  The study was premised on the following research  

(i)	There is a significant  relationship  between internal auditing and  performance of Gulu  Municipality

(ii)	There is a significant  relationship between accountability and performance  of  Gulu     Municipality

1.8. 	Conceptual Framework
Figure 1: A conceptual framework illustrating the relationship between government controls and performance

PERFORMANCE 

•	Efficiency
•	Effectiveness
•	Quality service delivery
•	Reporting and feed back

GOVERNMENT CONTROLS

Internal auditing
•	Reviewing internal control
•	Investigating fraud
•	Review of supporting documentation
•	Internal audit task risks
•	Ensure compliance with regulations and procedures

               Accountability

•	Following formal procedures 
•	Submission and presentation of  audit reports
•	Asset security
•	Asset utilization
•	Acting in stake holder interests
•	Approvals and authorization of supporting documentation

 INDEPENDENT VARIABLE                                                    DEPENDENT VARIABLE               

∕

Source: Adopted from Rezaee and Zabihollah (2002) Financial Statement Fraud: Prevention and Detection. New York: Wiley PP.67-73(Modified by the researcher)
The independent variable was government controls and the dependent variable was performance. Government controls referred to internal auditing and accountability. Internal auditing referred to investigating fraud, review of supporting documentation, internal audit task risks and ensuring compliance with regulations and procedures. Accountability referred to following formal procedures, submission and presentation of audit reports, asset security, asset utilization, and acting in stake holder interests, approval and authorization of supporting documentation. The dependent variable was performance which was measured by the following indicators efficiency, effectiveness, accomplishing tasks on time, quality service delivery, output, reporting and feedback. 

1.9 	Scope of the Study 
The scope of the study is divided into three perspectives: content, geographical and time scope 1.9.1Geographical scope: The study was conducted in Gulu Municipality located in Northern Uganda. It is the commercial and administrative Centre of Northern Uganda. Gulu Municipality is located at 2˚46'48N 32˚18'00E, on the meter gauge railway from Tororo to Pakwach. Gulu Municipality is located approximately 200 miles (320 km), by road, north of Kampala, Uganda's capital and largest city.
1.9.2 Content scope: The study the relationship between investigated the relationship between internal control and performance in Gulu Municipality. The independent variable was internal control and the dependent variable was performance. 
1.9.3 Time scope: The study focused on the period 2008-2012 because this was the period when there were a lot of flaws in the accountability reports. On 12th March 2012, Gulu Municipality Town Clerk and the Chief Finance Officer were detained at Gulu Central Police Station for some hours on the orders of the Local Government Public Accounts Committee of Parliament over their failure to account for over 1.3billion Uganda shillings the Municipality received from central government, New Vision of 14th March, 2012. 
 
1.10 Significance of the study
It is hoped that the study will be significant to the following stakeholders:
Local governments may adopt recommendations of the study in order to develop appropriate accountability strategies for good financial management.
The study may provide secondary data base for future researchers on internal auditing as it may provide information for researchers and accounts officers about how internal auditing influences accountability.
It may also help to provide a basis for internal auditing and accountability and findings of the study will sensitize accounts officers/chief finance officers in local government on issues of accountability.
The study may add value to the body of existing knowledge and perhaps lead to ventures in further research.
The study may also contribute to the existing literature on internal auditing and accountability.
Through the resultant interaction between the researcher and the respondents, the researcher’s knowledge, skills and understanding of research may improve.
1.11 Operational Definitions to key terms and concepts
The sub section presents the definitions to key terms and concepts 
Government controls referred to internal auditing and accountability. 
Internal auditing referred to investigating fraud, review of supporting documentation, internal audit task risks and ensuring compliance with regulations and procedures. 
Accountability referred to following formal procedures, submission and presentation of audit 

reports, asset security, asset utilization, and acting in stake holder interests, approval and authorization of supporting documentation. 
Performance was measured by the following indicators efficiency, effectiveness, quality service delivery, reporting and feedback. I now turn to the review of related literature. 

CHAPTER TWO
LITERATURE REVIEW
2.0	Introduction
This chapter is presented following the variables used in the study and comprises a critical review of related literature. The chapter looks at set objectives: relationship between internal auditing and accountability, roles of internal auditors and challenges of internal audit function in local governments (independent variable) and accountability (dependent variable). 

2.1 Theoretical Review
The first scholars to propose, explicitly, that the principal agency be created, and to actually begin its creation, were Stephen Ross and Barry Mitnick in 1935. The theory was in 2002 improved by Lonnar. However both Ross and Barry later explored the theory in detail and each took his own dimension leading to two different sub theories.   Ross is responsible for the origin of the economic theory of agency, and Mitnick for the institutional theory of agency, though the basic concepts underlying these approaches are similar. Indeed the approaches can be seen as complementary in their uses of similar concepts under different assumptions. In short, Ross introduced the study of agency in terms of problems of compensation contracting; agency was seen, in essence, as an incentives problem. Mitnick introduced the now common insight that institutions form around agency, and evolve to deal with agency, in response to the essential imperfection of agency relationships: Behavior never occurs as it is preferred by the principal because it does not pay to make it perfect. But society creates institutions that attend to these imperfections, managing or buffering them, adapting to them, or becoming chronically distorted by them. 

The principal agency theory assumes one party (is the principal) delegates work to another (the agent), who performs that work. Agency theory is concerned with resolving two problems that can occur in agency relationships. The theory assumes that the agent acts on behalf of the principal; it also assumes that the agent acts in the best interest of the principal. It assumes that the agent’s actions are the principal’s actions.

 The Principal agency theory has been recently improved by Lonarr (2002). According to Lonarr (2002) agent (manager) undertakes to perform certain duties for the principal (investor) and the principal undertakes to reward the agent (Jensen and Meckling, 1976). According to this theory, the role of the auditor is to supervise the relationship between the manager and the owners. A gap expectation occurs when the distribution of the responsibility is not well defined. The responsibility of every part is well defined in the regulation. The manager and the owners have to realize that the auditor does not have responsibility of the accounting, but only see that the auditing is done properly (Andersson and Emander, 2005).
It is argued that in a corporation, in which share ownership is widely spread, managerial behavior does not always maximize the returns of the shareholders (Donaldson and Davis, 1991). The degree of uncertainty about whether the agent will pursue self-interest rather than comply with the requirements of the contract represents an agent risk for an investor (Fiet, 1995).  Given that principals will always be interested in the outcomes generated by their agents, agency theory demonstrates that accounting and auditing have an important task in providing information and this task is often associated with stewardship, in which an agent reports to the principal on the companies’ events (Ijiri, 1975). The demand for auditing is sourced in the need to have some means of independent verification to reduce record keeping errors, asset misappropriation, and fraud within business and business organization. However, a survey conducted by the Auditors in the Ministry of Finance have revealed that the auditors believe that the auditor’s work would be used as a guide for investment, valuation of companies, sometimes in predicting bankruptcy and most times cracking on to cases of fraud in local governments. There are four conditions in the business environment which create a demand for an independent audit. They are: (1) Conflict of interest, (2) Consequence, (3) Complexity and (4) Remoteness. However the agency theory has been criticized on the following grounds: the first is the agency problem that arises when (a) the desires or goals of the principal and agent conflict and (b) it is difficult or expensive for the principle to verify what the agent is actually doing. The problem here is that the principal cannot verify that the agent has behaved appropriately. The second is the problem of risk sharing that arises when the principal and agent have different attitudes towards risk. The problem here is that the principle and the agent may prefer different actions because of the different risk preferences. 
2.3 Internal Control and Performance
This section presents the reviewed literature reviewed and presented on the basis of study objectives: relationship between internal auditing and accountability, roles of internal auditors and challenges of internal audit function in local governments (independent variables) and accountability (dependent variables). 
2.3.1 Internal Auditing and Performance
Audit is a governance mechanism that reviews and evaluates client internal controls and audits their financial statements in order to prevent material mis-statements. Auditors of higher quality are less willing to accept doubtful accounting methods and are more likely to report errors and irregularities revealed during the audit work. Thus, the internal auditor is considered to have an impact on the efficacy of the firm’s monitoring function, and hence the incidence of earnings management. Stockholders rely upon the external auditor to provide some assurance that the financial statements of a firm are not misleading. Thus, independence is the first and most important factor for external auditors in adequately discharging their auditing function, Aglietta, Michel and Rebérioux (2005).

Internal auditing is a management-oriented discipline that has evolved rapidly since World War II. Once a function primarily concerned with financial and accounting matters, internal auditing now addresses the entire range of operating activities and performs a correspondingly wide variety of assurance and consulting services. By definition, according to Institute of Internal Auditors (IIA), internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes, Richard and Jack 
(2005).
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Internal auditing is a catalyst for improving an organization's effectiveness and efficiency by providing insight and recommendations based on analyses and assessments of data and business processes. With commitment to integrity and accountability, internal auditing provides value to governing bodies and senior management as an objective source of independent advice. Professionals called internal auditors are employed by organizations to perform the internal auditing activity, Millichamp (2002).
The researcher noted that the scope of internal auditing within an organization is broad and may involve topics such as the efficiency of operations, the reliability of financial reporting, deterring and investigating fraud, safeguarding assets, and compliance with laws and regulations.
Internal auditing frequently involves measuring compliance with the entity's policies and procedures. However, internal  auditors are not responsible for the execution of company activities; they advise management and the Board of Directors (or similar oversight body) regarding how to better execute their responsibilities. As a result of their broad scope of involvement, internal auditors may have a variety of higher educational and professional backgrounds.
To perform their role effectively, internal auditors require organizational independence from management, to enable unrestricted evaluation of management activities and personnel. Although internal auditors are part of company management and paid by the company, the primary customer of internal audit activity is the entity charged with oversight of management's activities. This is typically the Audit Committee, a sub-committee of the Board of Directors. To provide independence, most Chief Audit Executives report to the Chairperson of the Audit Committee and can only be replaced with the concurrence of that individual, Lubaale (2005).
The researcher noted that auditing activity is primarily directed at improving internal control. Under the Framework, internal control is broadly defined as a process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following internal control categories: effectiveness and efficiency of operations and reliability of financial reporting. Management is responsible for internal control. Managers establish policies and processes to help the organization achieve specific objectives in each of these categories. Internal auditors perform audits to evaluate whether the policies and processes are designed and operating effectively and provide recommendations for improvement.
Munene (2009) auditor’s work includes assessing the tone and risk management culture of the organization as well as evaluating and reporting on the effectiveness and efficiency of the implementation of management policies. In other words internal auditing increase management efficiency 
 According to Luthans (2006) internal auditing professional standards require the function to monitor and evaluate the effectiveness of the organization's Risk management processes. Risk management relates to how an organization sets objectives, then identifies, analyzes, and responds to those risks that could potentially impact its ability to realize its objectives. Under the COSO enterprise risk management (ERM) Framework, risks fall under strategic, operational, financial reporting, and legal/regulatory categories. Management performs risk assessment activities as part of the ordinary course of business in each of these categories. Examples include: strategic planning, marketing planning, capital planning, budgeting, hedging, incentive payout structure, and credit/lending practices. Sarbanes-Oxley regulations also require extensive risk assessment of financial reporting processes. Corporate legal counsel often prepares comprehensive assessments of the current and potential litigation a company faces. Internal auditors may evaluate each of these activities, or focus on the processes used by management to report and monitor the risks identified. For example, internal auditors can advise management regarding the reporting of forward-looking operating measures to the Board, to help identify emerging risks.
Lucas (2004) states that auditors work closely with line managers to review operations then report their findings. The internal auditors are well versed in most cases with the strategic objectives of the organization, so that they have a clear understanding of how the operations of any given part of the organization fit into the bigger picture.
In larger organizations, major strategic initiatives are implemented to achieve objectives and drive changes. As a member of senior management, the Chief Audit Executive (CAE) may participate in status updates on these major initiatives. This places the CAE in the position to report on many of the major risks the organization faces to the Audit Committee, or ensure management's reporting is effective for that purpose. Internal auditors may help companies establish and maintain Enterprise Risk Management processes. Internal auditors also play an important role in helping companies execute a SOX 404 top-down risk assessment. In these latter two areas, internal auditors typically are part of the risk assessment team in an advisory role, Gupta (2005). 
Internal auditing activity as it relates to corporate governance is generally informal, accomplished primarily through participation in meetings and discussions with members of the Board of Directors. Corporate governance is a combination of processes and organizational structures implemented by the Board of Directors to inform, direct, manage, and monitor the organization's resources, strategies and policies towards the achievement of the organizations objectives. The internal auditor is often considered one of the "four pillars" of corporate governance, the other pillars being the Board of Directors, management, and the external auditor. A primary focus area of internal auditing as it relates to corporate governance is helping the Audit Committee of the Board of Directors (or equivalent) perform its responsibilities effectively. This may include reporting critical internal control problems, informing the Committee privately on the capabilities of key managers, suggesting questions or topics for the Audit Committee's meeting agendas, and coordinating carefully with the external auditor and management to ensure the Committee receives effective information, Keneth (2005). 
The researcher noted that based on a risk assessment of the organization, internal auditors, management and oversight Boards determine where to focus internal auditing efforts (the focus prioritization is part of the annual/multi-year audit planning; usually, the audit plan is proposed by the Chief Internal  Audit (sometimes with several options or alternatives) to the approval of the Audit Committee or Board of Directors). Internal auditing activity is generally conducted as one or more discrete assignments. A typical internal audit assignment involves the following steps: Audit assignment length varies based on the complexity of the activity being audited and internal Audit resources available. Many of the above steps are iterative and may not all occur in the sequence indicated.
Okumu (2004) asserts that auditing provides an independent view on the organization’s governance, risk management and control processes. Auditors review, the adequacy of control design to ensure that risks are effectively managed, and then test operation of key controls to ensure they are operating as intended and therefore are effective in managing the organization’s risk. 
The recommendations in an internal audit report are designed to help the organization achieve its goals, which may relate to operations, financial reporting or legal/regulatory compliance. They may relate to effectiveness (i.e., whether goals were met or compliance with standards was achieved) or efficiency (i.e., whether the outputs were generated with minimum inputs).Audit findings and recommendations also relate to particular assertions about transactions, such as whether the transactions audited were valid or authorized, completely processed, accurately valued, processed in the correct time period, and properly disclosed in financial or operational reporting, among other elements. The measurement of the internal audit function can involve a balanced scorecard approach. Internal audit functions are primarily evaluated based on the quality of counsel and information provided to the Audit Committee and top management. However, this is primarily qualitative and therefore difficult to measure. "Customer surveys" sent to key managers after each audit engagement or report can be used to measure performance, with an annual survey to the Audit Committee. Scoring on dimensions such as professionalism, quality of counsel, timeliness of work product, utility of meetings, and quality of status updates are typical with such surveys. Understanding the expectations of senior management and the audit committee represent important steps in developing a performance measurement process, as well as how such measures help align the audit function with organizational priorities, Arenset al (2003).
Financial reports are the documents and records you put together to track and review how much money a company is making (or not). The purpose of financial reporting is to deliver financial information to the lenders and shareowners (the stakeholders) of the company. If someone else is supporting part of a company, financial reporting must be part of the essential contract between the company and its employees. Lenders and investors have the right to know if their money is being spent wisely and returning a profit.
 The organization of an audit committee within the entity is a central issue of the corporate governance. The contribution made by an audit committee refers to the assessment of the financial statements quality. On the other hand, an audit committee plays an important role in the communication between the internal and the external audit of the company. Audit committee is also responsible for coordinating the financial statements and external audit process, but also for the organization of the internal reports Spira (2003). This study created a nexus between government controls and performance.
 
Spira (2003) also observed that in the description of the roles of the Audit Committee terms such as to review; to discuss; to recommend d; to undertake; to examine etc, were used to indicate the nature of their responsibilities. Essentially, they are terms that suggest oversight functions on activities or roles performed by a third party. This may be over members of the company staff such as internal control personnel or the management or over persons or entities employed by the firm such as the external auditor. She further suggested that the Audit Committee essentially plays the following advisory roles:  “the Audit Committee is a subcommittee of the main board of directors, with a remit covering issues relating to financial reporting, audit and internal financial control. It has no decision making powers and does not report directly to company shareholders. Its “output” consists of reports and recommendations to the main board, offering assurance by providing formal evidence of its oversight activities. Its role is advisory and largely reactive” (Spira, 2003:182). The study does not clearly bring out the difference between the key variables of government controls that is internal auditing and accountability.

The  scope of the responsibilities of the  Audit Committees has changed significantly in an  increasingly global business environment (DeZoort et al, 2002:38) to include review  and monitoring of internal control, internal audit functions and risk management in  addition to the traditional reporting functions and interactions with the auditors  (Zaman, 2001). However, concerns have been expressed at the high expectations placed on the Audit Committee with likely adverse consequences should these not be met (Zaman, 2001; Spira, 2003; Turnbull, 2005). Also, the changes in language and tone in which the functions and responsibilities of the Audit Committee are expressed also matter in understanding the changes in the expectations of the Audit Committees

Moorland (1995) asserts that stockholders rely upon auditors to provide some assurance that the financial statements of a firm are not misleading. He asserts that it is crucial that the monitoring provided by external auditors is no impaired and thus the most important factor for the proper discharge their auditing function is their independence. Auditor independence can be compromised when the auditor provides non-audit services to the client (Becker, 1998). In bringing the gap, the study found out that internal controls can influence the performance of an institution.
According to the Local Government Internal Audit Manual (2007) Financial reporting is governed by statutory and common law and it is done according to ethical standards. Unfortunately, financial reporting sometimes falls short of both legal and ethical standards. These standards and requirements for accounting and financial reporting often change, so you need to stay updated. The reasons for these changes include the following: Scandals: Without a doubt, the rash of accounting and financial reporting scandals over the last two decades (1990-2000) was one major reason for the step-up in activity by the standards setters. The Enron accounting fraud not only brought down a major international CPA firm (Arthur Andersen) but also led to passage of the Sarbanes-Oxley Act of 2002. Sarbanes-Oxley includes demanding requirements on public companies regarding establishing and reporting on internal controls to prevent financial reporting fraud. Doing business has an ever-increasing level of complexity. When you look at how business is being conducted these days, you find more and more complexity for example, the use of financial derivative contracts and instruments. The legal exposure of businesses has expanded, especially in respect to environmental laws and regulations. There's also a move toward the internationalization of accounting and financial reporting standards.
2.3.2 Accountability and Performance
Accountability is integral to corporate governance; accountability reduces the information asymmetry between a firm’s management and financial stakeholders, mitigating the agency problem in corporate governance (Sandeep , 2007). In Uganda lack of transparency is attributed to the closure of commercial banks (Yunusu, 2001). In governance, accountability has expanded beyond the basic definition of "being called to account for one's actions". It is frequently described as an account-giving relationship between individuals, for example "A is accountable to B when A is obliged to inform B about A’s (past or future) actions and decisions, to justify them, and to suffer punishment in the case of eventual misconduct". Accountability cannot exist without proper accounting practices; in other words, an absence of accounting means an absence of accountability.

Most of the prior studies on the relationship between corporate governance and earnings Management document give a negative relationship between the presence of outside directors and the occurrence of fraudulent financial statements or discretionary accounting accruals. Peasnell (2003) examine the effect of various characteristics of boards and audit accountability on constraining earnings management. He uses discretionary current accruals (using the Jones 1991 model) to measure earnings management for a sample of 282 US firms for the years 1992, 1994 and 1996. They hypothesize that companies with a larger proportion of independent directors will be less likely to engage in earnings management than those whose boards which have a majority of executive directors. His results support the researcher’s tentative hypothesis. One remarkable limitation of their study is the use of only two control variables. They only control for firm size, using the log of the market value of equity, and year, using two dummy variables taking the value of 1 if the analysis year is 1992 or 1996. 
Other studies show that there are many other important control variables, such as managerial ownership, leverage, audit quality and a presence of block holders.

According to poor accountability may sometimes give rise to poor corporate governance issues. First there is an agency problem, or conﬂict of interest, involving members of the organisation these might be owners, managers, workers or consumers. Second, transaction costs are such that this agency problem cannot be dealt with through a contract. In ‘the absence of agency problems, all individuals associated with an organization can be instructed to maximize proﬁt or net market value or to minimize costs. Individuals will be prepared to carry out their instructions since they do not care per se about the outcome of the organization’s activities. 

However the researcher was critical of that view, he notes that the theory does not by itself provide a role for governance structure. The reason is that optimal principal agent contracts, although second-best, in the sense that depends on performance rather than directly on are ‘comprehensive’ in the sense that a contract speciﬁes all parties’ obligations in all future states of the world, to the fullest extent possible.  

According to Allen (2009) among other things, managers may overpay themselves and give themselves extravagant perks; they may carry out unproﬁtable, but power-enhancing investments; they may seek to entrench themselves. In addition, managers may have goals that are more genuine but are still inconsistent with value maximization. They may be reluctant to lay off workers that are no longer productive. Or they may believe that they are the best people to run the company when in fact they are not. In view of the managers’ ability to pursue their own agenda, it is obviously important that there exist checks and balances on managerial behavior. A major part of corporate governance concerns the design of such checks and balances. 

2.3.3 Challenges of Internal Audit in relation to Performance
Accountability in using public funds is a concept that has received a good deal of attention over the past years (Premchand, 2003). In most countries the Public Accounts Committees play a significant role when it comes to accountability. It is now universally recognized as one of the mean for ensuring proper and effective use of public funds. It is also used in the optimization resources, especially in the context of the expansion of the activities of the state into social and economic sectors require the presence of a Supreme Audit Institution (Premchand, 2003).
The researcher emphasized the fact that internal auditing has gained recognition in many developing countries. This comes as a result of increasing volume of transactions. The resources of these countries in relation to their pressing need are severely limited and thus the need to use these resources more effectively.

According to Lutheran (2007) process of planning for development increases the amplitude of public finances and public expenditure programmes. However, enforcement of rules and regulations through instrumentality of the audit function have often not been adequate. Many of the development programmes require a dynamic approach to satisfy the growing aspirations of the nation’s people. The decisions will therefore, require to be evaluated by the audit function like PAC on the basis of mature judgment and appreciation of the wide spectrum of objectives. In order to meet public expenditure programmes, there is need to mobilize resources. And the audit function has to satisfy parliament and the public, that revenue collected are in accordance with the tax laws. And that the executive arm of the government takes appropriate decisions. This should also help assessing officers in levying and collecting taxes promptly and without omission.

In this general evolution, it becomes critical that internal auditors give management an objective and independent opinion on the system of control. Moreover, it is important that they are professional by being qualified and applying international methodology. Globally it is key that internal auditors make pertinent recommendations and ensure that these are implemented properly through adequate follow-up actions. On the risk management side, ERM is managed by a specific department. The internal auditors use the ERM analysis as an input to complement their own risk assessment approach to define their annual audit plan. Close collaboration is therefore requested to ensure consistency of the global picture. Managers may evolve; each of them is prone to develop his/her own business vision and what level of the maturity the organization should reach, Richard and Jack (2005). The study does not point out the key challenges to the internal audit function in an institution.

Renard (2008) asserts that improvement is fundamental to the purpose of internal auditing. But it is done by advising, coaching and facilitating in order to not undermine the responsibility of management. For a successful audit to take place, auditors must work within the set standards so that they are not held accountable.

Internal audit reviews the design and operating effectiveness of the system of internal control of the whole organization and gives an independent opinion. They also assess the means use to achieve the objectives and report on the efficiency of the organization. This is important for us, in the international context where we operate, as they play a value protection role. Sometimes, internal audit may be asked to perform investigations or fraud inquiries.. The internal auditors also have direct contact with the Executive committee and report on their recommendations and the status of their implementation. Finally, the internal audit reports must be readable, timely include an executive summary, should address the significant risk elements, and focus on key findings and recommendations. 

According to Mautz (2004) there are 3 key elements concerning the performance of the internal audit activity: its independence, a clear focus on the most important and significant activities and risks of the business, the right timing in the execution of the audit engagement, and of its reporting. The hierarchical link and positioning of the internal audit function is not a sufficient condition for good performance. It may help, however people should be foremost independent in their judgment and mindset. For some people this can be easier, for others it may not be straightforward. This is how you recognize a good internal auditor. For the focus, they must select the key risks and be accordingly selective in their reporting. Finally, the engagement results must certainly be up to- date and therefore the report must ideally be issued relatively quickly right after the closing of the mission. Both soft and hard skills are required for the job. The knowledge of the business and its activities remains yet paramount. In all circumstance, internal auditors should always ensure that they listen carefully to the auditees and potentially to major stakeholders. The oral communication is therefore important; especially they should be careful to raise their questions in a neutral way. In an audit department, it is ideal to benefit from a mix of people with business background (e.g. operations, trading, IT,...) and other with internal auditing competencies. When acute business knowledge is required, for a given engagement and yet not readily available in the internal audit department, use the services of business experts for the purpose of the mission. Those can be external or internal to the organization.

Mulumba (2005) who stated that auditing adds credibility and reliability to financial reports from the organization to its stakeholders by giving opinion on the report.  

William (2008) asserts that role of an internal audit department is to help the organization achieve its strategic objectives. It does this by helping managers to identify and control the factors that can threaten their ability to achieve their goals. All organizations face risks in everything they do. The profession of internal audit is fundamentally concerned with providing assurance by evaluating an organizations management of risk. An important part of the job of an effective senior management team is setting in place systems which show how well the entire complex processes to manage risks are working. In this ideal context, the role of the internal auditor is to evaluate, across all parts of an organization, the quality of those systems of internal control, risk management and corporate governance processes and then report this directly and independently to the senior management. How well they recognize, understand and manage those risks will play a critical part in the success (or failure) of the organization and consequently the value delivered to customers, shareholders and stakeholders. As well as this ongoing assurance provision, the internal auditors’ knowledge of the management of risk enables them to act as consultant and catalyst for improvement in an organization’s practices.
Munene (2007) states that to ensure their independence; internal auditors must carry out their work freely and objectively. They cannot subordinate their judgment on audit matters to that of others, and they should have the support of senior management, the board of directors and the audit committee. Use the following to determine internal audit independence. 
2.4 Summary of the Literature Review
Much as the literature reviewed highlights the key functions and roles of internal auditing in institutions as the pillar on which accountability is based, proper management of public finances can occur only if the internal audit section is wel1 disposed and made organizationally effective to perform its duties. The reviewed literature reveals that the studies were carried out in developed nations yet the current study was carried out in a developed nation. The reviewed literature was mostly qualitative yet the current study took a mixed approach. The researcher therefore turns to the methodology that enabled the researcher collect her data.

CHAPTER THREE
METHODOLOGY

3.1 	Introduction
This chapter provided the road map in which the research was conducted. The chapter presents the research design, research area, population size, research instruments, data collection methods, data analysis and validity and reliability of data.
3.2 	Research design
A case study design was used to conduct the study. This is supported by Ezeani (2002), who argues that a case study is a detailed investigation of a single individual or group. A case study points attention to a few items that can be well analysed, it limits the  scope, and suggests possible links between phenomena according to Katebire (2007) Case studies can be qualitative or quantitative in nature, and often combine elements of both. The defining feature of a case study is its holistic approach; it aims to capture all of the details of a particular individual or group, which are relevant to the purpose of the study, within a real life context. To do this, case studies rely on multiple sources of data; including interviews, direct observation, video and audio tapes, internal documents, and artifacts. The case study helps to examine how generalizable the findings may be. The study also applied the quantitative and qualitative approaches. The mixed approach was applied in sample selection, data collection and data analysis. Amin (2005) supports the use of mixed research because multiple methods help to research a problem from all sides; usage of different approaches also helps to focus on a single process and confirms the data accuracy. Use of a mixed approach complements a result from one type of research with another one.  Amin (2005) also asserts that a mixed approach does not miss any available data.
3.3 Study population
The study consisted of a population of 97. The population was made up of Town clerk and the deputies, Accounts officers and Chief Finance Officer, Internal auditor and Chief Internal Auditor, other Municipality employees and support staff. The researcher believed that this category of people was knowledgeable enough about his area of study and were able to avail with the necessary data.
3.4 	Sample size and Selection
The study was based on a sample size of 73 that was drawn from a population of 97. The sample size of 73 was sufficient and this is supported by Krejcie, Robert, Morgan, and Daryle (1970) in their work “Determining sample size for Research Activities”, Educational and Psychological Measurement. They state that where a total population is 97, a sample size of 76 or more is sufficient. Furthermore, Krejcie & Morgan (1970: 607-610) assert that treat each sub-group as a population and then use the table to determine the recommended sample size for each sub-group ( refer to  appendix 4).

Table 3.1:  Sample size and sampling procedure
Category	Population	Sample size	Sampling technique	
Town clerk and Deputies	3	2	Purposive	
Chief Finance Officer	1	1	Purposive	
Accounts officers	2	1	Purposive	
Chief Internal Auditor and other Internal Auditors	2	1	Purposive	
Other employees of the Municipality	60	48	Simple random	
Support staff	30	20	Purposive	
Total	97	73		
Source: Primary data (2014)
The researcher used non probability (purposive sampling) methods because of the nature of study, which required getting particular information from the respondents. Purposive sampling was used to pick data from Town Clerk and his deputies, Chief Finance Officer, Accounts officers, Internal Auditor and support staff.  Mugenda and Mugenda (1999) purposive sampling focuses on particular characteristics of a population that are of interest, which best enables the researcher to answer her research questions.  Those people who are unsuitable for the sampling study or who do not fit the bill are always eliminated, so only the most suitable candidates remain. Both female and male made up the above sample. Simple random sampling was applied when sampling other employees of the Municipality. Best and Khan (2003) explains that this type of technique ensures that all the elements in the population have equal chances of being selected.

3.5	Methods of data collection
Both primary sources were used to collect data related to variables in the study. In this case, observation, interviews and questionnaires were used. Observation allowed the researcher to gain firsthand experience whereas interviews allowed the researcher to obtain information that could not be directly observed and questionnaires were used because the population was literate and time was limited.
3.6 Data collection methods 
Both primary and secondary data were obtained. 
3.6.1 Primary data
Primary data was got through self-administered questionnaires, observation and interview guides to respondents following systematic and established academic procedures as proposed by (Nunnally & Berstein, 1994). There were several ways the researcher collected the primary data. This necessitated use of observation method, interview method, and through questionnaires.
3.6.2 Secondary data
In the secondary analysis of qualitative data, good documentation cannot be underestimated as it provides necessary background and much needed context both of which make re-use a more worthwhile and systematic endeavor. Secondary data was obtained through the use of published and unpublished documents. Various publications, magazines and newspapers reports, historical documents and other sources of publish information were reviewed by the researcher.  According to Amin (2005) secondary data can be helpful in the research design of subsequent primary research and can provide a baseline with which the collected primary data results can be compared to other methods. 
3.6 Data collection instruments.
Both secondary and primary data was collected for study. According to Jackson (1994) the value of a research is related to its data collection methods and importantly whether or not it includes both secondary and primary data. As Creswell (2003) states, secondary data which is an unobtrusive data collection method, depends on the location of pertinent and verifiable previously published academic studies and theories. 
In addition, primary data was also collected from the target and accessible population, as explained above. The data collection method included interviews and questionnaires, because it allowed the researcher to collect large volume of information on a limited budget and in a short time and also because it allowed freedom to express feelings and thoughts, especially when complex issues were being studied (Sarantakos, 2005).
3.6.1 Interviews: 
Interviews were used and were face to face. An interview is a face-to-face oral / verbal dialogue between a researcher (interviewer) and a respondent (interviewee) (Kombo et al, 2006), where ideas are exchanged and recorded. This study used open-ended questions but with the guidance of an interview guide. 
3.6.2 Questionnaires 
Questionnaires were distributed to all the respondents and were self-administered. Questionnaires which are a collection of items to which respondents are expected to react in writing were used. This allows in-depth research, to gain firsthand information and more experience over a short period of time (Kothari, C.R. 2008; Amin, 2005; Creswell (2003)). It is suitable for the sturdy because of the literate population and time limit (Oso & Onen, 2008). The qualitative data was analyzed, interpreted & presented in relation to the research objectives and backed up by the literature review. While the quantitative data was coded, classified and tabulated into percentages using SPSS and interpreted in relation to research objectives. 
Interviews were employed using the same questionnaires to ask verbal questions intended to obtain information from respondents that were not easily got using questionnaires and also to gain control over the line of questioning (Oso & Onen, 2008).
3.7 	Quality control of data collection
This ensured that data collected is valid and reliable; the instrument was first tested to ensure validity and reliability.
3.7.1 	Validity
To establish validity and reliability, the instruments were given to experts including the supervisor as recommended by Gay (1997), Amin (2005) as the best method for ensuring reliability to evaluate the relevance of each item in the instruments to the objectives and research questions. The researcher then made necessary adjustments to ensure that the instruments are relevant, clear, reliable and properly arranged. The researcher also used randomization to create equivalent representation of samples (Oso and Onen, 2008).  
To establish validity, the researcher conducted a pre-test/ pilot study and used the Content Validity Index (CVI) to check the validity of the questionnaire contents. The CVI was computed using the following formula:
CVI =        Items rated relevant/Very relevant by both rates (3 or 4)
                  Total number of items in the instrument
The instrument was valid because the corresponding CVIs were within the accepted range of 0.7 to 1 as shown below in table 3.2. 

3.2: Results of the Content Validity Index (CVI)
Variables	Content Validity Index	Number of items	
Internal Auditing	0.777	5	
Accountability	0.812	5	
Challenges to the internal audit function	0.785	5	
Performance	0.785	5	
Source: Primary data (2014)

3.7.2 	Reliability
Reliability can be thought of as consistency. Does the instrument consistently measure what it is intended to measure?. To ensure reliability of the instruments, questionnaires and interview guide were designed and pre-tested with the respondents. A test-retest was done in time lapse of 4 weeks to establish consistence in responses. According to Sekaran (2003), pre-test can be used to measure the extent to which the instrument will produce consistent scores when the same group of individuals is repeatedly measured under same conditions. The results from the pretest were used to modify the items in the instruments.  The expert (supervisor) went through the questions and advised that those questions that appeared ambiguous and would not elicit a good response should be eliminated. The researcher applied the Cronbach's Alpha Reliability Coefficient for Likert-type scales. The researcher did a pretest of the instrument in a time lapse of 4 weeks to establish consistence in responses. According to Amin (2005), test-retest reliability can be used to measure the extent to which the instrument can produce consistent scores when the same group of individuals is repeatedly measured under same conditions. The results from the pretest were used to modify the items in the instruments. This was done by performing Cronbach's Alpha Reliability Coefficient for Likert-Type Scale. All the results from the Cronbach test were above .7 (70%) which indicated that the items in the instrument were valid as shown in the table below.
3.3: Results of the Cronbach's Alpha Reliability Coefficient for Likert-Type Scale test
Variables	Cronbach’s Alpha Coefficient	Number of items	
Internal Auditing	0.7227	5	
Accountability	0.831	5	
Role of internal auditing	0.759	5	
Challenges to the internal audit function	0.756	5	
Source: Primary data (2014)
3.8	Data Analysis techniques
Data was analyzed both qualitatively and quantitatively.

3.8.1 	Quantitative data analysis
The collected raw data was analyzed (coded and tabulated) using software Statistical Package for Social Sciences (SPSS). The inferential statistical techniques used were Pearson Correlation Coefficient and Regression Analysis. This was a convenient way of converting quality information into percentages for easy presentation. Data was analyzed by extracting meanings out of them and grouping them according to the themes related to the objectives and research questions of the study. The responses from the closed-ended questions were analyzed and the interpretations were drawn from the general frequencies, percentages as they appeared in tables of analysis. This approach was recommended by Gay (2006).
3.8.2 Qualitative data analysis
Qualitative data was analysed using thematic and content analysis. The researcher coded the data, logically presented and interpreted the data

3.9      Measurement of Variables 
The variables of the study were measured on a five point Likert type scale (1- strongly disagree, 2-Disagree, 3-Not sure, 4- Agree and 5-Strongly agree. The choice of this measurement was that each point on the scale carries a numerical score which is used to measure the respondents’ attitude and it is the most frequent used summated scale in the study of social attitude. According to Mugenda (1999) and Amin (2005), the Likert scale is able to measure perception, attitudes, values and behaviours of individuals towards a given phenomenon

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.0	 Introduction
This chapter presents the description of the background variables, data analysis, presentation and interpretation of the findings research question per research question from the study about Internal Auditing and Accountability in local Governments in Uganda, a case study of Gulu Municipality. The findings were presented based on the following research questions:
What is the role of internal auditing in Gulu Municipality?

What is the relationship between internal auditing and accountability in Gulu     Municipality?

What are the challenges of internal audit in relation to accountability in Gulu Municipality?
4.1 Response Rate
Number of Questionnaires 	Frequency	Percentage	
Number of Questionnaires Distributed	75	100%	
Number of Questionnaires Received	73	97%	
Source: Primary data (2014)
A total of 75 questionnaires were distributed making a total of 100% and 73 were returned which was about 97% response rate just within the accepted range of above 80%

4.2	 Description of respondents’ background 
This presents a description of the background of respondents in the following arrangement; category (position) of respondents, gender, age, level of education, functional area, places worked in before joining Gulu Municipality, and working experience at Gulu Municipality.  
4.2 Respondents by category
Respondents according to their job category who participated in the study are summarized in Table 4.2;
Table 4.2: Distribution of respondents according to job category

 Categories	Frequency	Percent	
Town Clerk and Deputies	2	2.7	
Chief Finance Officer	1	1.4	
Accounts officers	1	1.4	
Chief Internal Auditor and other  Internal Auditors	1	1.4	
Other employees of the Municipality	48	65.7	
Support staff	20	27.4	
 Total	73	100.0	
Source: Primary data (2014)
Like in any other institution, the numbers of senior positions such as: Town Clerk and his Deputies are normally small as reflected in table 4.1.1 above: senior administrators only constituted less than 3 %, other employees of the municipality constituted 65.7% while support staff 27.3%.  The majority of workers were in lower level positions like administrative assistants, secretaries, office assistants, drivers and so on. 
4.3 Respondents by gender
Respondents who participated in the study by their gender are summarized in Table 4.2;

Table 4.3: Distribution of respondents according to gender

Gender	Frequency	Percent	
Female	21	28.8	
 Male	52	71.2	
 Total	73	100.0	
Source: Primary data (2014)
Majority of respondents 71.2% were males compared to 28.7% females working with Gulu Municipality. This could have been as a result of having a bigger number of males in the country more educated as compared to females.  In spite of fact that the government of Uganda introduced bonus points for the girl child to join university education, more male students are still enrolled than female students in many universities in Uganda. This to some extent is as a result of culture background in that, many parents especially from rural areas look at their daughters as source of incomes for the family and so end up getting married before completing their studies. This meant that the male are more involved in matters of internal auditing and accountability than their female counterparts

4.4 Respondents by age

Respondents who participated in the study by their age are summarized in Table 4.3

Table 4.4 : Distribution of respondents according to age

Age bracket	Frequency	Percent	
21 - 30 years	33	45.2	
 31 - 40 years	26	35.6	
 41 - 50 years	07	9.6	
 Above 50 years	07	9.6	
Total	73	100.0	
    Source: Primary data (2014)
The majority of respondents were between the age of 21-30 (45.2%) followed by 31-40 (35.6%) and very few workers were above 50 years. This indicated that the people who were more involved and well knowledgeable on matters of internal auditing and accountability in the municipality were 30 years and below. In addition, the Labour statue of Uganda required that civil servants retire at the age of 60 years. Therefore the majority of employees opt to take early retirement.  
4.5 Respondents by their level of education
Respondents who participated in the study by their level of education are summarized in Table 4.5.

Table 4.5: Distribution of respondents according to their highest level of education
Level of education 	Frequency	Percent	
 Masters	4	5.5	
 Postgraduate Diploma	13	17.8	
 Degree	41	56.2	
 Diploma	06	8.2	
 A'Level	05	6.8	
O'Level	04	5.5	
 P.L.E.	00	00	
 Others (Specify)	00	00	
 Total	73	100.0	
     Source: Primary data (2014)
The majority of respondents were degree holders (56.2%) just because today most institutions at least recruit workers who have attained their first degree since they possess more trainability skills than persons without degrees. At least 17.8% had a post graduate Diploma qualification and only 8.2% were Diploma holders. This implied that the majority of the respondents were literate and had the ability to understand the questions posed to them and were able to properly interpret and give appropriate responses to the questions.

 
4.6 Respondents according to their functional areas
Respondents who participated in the study by their functional areas are summarized in Table 4.6;
Table 4.6: Distribution of respondents according to their functional areas

Functional areas	Frequency	Percentage	
Internal Auditing	06	8.2	
 Finance	05	6.8	
 Procurement	05	6.8	
 Planning	01	1.4	
 Environment	01	1.4	
Others	55	75.4	
 Total	73	100.0	
    Source: Primary data (2014)
When it came to the functional areas, the majority of the respondents interviewed were in the internal audit department. In the internal audit unit, they were 8.2%, in finance they were 6.8%, in the procurement unit they were 6.8%, in planning they were 1.4, environment they were 1.4 and other departments the total number was 75.4%.  
 
4.7 Respondents according to their job experience
Respondents who participated in the study according to job experience are summarized in Table 4.7;

Table 4.7: Distribution of respondents according to their job experience

Job experience	Frequency	Percent	
Less than 1 year	11	15	
 1 - 5 years	39	53.4	
 6 - 10 years	11	15	
 11 - 15 years	09	12.3	
 Over 15 years	03	4.1	
 Total	73	100.0	

Source: Primary data (2014)
The majority of the respondents had worked in Gulu Municipality Council for more than one year. This meant that there is job retention in Gulu Municipality, because 85% had at least worked with this institution for more than one year. Only 15% had worked in the municipality for less than a year. 	Therefore given the fact that the majority had been in the Municipality Council for more than a year they were conversant with issues of internal auditing in the Municipality and were able to adequately respond to the questions posed to them by the researcher.

4.8. Accountability and Performance

This presents a description of research question one which was assessed using a variety of questions as per Section B of the Instrument (Appendix A); what is the role of internal auditing in local governments? This research question was conceptualized using seven questions which required each respondent to do self-rating on accountability.  Responses were based on Likert scale ranging from one which represented strongly disagrees to 
five which reflected strongly agree, although these were thereafter categorized into agree and disagree sections. The resulting summary statistics are in Table 4.8;
Table 4.8: Summary statistics on accountability and performance in local governments
Questions                                                                            Responses	Frequency	percent	
Internal auditing has helped to increase management efficiency in Gulu Municipality 
 
 	Strongly Disagree	53	76%	
	Disagree	03	04%	
	Agree	10	14%	
	Strongly Agree	04	06%	
Internal auditing has helps the municipality  to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance process 	Strongly Disagree	44	60.3%	
	Disagree	09	12.3%	
	Agree	10	13.6%	
	Strongly Agree	10	13.6%	
Internal auditors always  review the municipality’s financial statement 
 
 	Strongly Disagree	12	16.4%	
	Disagree	12	16.4%	
	Agree	33	45.2%	
	Strongly Agree	15	20.5%	
The internal audit unit evaluates controls and advises administrators at all levels 
 
 	Strongly Disagree	13	17.8%	
	Disagree	18	24.6%	
	Agree	12	16.4%	
	Strongly Agree	30	41.0%	
The internal audit unit evaluates financial risk 
 
 	Strongly Disagree	10	13.6%	
	Disagree	09	12.3%	
	Agree	10	13.6%	
	Strongly Agree	44	60.2%	
The internal audit unit analyses operations and confirms information

 	Strongly Disagree	39	53.4%	
	Disagree	15	20.5%	
	Agree	15	20.5%	
	Strongly Agree	04	5.4%	
The head internal audit reviews compliance 
 
 	Strongly Disagree	12	16.4%	
	Disagree	02	03%	
	Agree	40	55.7%	
	Strongly Agree	19	26.0%	
Source: Primary data (2014)
Most of the respondents (76%) strongly disagreed with the question stated that internal auditing has not helped to increase management efficiency in Gulu Municipality and only ( 14%) agreed that  internal auditing has helped to increase management efficiency in Gulu Municipality. 06% strongly agreed and 4 % disagreed with the question. This indicated that management efficiency has nothing to do with internal auditing.
  However, the Chairman Local Council V said 
“If it was not to be for the internal audit department, we would lose money every day but internal auditing has saved the district and the government at large from loosing large amounts of money”  

Again many respondents (60.3%) strongly disagreed with the question that stated that internal auditing is not helping the municipality to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance process and 12.3% disagreed, 13.6 % agreed and 13.6 % strongly agreed. This indicated that internal auditing has helped to increase effectiveness in the running of the municipality affairs. A key informant responded to the above question by asserting that
 “Given the fact that the town clerk and another official were arrested recently over embezzling huge sums of money can we really say that the internal auditing department is helping us, I really doubt” 

When the researcher went on ground to verify the response he was told by the Senior accountant that 
“really without the audit department we would not be effective in matters of handling finances. It means the District would be spending money any how” 

When asked whether the internal auditors normally review the municipality financial statement, 16.4% strongly disagreed, 16.4% disagreed, 45.2% agreed and 20.5 % strongly agreed. This means that internal auditing is of paramount significance when it comes to matters of financial management in the municipality.

 When asked whether the internal audit unit analyses operations and confirms information, 53.4 % strongly disagreed with the question and only 20.5 % disagreed with the question. 20.5% felt that the head internal audit reviews compliance, and 5.4% strongly agreed with the question. This indicated that the internal audit department does not analyse operations and confirms information some times.
The respondents were asked whether internal audit unit evaluates controls and advises administrators at all levels. 17.8 % strongly disagreed and 24.6 % disagreed with the question and 16.4% agreed and 41 % strongly agreed with the question. This meant that there is evaluation of control in Gulu Municipality.  

Whether the evaluation of financial risk is the role of the audit unit, 13.6 % strongly disagreed with the question, 12.3 % disagreed with the question, 13.6 % agreed with the question and 60.3 % strongly agreed. This implied that evaluation of financial risk is within the scope of work of the audit department. 
Furthermore, in connection to the above question a respondent in the internal audit department during interviews said
“The internal audit unit has the responsibility to establish internal control and overall arrangements for good governance so that its activities are conducted in an efficient and orderly manner. Internal control in our municipality comprises of the whole system of controls and methods, both financial and otherwise, which are established by management to safeguard its assets, ensure reliability of records, promoting operational efficiency and monitoring adherence to policies and directives”

Furthermore, in connection to the above research question a respondent at senior administrative level (population officer) during interviews said
“In dealing with the public, ethical and professional considerations are of prime importance. The general rule is always that the auditors have to refer any approach by the public with much interest and attention. The auditors are always careful with the guidelines, particularly as regards the need to keep the authorities informed and the limitations on the type of information which may be disclosed. Ideally, LGPAC proceedings are always open to the public and their reports are published”.

In connection to the above research question a respondent the Deputy CAO during interviews said
“Internal Auditors work closely with senior administrators like the CAO to review operations then report their findings. The internal auditors are well versed with the strategic objectives of the institution, so they have a clear understanding of how the operations of any given part of the institution fit into the bigger picture. Internal Auditors always identify key activities and relevant risk factors and assess their significance. Changing trends and economic conditions sometimes impact on the way the internal auditor assesses risk. The techniques of internal auditing have changed from a reactive and control based form to a more proactive and risk based approach. This has enabled the internal auditor to anticipate possible future concerns and opportunities as well as identifying current issues”.

Furthermore, during interviews the Chief Finance Officer said

“Compliance review ensures that the municipality is adhering to rules, regulations, laws, codes of practice, guidelines and principles as they apply individually and collectively to all parts of their municipality. Internal audit units do provide an independent view on the municipality’s governance, risk management and control processes. Internal audit units, the adequacy of control design to ensure that risks are effectively managed, and then test operation of key controls to ensure they are operating as intended and therefore are effective in managing the municipality’s risk.”.

Verification of research hypothesis (One): There is a significant relationship between accountability and performance?
To verify this research question, correlation was done where by all responses for each variable; accountability (A) and performance (P)were aggregated into a single index (A)  and (P)  respectively and then Pearson’s correlation Co-efficient (r) technique was used to assess the nature and magnitude of the relationship; using Pearson’s correlation Co-efficient (r)

Table 4.9 gives Pearson’s correlation Coefficient for the two variables which include; internal auditing (IA) and accountability (A)

Table 4.9:  Pearson’s Correlation Co-efficient between accountability and performance

Correlations

1

.725

**

.

.000

73

73

.725

**

1

.000

.

73

73

Pearson Correlation

Sig. (2-tailed)

N

Pearson Correlation

Sig. (2-tailed)

N

Accountability

Performance

Accountability

Performance

Correlation is significant at the 0.01 level (2-tailed).

**. 

Table 4.9 shows that, Pearson’s Correlation Coefficient  for accountability and performance of Gulu Municipality was r = 0.725**, with probability value (p = 0.000) that is less than α = 0.01 level of significance showing a strong relationship between accountability (A) and performance (P) at the one percent level of significance.  Therefore, performance (P) is significantly influenced by accountability (A). The earlier postulated hypothesis in chapter one is therefore upheld.
Regression Analysis
Further analysis using regression analysis technique was made to check the level of contrcibution of accountability to performance and results are shown in the table 4.9 below

Table 4.10:  Regression analyzing the relationship between the accountability
            and performance

Model Summary

.711

a

.505

.495

.34590

Model

1

R

R Square

Adjusted

R Square

Std. Error of

the Estimate

Predictors: (Constant), Accountability

a. 

Table 4.10 provides the R and R2 value. The R value is 0.711, which represents the simple correlation and, therefore, indicates a moderate degree of correlation. The R2 value indicates how much of the dependent variable, performance can be explained by the independent variable accountability. In this case, 0.505% can be explained, which is very large. The standard error of the estimate is .34590 and the adjusted R square value is 0.495. Therefore the square value of .495 implied that accountability predicts performance; in other words performance is dependent on accountability by 49.5%
In Conclusion, Most of the respondents (78%) disagreed by stating that internal auditing has helped to increase management efficiency in Gulu Municipality and only (20%) said that internal auditing has helped to increase management efficiency in Gulu Municipality. This implied that increasing management efficiency is not within the scope of the work of the internal audit department.   Again, the majority of the respondents felt that internal auditing is helping the municipality to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance process and just only 14% disagreed. When asked whether internal auditing provides Local Government Public Accounts Committees with copies of quarterly internal Audit report the majority agreed with the question. A biggest number of respondents were of the view that internal auditors always review the municipality’s financial statement. The majority felt that the internal audit unit evaluates controls and advises administrators at all levels. The majority were positive about the role played by the internal audit unit in evaluating risk. When asked whether the internal audit unit analyses operations and confirms information, the majority disagreed with the question and only 26% agreed with the question. 81% felt that the head internal audit reviews compliance, and 19 had a negative view about it. 

Research question two: What is the relationship between internal auditing and performance in Gulu Municipality?

This Section gives a description of research question two which was assessed using a variety of questions as per Section A of the Instrument (Appendix A); what is the relationship between internal auditing and accountability in local governments? This research question was conceptualized using six questions which required each respondent to do self-rating on internal auditing and accountability. Responses were based on Likert scale ranging from one which represented strongly disagree to five which reflected strongly agree, although these were thereafter categorized into agree and disagree sections. The resulting summary statistics are in Table 4.11
Table 4.11: Summary statistics on respondents’ self-rating on internal auditing 
Questions                                                                        Responses	Frequency	Percent 	
Internal Auditors have enhanced and strengthened accountability 
 
 	Strongly Disagree	39	53.4%	
	Disagree	15	20.5%	
	Agree	15	20.5%	
	Strongly Agree	04	5.4%	
The internal  auditing process helps to crack on people who mismanage funds 
 	Strongly Disagree	03	4.1 %	
	Disagree	24	32.8%	
	Agree	16	21.8%	
	Strongly Agree	30	41.0%	
The financial reports are analyzed and reviewed 	Strongly Disagree	12	16.4%	
	Disagree	12	16.4%	
	Agree	33	45.2%	
	Strongly Agree	15	20.5%	
The audit function has helped to improve management	Strongly Disagree	10	13.6 %	
	Disagree	09	12.3 %	
	Agree	10	13.6%	
	Strongly Agree	44	60.3 %	
The internal audit function has exposed fraud in the district	Strongly Disagree	39	53.4%	
	Disagree	15	20.5%	
	Agree	15	20.5%	
	Strongly Agree	04	5.4%	
The District avails its financial data for auditing	Strongly Disagree	12	16.4%	
	Disagree	02	3.0 %	
	Agree	40	55.7%	
	Strongly Agree	19	26.0%	
Source: Primary data (2014)

The majority of respondents (53.4 %) which is more than 50% strongly disagreed, 20.5% disagreed, 20.5% agreed and 5.4% strongly disagreed with the question that stated that internal auditors have enhanced and strengthened accountability. This implied that enhancing accountability is not a key role of internal audit units in Gulu Municipality. 
 In contradiction of what was stated by the majority, the CAO stated 
“Our auditing department is one of the most active in northern Uganda, so when someone states a contrary statement I just wonder” However, in his analysis of the accountability, the CAO said that “Gulu municipality always strives to achieve its goals within the time laid down but only that sometimes the district is let down by the scarcity of resources”. 

When the researcher went on ground to verify the statement, he found that certain issues are left unattended to due to limited resources or due to failure to give orders”.
When the respondents were asked whether the auditing process helps to crack on people who mismanage funds, 4.1% strongly disagreed, 32.8% disagreed, 21.8 agreed and 41% strongly agreed with the question. This implied that the internal audit in Gulu Municipality department plays a vital role in cracking on thieves in the local government. 

In connection to the above question, Senior Auditor said 
“It is rare that the different departments can conceal information from the internal audit department, for us we always access the available information. There is a principle to disclose all the information got/acquired” 

This implied that there is disclosure and no concealment of information in the Gulu Municipality council. 
When asked whether the financial reports are analyzed and reviewed. The majority, 16.4% strongly disagreed, 16.4% disagreed, 45.2% agreed and 20.5% strongly agreed. This implied that the reviewing financial statement is within the scope of work of internal auditors.

 When it came to the question that stated that the audit function has helped to improve management 13.6 %   strongly disagreed, 12.3 % disagreed, 13.6 % agreed and 60.3% % strongly agreed with the question. This implied that auditing leads to management efficiency.

When asked whether the internal audit function has exposed fraud in the district, 53.4% strongly disagreed, 20.5% disagreed, 20.5% agreed and 5.4 strongly agreed with the question. This meant that internal audit function has failed to detect and expose fraud among the workers of the Municipality.

 When asked whether the district avails its financial data for auditing, 55.7% agreed, 26% strongly agreed, 3% disagreed and 16.4 % strongly disagreed with the question. This implied that there is a cordial relationship between other departments and the internal audit department.  Indeed when the researcher interviewed the CAO,
 He found out that each and every employee is always required to disclose information for auditing purpose. The researcher noted from the interview that disclosure of information is now and part and parcel of public management in Uganda. Disclosure has helped the public sector in the area of performance management given the fact that the government is putting emphasis on Management By Objective (MBO).

The Chief Accounting Officer said 
“in the past we have had issues with accountability for example the officials who were in charge of the one of the district projects in 2011 forged documents and opened bank accounts where they diverted money meant for the projects. The officials created fictitious community projects with names similar to those that were meant to benefit from the funds. However I can tell that such cases of embezzlement are rare in Gulu”

 However the researcher confirmed this response with the CAO, he insisted that it was due to laxity that the funds were embezzled but added that that would not happen in Gulu Municipality Council again.

Table 4.12: Summary statistics on respondents’ self-rating on performance
Question	Response	Frequency	Percentage	
The municipality employees are accountable for their actions	Strongly Disagree	13	17.8%	
	Disagree	18	24.6%	
	Agree	12	16.4%	
	Strongly Agree	30	41.0%	
The consequences of failure to perform are grave	Strongly Disagree	12	16.4%	
	Disagree	02	03%	
	Agree	40	55.7%	
	Strongly Agree	19	26.0%	
The municipality employees can defend themselves against accusations of malpractice of any kind whenever they behave in an ethical fashion inconsistent with professional standards.	Strongly Disagree	30	41.0%	
	Disagree	18	24.6%	
	Agree	12	16.4%	
	Strongly Agree	13	17.8%	
Documentation helps in defending one's actions and makes a person's professional actions "transparent" or easily assessed.

	Strongly Disagree	10	13.6%	
	Disagree	09	12.3%	
	Agree	10	13.6%	
	Strongly Agree	44	60.3%	
Municipality employees strive to incorporate the highest values into their work and aspire to do their work in the best possible way.	Strongly Disagree	39	53.4%	
	Disagree	15	20.5%	
	Agree	15	20.5%	
	Strongly Agree	04	5.4%	
I have the responsibility to be honest, and to be disciplined and to be authentic.	Strongly Disagree	30	41.0%	
	Disagree	18	24.6%	
	Agree	12	16.4%	
	Strongly Agree	13	17.8%	
Source: Primary data (2014)
When asked whether the municipality employees are accountable for their actions, 17.8% strongly disagreed, 24.6% disagreed, 16.4 agreed and 41% strongly agreed with the question. This implied that the objective of auditing is to hold employees accountable for their actions. The Town Clerk stated that 
“it his responsibility to account and just like any other civil servant they too are responsible for their own actions”. The researcher noted from the interviews that individual responsibility counts more when it comes to gross inefficiency or abuse of office

The researcher went on ground to verify this response and the senior accounting officer stated that 
“every employee is responsible for his actions, no one can claim that is out of the vicinity of the law”.
As pointed out above, the researcher noted from the interviews that individual responsibility counts more when it comes to gross inefficiency or abuse of office

  A key informant said in addition 
“we normally have meetings and when you are acting contrary you are normally pinned for that kind of behavior. Sometimes, people keep minutes of a meeting in order to keep track of next steps and who is accountable for them, but that only works if people read the minutes. In my experience, that's rare”. 

This meant that accountability is a key aspect in the municipality
In support of this view the CAO stated that 
“all the workers here are dedicated and most times they don’t let their family affairs interfere with their work. Imagine that you are accountable for picking up your two-year-old at daycare. There's no way you are going to say, ' I forgot' or 'Something came up.' It may be true that you can't get there because of an emergency or because you have to attend to something else, but because you are accountable, you find another way to get the job done. Maybe you call your wife or your mother-in-law to do the pickup probably then you close the loop and make sure that the pickup was successful."

 This implied that there is a lot of dedication to duty in the municipality. 

When asked whether the consequences of failure to perform are grave, 16.4% strongly disagreed with the question and 03% disagreed, 55.7% agreed and 26.0% strongly agreed. This implied that auditing is promoting accountability in one way or the other.  Further more about the same question the Deputy CAO stated that 
“Performance is now part and parcel of our work”. This meant that the local government is putting much emphasis on performance management currently.
The District planner stated that
 “for me am not bothered It's the CAO's job to keep the accountability decisions alive”

41% were of the view that the municipality employees can defend themselves against accusations of malpractice of any kind whenever they behave in an ethical fashion inconsistent with professional standards. This indicated that internal auditing helps to make the perpetuators accountable for their actions since evidence will be on record. The remaining respondents 24% disagreed with the question, 16.4% agreed and 17.8% strongly agreed with the question.

Furthermore, 60.3% strongly agreed with the question that stated that documentation helps in defending one's actions and makes a person's professional actions "transparent" or easily assessed. 13.6% agreed, 12.3% disagreed and 13.6% strongly disagreed with the question. This indicated that internal auditors provide managers with reasonable assurance that the financial and operating data is accurate and reliable. When asked whether Municipality employees strive to incorporate the highest values into their work and aspire to do their work in the best possible way, 53.4% strongly disagreed , 20.5% disagreed, 20.5% agreed and 5.4% strongly agreed. This implied that accountability do not help to shape civil servants and bring them to book. 

A respondent in support of this view said 
“We guard our jobs jealously the same way the fowl guards her young ones jealously so being honest is a prerequisite”. 

A key informant during interviews said
“Always when one of us acts contrary to the law, it is rare that he will escape from being implicated? Those who have been victims have tasted the wrath of their conduct. Working with the Municipality calls for a lot of care and execution of due diligence for example recently the Town Clerk and the Chief Finance Officer were detained at Gulu Central Police Station for some hours on the orders of the Local Government Public Accounts Committee of Parliament over their failure to account for over Shs1.3b the municipality received from central government” 

The information officer during interviews said
“Accountability is both an instrument and a goal in the local government today. What started as an instrument to enhance the effectiveness and efficiency of public governance, has gradually become a goal in itself. Nowadays, accountability has become a good thing of which it seems we cannot have enough. As a concept in this municipality, accountability is rather elusive. It has become a hurrah-word like “learning”, “irresponsibility” or “solidarity” to which no one can object. In Gulu municipality, it is one of those evocative political words that can be used to patch up a rambling argument, to evoke an image of trustworthiness, fidelity and justice or to hold critics at bay”

In addition to what was stated above, the information officer contradicted his statement above when asked by the researcher about the arrival and departure time of the officers in the audit department, he said
‘My dear there is no specific reporting time for auditors in this building, if you are looking  for any of us to interview better call and find out when someone will be in office other than waiting for people who may not even come. This is local government where any of us can arrive and depart at any time as he or she pleases’.

This meant that they are not accountable to any one and cannot be reprimanded for their action that is why they depart and arrive for work as they please.

Verification of research hypothesis (Two): There is a significant relationship between internal auditing and performance?
To verify this research question, correlation was done where by all responses for each variable; internal auditing (IA) and performance (P)were aggregated into a single index (IA)  and (P)  respectively and then Pearson’s correlation Co-efficient (r) technique was used to assess the nature and magnitude of the relationship; using Pearson’s correlation Co-efficient (r)

Table 4.13 gives Pearson’s correlation Coefficient for the two variables which include; internal auditing (IA) and accountability (A)

Table 4.13:  Pearson’s Correlation Co-efficient between internal auditing and performance

Correlations

1

.444

**

.

.000

73

73

.444

**

1

.000

.

73

73

Pearson Correlation

Sig. (2-tailed)

N

Pearson Correlation

Sig. (2-tailed)

N

Internal Auditing

Performance

Internal auditing

Performance

Correlation is significant at the 0.01 level (2-tailed).

**. 

Table 4.13  shows that, Pearson’s Correlation Coefficient for internal auditing and performance of Gulu Municipality was r = 0.444**, with probability value (p = 0.000) that is less than α = 0.01 level of significance showing a strong relationship between internal auditing (IA) and performance (P) at the one percent level of significance.  Therefore, performance (P) is significantly influenced by internal auditing (IA). The earlier postulated hypothesis in chapter one is therefore upheld.
Regression Analysis
Further analysis using regression analysis technique was made to check the level of contribution of internal auditing to performance and results are shown in the table 4.13 below
Table 4.13:  Regression analyzing the relationship between the internal auditing
            and performance

Model Summary

.620

a

.384

.615

.62604

Model

1

R

R Square

Adjusted

R Square

Std. Error of

the Estimate

Predictors: (Constant), Internal auditing

a. 

Table 4.13 provides the R and R2 value. The R value is 0.620, which represents the simple correlation and, therefore, indicates a moderate degree of correlation. The R2 value indicates how much of the dependent variable, performance can be explained by the independent variable internal auditing. In this case, 0.384% can be explained, which is very large. The standard error of the estimate is .62604 and the adjusted R square value is 0.615. Therefore the square value of .615 implied that internal auditing predicts performance; in other words performance is dependent on internal auditing by 61.5%

 Research question three: What are the challenges of the internal audit function in relation to performance in Gulu Municipality? 

This Section gives a description of research question one which was assessed using a variety of questions as per Section A of the Instrument (Appendix A); what are the challenges to the internal audit function in Gulu Municipality? This research question was conceptualized using eight questions which required each respondent to do self-rating on the challenges of internal audit function in local governments. Responses were based on Likert scale ranging from one which represented strongly disagree to five which reflected strongly agree, although these were thereafter categorized into agree and disagree sections. The resulting summary statistics are in Table 4.14;
Table 4.14: Summary statistics on respondents’ self-rating on challenges of internal audit function in relation to performance in Gulu Municipality?

Question	Response	Frequency	Percentage	
The Gulu Municipality internal Audit unit does not have adequate resources to do 100% audit of every transaction within in the Municipality	Strongly Disagree	13	17.8%	
	Disagree	18	24.6%	
	Agree	12	16.4%	
	Strongly Agree	30	41.0%	
Procedures are followed by the internal audit unit	Strongly Disagree	10	13.6%	
	Disagree	09	12.3 %	
	Agree	10	13.6%	
	Strongly Agree	44	60.3 %	
Audit reports always have so many cases of non-conformities	Strongly Disagree	39	53.4%	
	Disagree	15	20.5%	
	Agree	15	20.5%	
	Strongly Agree	04	5.4%	
The internal audit process is always carried out with management support	Strongly Disagree	12	16.4%	
	Disagree	02	03%	
	Agree	40	55.7%	
	Strongly Agree	19	26.0%	
There is always enough time for audit preparations and writing up final results	Strongly Disagree	13	17.8%	
	Disagree	18	24.6%	
	Agree	12	16.4%	
	Strongly Agree	30	41.0%	
The administration takes note of the cost of audit observations and the greater cost of not responding to them.	Strongly Disagree	10	13.6%	
	Disagree	09	12.3%	
	Agree	10	13.6%	
	Strongly Agree	44	60.3%	
The Internal audit department is independent and practices its work without any undue influence from some one	Strongly Disagree	39	53.4%	
	Disagree	15	20.5%	
	Agree	15	20.5%	
	Strongly Agree	04	5.4%	
The internal audit unit has the necessary skills are vital in helping them accomplish their tasks	Strongly Disagree	12	16.4%	
	Disagree	02	03%	
	Agree	40	55.7%	
	Strongly Agree	19	26.0%	

Source: Primary data (2014)

When asked whether the Gulu Municipality internal Audit unit has adequate resources to do 100% audit of every transaction, 17.8% respondents strongly disagreed with the question, 24.6% disagreed, 16.4% agreed and 41% strongly agreed with the question. This implied that in order for the internal audit department to effectively influence accountability, the resources should be available. The key informant in response said 
“the limited resources at our disposal hamper some of our services for example sometimes we want to do certain duties but because of lack of resources we end up postponing them” 
 
However, when the respondent in the finance department asked further said, 

‘Sometimes I get disgusted with what this internal audit thing is all about. It puts us on pressure. The Chief Finance Officer sometimes cannot act on his own because the internal audit unit the watch dog may implicate him. Even a simple issue which requires him to act as an individual he has to refer to the CAO for endorsement fear of the watch dog. Really internal audit makes some of our active department work on tension and the end result is mistakes. This internal audit thing does not make sense to some of us most especially when the people in it begin pushing some of so hard. 

This implied that not every person in the municipality pleased with the role of the internal audit department

The majority of the respondents which is 13.6 % strongly disagreed, 12.3 % disagreed, 13.6% agreed and 60.3 % strongly agreed with the question. This implied that procedure is a responsibility of the internal audit unit to observe and therefore it has to maintain the internal control system and to ensure that the organisation's resources are properly applied in the manner and on the activities intended. This includes responsibility for the prevention and detection of fraud and other illegal acts.

When asked whether the audit reports always have so many cases of non-conformities, 53.4% strongly disagreed, 20.5% disagreed, 20.5% agreed and 5.4% strongly agreed. This indicated that the internal audit always does a thorough job before submitting the reports. This is why the culprits are always brought to book thereafter. Auditor who discovers evidence of, or suspects malpractice always affirm so in their report with evidence, or reasonable suspicions to the appropriate level of management. It is a management responsibility to determine what further action to be taken.
 
  Most of the respondents (55.7%) agreed, 26% strongly agreed, 16.4% strongly disagreed, and 03% disagreed with the question that stated that the internal audit process is always carried out with management support. The CAO in support of this view said

 “We try to give moral, social and financial support to the units within the Local government”. On the contrary the principal accountant said “they only give us what was budgeted for and not smoothly but after repeated reminders and begging” 

This implied that support is given to the units when it is needed. 

Furthermore 17.8% strongly disagreed, 24.6% disagreed, 16.4% agreed and 41% strongly agreed by stating that there is always enough time for audit preparations and writing up final results.
The personnel confirmed this response and said
 “Yes we do allow time for thorough preparations of the work. We normally have a year planner so we don’t hijack any department “This implied that all activities that go on at the district in any department are planned for”. 

 When asked whether the administration takes note of the cost of audit observations and the greater cost of not responding to them,  13.6% of the respondents strongly disagreed, 12.3 % disagreed, 13.6% agreed and 60.3 % strongly agreed with the question that stated that the Internal audit unit is independent and practices its work without any undue influence from someone. This indicated internal audit department is  free from any conflict of interest arising either from professional or personal relationships or from pecuniary or other interests in an organisation or activity which is subject to audit.  An Auditor within the audit unit said 
“The purpose of an audit is to enhance the credibility of financial statements by providing written reasonable assurance from an independent source that they present a true and fair view in accordance with an accounting standard. This objective will not be met if users of the audit report believe that the auditors may have been influenced by other parties, more specifically company managers/directors or by conflicting interests (e.g. if the auditors owns shares in the company to be audited). 

The majority of the respondents that is 53.4% strongly disagreed, 20.5% disagreed, 20.5% agreed and 5.4% strongly agreed with the question that stated that   the internal audit department is independent and practices its work without any undue influence from some one
Most of the respondents that is 16.4% strongly disagreed, 03% disagreed, 55.7% agreed and 26.0% strongly agreed with the question that stated that the internal audit unit has the necessary skills are vital in helping them accomplish their tasks.

 “the local government internal audit unit does not have adequate resources to do a 100 audit of every transaction. Therefore it is always the task of the head internal audit to decide how best to determine audit priorities and where to allocate his relative scarce resources”

Furthermore in connection to the above question a key informant said
“Independence is a must in auditing. In Gulu Municipality, the internal auditors have the freedom to select the areas of audit he/she wishes to investigate and to report there on to all levels of the council. In Gulu municipality, internal auditors have at all times had direct access to all departmental heads, the accounting officer, the council and the institutions and the records and information. The head internal audit has a right to report without editing under his name. The internal audit unit is completely independent of all financial systems operating within the council”

A respondent at a senior administrative level said

“The head of internal audit in Gulu has the right of reporting any aspect of financial work including that of the finance department”
This implied that disclosure of information is very important when it comes to the public service

A key informant during interviews said 
“The municipal administration expects internal audits department to provide additional input to management in form of monitoring and oversight; ensuring compliance monitoring and enforcement of essential requirements. To address the issue of weaknesses in oversight programs, the department needs to establish the minimum standards for monitoring compliance and risk management programs. These standards should address compliance monitoring activities; technical assistance; enforcement; and documentation, analysis, and reporting of results. Stiff penalties for non-compliance have prompted employers to take a proactive approach to reduce the risks of fraud within their organizations. With an increase in awareness and interest in corporate governance, the audit function faces rise in the number of special requests”.

In conclusion, in an attempt to answer this research question, respondents were asked many questions and their feedback indicated that; first of all, when asked whether the Local Government internal Audit unit has adequate resources to audit every transaction were negative. Many felt that little is allocated to the internal audit department during the budget exercise to help it in its work.  The issue of procedure also created much dust, procedure is at times not followed by the internal audit unit. There was also a feeling that audit reports always have so many cases of non-conformities and these are normally noticed with time. Most of the respondents were of the view that the internal audit process is always carried out with management support. However the researcher noted that enough time is allocated to audit preparations and writing up final results. The findings revealed that the audit unit is independent and practices its work without any undue influence from someone. The reports produced by the internal audit are taken by the management as final. They serve as a basis for detection of irregularities within the council. The findings also revealed that the internal audit unit staff has the necessary skills that are vital in helping its staff accomplish their tasks. It was found out that the lowest level of education of an auditor in the audit department was a diploma.

CHAPTER FIVE

SUMMARY, DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction

This chapter focuses on the discussion of the results of the study which is presented in arrangement of research question by research question, conclusions drawn from the study findings and recommendations based on the conclusions.
5.2 Summary of Key Findings
The study established that there was a positive significant relationship between accountability and performance of Gulu Municipality and lastly it was further observed that internal auditing and performance of Gulu Municipality are significantly positively related.
5.2.1 Accountability and Performance of Gulu Municipality
The Pearson correlation coefficient was carried out results showed that the correlation coefficient was 0.711(**) and its significance level 0.009. This implied that accountability influences performance in Gulu Municipality. Therefore,   the results indicated that there is a positive significant relationship between accountability and performance in Gulu Municipality. Therefore the alternative hypothesis that was earlier postulated was upheld (H1 upheld).
Regression analysis was also carried out and study findings revealed an R square of .505 indicating that accountability and  influence performance of performance in Gulu Municipality; it implied that the performance of Gulu Municipality is dependent on accountability.
5.2.2 Internal Auditing and Performance of Gulu Municipality
The Pearson correlation coefficient was carried out results showed that the correlation coefficient was 0.444(**) and its significance level 0.009. This implied that internal auditing influences performance in Gulu Municipality. Therefore,   the results indicated that there is a positive significant relationship between internal auditing and performance in Gulu Municipality. Therefore the alternative hypothesis that was earlier postulated was upheld (H2 upheld).
Regression analysis was also carried out and study findings revealed an R square of .615 indicating that internal auditing and  influence performance of performance in Gulu Municipality; it implied that the performance of Gulu Municipality is dependent on internal auditing.
5.2.3 Challenges of the internal audit function in relation to accountability in Gulu Municipality? 

Many felt that little is allocated to the internal audit department during the budget exercise to help it in its work.  The issue of procedure also created much dust, procedure is at times not followed by the internal audit unit. There was also a feeling that audit reports always have so many cases of non-conformities and these are normally noticed with time. Most of the respondents were of the view that the internal audit process is always carried out with management support. However the researcher noted that enough time is allocated to audit preparations and writing up final results. The findings revealed that the audit unit is independent and practices its work without any undue influence from someone. The reports produced by the internal audit are taken by the management as final. They serve as a basis for detection of irregularities within the council. The findings also revealed that the internal audit unit staff has the necessary skills that are vital in helping its staff accomplish their tasks. It was found out that the lowest level of education of an auditor in the audit department was a diploma.

5.3 Discussion

This subsection looks at the discussion of the findings research question by research question;

5.3.1 Research question one: Accountability and performance in Gulu Municipality

To answer this research question, the researcher asked respondents several questions and study findings indicated that there is a positive significant relationship between accountability and performance in Gulu Municipality. This is inconsistent with Munene (2009) auditor’s work includes assessing the tone and risk management culture of the organization as well as evaluating and reporting on the effectiveness and efficiency of the implementation of management policies. In other words, internal auditing increases management efficiency. However, some had a mixed view about the same question, acknowledging the fact that internal auditing had helped to increase management efficiency in Gulu Municipality. This is consistent with Lucas (2004) who stated that auditors work closely with line managers to review operations then report their findings. The internal auditors are well versed in most cases with the strategic objectives of the organization, so that they have a clear understanding of how the operations of any given part of the organization fit into the bigger picture.
Findings revealed that the majority of the respondents strongly agreed with the question which stated that internal auditing is helping the municipality to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance process. The majority of the respondents gave an example of the town clerk and another official who were arrested recently over embezzling huge sums of money as a reference point on how the internal auditing department is helping the municipality. Some acknowledged the work of the internal audit department by agreeing that really without the audit department the Municipality Council would not be effective in handling finances. These findings observed are in line with Okumu (2004) who asserts that auditing provides an independent view on the organization’s governance, risk management and control processes. Auditors review, the adequacy of control design to ensure that risks are effectively managed, and then test operation of key controls to ensure they are operating as intended and therefore are effective in managing the organization’s risk. 
The above findings are consistent with Gupta (2005) who asserts that internal auditors should take a proactive role in exploring how the work of internal and external auditors can be coordinated and productively utilized. A full understanding of respective professional responsibilities and concerns can help build a mutually beneficial relationship. Internal auditors are concerned with an organization's financial statements and the accounting information system and controls that affect the statements. The internal auditor's professional responsibilities in Uganda emanate primarily from the tasks one has to accomplish at work.

Furthermore, findings from the interviews revealed that internal auditing has helped to increase management efficiency in Gulu Municipality. From the interviews, most respondents stated that internal auditing has saved the district and the government at large from loosing large amounts of money. This is in line with Mulumba (2005) who asserts that   internal auditing has helped to increase management efficiency. The internal audit unit has the responsibility to establish internal control and overall arrangements for good governance so that its activities are conducted in an efficient and orderly manner. The findings are in line with the observations of Lumala (2006) who asserted that internal auditing gives an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes."

This is consistent with the agency theory which states that the principals will always be interested in the outcomes generated by their agents. Agency theory demonstrates that accounting and auditing have an important task in providing quality output. The demand for auditing is sourced in the need to have some means of independent verification to reduce record keeping errors, asset misappropriation, and fraud within business and business organization. The findings above were also observed by Lucas (2006) who stated that by providing assurance on the risk management, control, and governance processes within an organization, internal auditing is one of the key cornerstones of effective organizational governance.

Findings revealed that the evaluation of financial risk is the role of the audit. This is consistent with Munene (2009) who asserts that internal audit activity has to verify the adequacy of the risk management process that is whether management has planned and designed it in such a manner that it provides reasonable assurance that the organization’s objectives and goals will be achieved. Risk management is a key responsibility of management. However, internal auditors acting in a consulting role can assist management in identifying, evaluating and implementing risk management methodologies and controls to address those risks. The internal audit unit has the responsibility to establish internal control and overall arrangements for good governance so that its activities are conducted in an efficient and orderly manner. Internal control in Gulu municipality comprises of the whole system of controls and methods, both financial and otherwise, which are established by the District to safeguard its assets, ensure reliability of records, promoting operational efficiency and monitoring adherence to policies and directives.

The study revealed that internal auditors identify key activities and relevant risk factors and assess their significance. This enables the internal auditor to anticipate possible future concerns and opportunities as well as identifying current issues.  This is in line with Langol  & Onono (2011) who assert that internal auditors identify key activities and relevant risk factors and assess their significance. Changing trends and business/economic conditions impact the way the internal auditor assesses risk. The techniques of internal auditing have changed from a reactive and control based form to a more proactive and risk based approach. This enables the internal auditor to anticipate possible future concerns and opportunities as well as identifying current issues. Internal Auditors work closely with line managers to review operations then report their findings. The internal auditor must be well versed in the strategic objectives of the organization, so that they have a clear understanding of how the operations of any given part of the organization fit into the bigger picture. Internal Auditor provides an independent view on the organization’s governance, risk management and control processes. They review the adequacy of control design to ensure that risks are effectively managed, and then test operation of key controls to ensure they are operating as intended and therefore are effective in managing the organization’s risk.

The majority agreed that the internal auditors normally review the municipality financial statement. The above finding was also reached at by Millichamp (2002) who stated that auditors deal with issues that are fundamentally important to the survival and prosperity of any organization. Unlike external auditors, they look beyond financial risks and statements to consider wider issues such as the organization’s reputation, growth, its impact on the environment and the way it treats its employees. The majority of the respondents agreed that the internal audit unit evaluates controls and advises administrators. This is in line with Mulumba (2005) who states that the internal auditor occupies a unique position, he or she is employed by the management but is also expected to review the conduct of management which can create significant tension since the internal auditor's independence from management is necessary for the auditor to objectively assess the management's action, but the internal auditor's dependence on the management for employment is very clear. The internal audit unit has the responsibility to establish internal control and overall arrangements for good governance so that its activities are conducted in an efficient and orderly manner. Internal control in Gulu municipality comprises of the whole system of controls and methods, both financial and otherwise, which are established by management to safeguard its assets, ensure reliability of records, promoting operational efficiency and monitoring adherence to policies and directives.
This is in line with Millichamp (2002) internal auditing has the responsibility to establish internal control and overall arrangements for good governance so that its activities are conducted in an efficient and orderly manner.

The study observed that the internal Auditors work closely with senior administrators like the Town Clerk to review operations and then report their findings. The internal auditors are well versed with the strategic objectives of the Gulu municipality, so they have a clear understanding of how the operations of any given part of the Gulu municipality fit into the bigger picture. Internal Auditors always identify key activities and relevant risk factors and assess their significance. Changing trends and economic conditions sometimes impact on the way the internal auditor assesses risk. The techniques of internal auditing have changed from a reactive and control based form to a more proactive and risk based approach. This has enabled the internal auditor to anticipate possible future concerns and opportunities as well as identifying current issues. This is inconsistent with Mulumba (2005), asserts that in an organization, it is not the role of internal auditors to identify key activities and relevant risk factors and assess their significance

 The study observed that the majority of respondents agreed that internal auditors have enhanced and strengthened accountability. Gulu Municipality always strives to achieve its goals within the time laid down but only that sometimes the district is let down by the scarcity of resources. This is inconsistent with Munaaba (2009), who revealed that internal auditing does not strengthen accountability but the institutions that are put in place help to strengthen accountability. If the institutions are strong, then accountability will be unquestionable.

Findings revealed that the auditing process helps to crack on people who mismanage funds. It is rare that the different departments can conceal information from the internal audit department. In Gulu Municipality, auditors find it is easy to access the available information. There is a principle to disclose all the information acquired. This is in line with Langol  & Onono (2011), who asserts  that the auditors must not be denied access to information. Flesher (2006), suggests that, although the modern work of the internal auditor involves acting at times as a management consultant and auditing for efficiency and effectiveness as much as for financial propriety, such activity has not always been among the internal auditor’s duties. The profession of internal auditing has changed considerably over the past half century and no one can deny an auditor access to information he wants. The researcher found out that disclosure of information is now and part and parcel of public management in Uganda. Disclosure has helped the public sector in the area of performance management given the fact that the government is putting emphasis on Management By Objective (MBO).

It was observed from the study that financial reports are analyzed and reviewed. Findings also revealed that the audit function has helped to improve management. In the past,  Gulu Municipality had issues with accountability for example the officials who were in charge of one of the district projects in 2011 forged documents and opened bank accounts where they diverted money meant for the projects. The officials created fictitious community projects with names similar to those that were meant to benefit from the funds. The findings are consistent with Luna (2008), who asserts that internal auditors evaluate and improve the effectiveness of governance, risk management and control processes.  This provides members of the boards and senior management with assurance that helps them fulfill their duties to the organization and its stakeholders. This is consistent with Emander (2005), who asserts that the role of an internal audit department is to help the organization achieve its strategic objectives. It does this by helping managers to identify and control the factors that can threaten their ability to achieve their goals. All organizations face risks in everything they do. The profession of internal audit is fundamentally concerned with providing assurance by evaluating an organizations management of risk. An important part of the job of an effective senior management team is setting in place systems which show how well the entire complex processes to manage risks are working.    

5.3.2 Research question two: Internal auditing and performance in Gulu Municipality

To answer this research question, the researcher asked respondents several questions and study findings indicated that there is a positive significant relationship between internal auditing and performance in Gulu municipality. However, the findings although revealed a positive relationship between internal auditing and accountability, other factors were also found significant in influencing accountability besides internal auditing. 

The majority of the respondents agreed with the question which stated that the consequences of failure to perform are grave, however interviews revealed that some Internal Audit staff of Gulu Municipality do not mind about the observation of the regulations, some come late, poor record information etc.  Many felt that the municipality employees can defend themselves against accusations of malpractice of any kind whenever they behave in an ethical fashion inconsistent with professional standards.  The majority of the respondents agreed with the question which stated that documentation helps in defending one's actions and makes a person's professional actions "transparent" or easily assessed.

 Many respondents were of the view that employees strive to incorporate the highest values into their work and aspire to do their work in the best possible way.  Many respondents felt that Gulu Municipality is practicing beyond the scope of the said practice. The employees of the council have the responsibility to be honest, and to be disciplined and to be authentic. In their work, the members of the Audit department display openness, fairness and integrity.  They are authentic and open without regard to their own vulnerabilities, biases and uncertainties. The employees make a distinction between a person and the practices (emotional, behavioral, cognitive and health related practices) that the person has developed. 

Findings revealed that the district employees strive to work within the set standards so that they are not held accountable. The findings are in line with Renard (2008) who asserts that improvement is fundamental to the purpose of internal auditing. But it is done by advising, coaching and facilitating in order to not undermine the responsibility of management. For a successful audit to take place, auditors must work within the set standards so that they are not held accountable. This is consistent with the agency theory that states that agent (manager) undertakes to perform certain duties for the principal (investor) and the principal undertakes to reward the agent (Jensen and Meckling, 2006). According to this theory, the role of the auditor is to supervise the relationship between the manager and the owners. An expectation gap occurs when the distribution of the responsibility is not well defined. The responsibility of every part is well defined in the regulation. The entire local government administration and the government have to realize that the auditor do not have responsibility of the accounting, but only see that the auditing is done properly (Andersson and Emander, 2005).

The study revealed that internal auditing has enhanced and strengthened accountability in Gulu Municipality. The same was observed by Musumimi (2005) who asserted that impartiality, unbiased mental attitude and avoidance of conflicts of interest, allowing internal auditors to perform engagements in such a manner that they have an honest belief in their work product and that no significant quality compromises are made. The audit department always strives to achieve its goals within the time laid down but only that sometimes the department is let down by the scarcity of resources. Scarcity of resources may end up affecting the auditors’ morale and work motivation.  This was also observed by Munaaba (2009) who revealed that it is an established rule that the auditors are to play a vigilant and objective role in ensuring that the shareholders' interests are well protected provided they are given resources. It is the shareholders who primarily depend on the good faith and efficiency of the company's auditor to ensure that company's actions in the day-to-day operations are verified.

The study further observed that the auditing process helps to crack on people who mismanage funds. It is rare that the different departments can conceal information from the internal audit department; in Gulu Municipality it is easy to access the available information. There is a principle to disclose all the information acquired. The same was observed by Mulumba (2005) who stated that auditing adds credibility and reliability to financial reports from the organization to its stakeholders by giving opinion on the report.  This is also in line with Langol  & Onono (2011) who assert that the auditors must not be denied access to information. Flesher (2006) suggests that, although the modern work of the internal auditor involves acting at times as a management consultant and auditing for efficiency and effectiveness as much as for financial propriety, such activity has not always been among the internal auditor’s duties. The profession of internal auditing has changed considerably over the past half century and no one can deny an auditor access to information he wants. The researcher noted from the interview that disclosure of information is now and part and parcel of public management in Uganda. Disclosure has helped the public sector in the area of performance management given the fact that the government is putting emphasis on Management By Objective (MBO).

Findings revealed that the financial reports are analyzed and reviewed. With regard to the audit function, findings revealed that the audit function has helped to improve management. This was also observed by Gupta (2005) who noted that audit as a function helps to improve management. In the past Gulu Municipality had issues with accountability for example the officials who were in charge of the one of the district projects in 2011 forged documents and opened bank accounts where they diverted money meant for the projects. The officials created fictitious community projects with names similar to those that were meant to benefit from the funds. However the respondents revealed that such cases of embezzlement are rare in Gulu Municipality. This is consistent with Emander (2005) who asserts that the role of an internal audit department is to help the organization achieve its strategic objectives. It does this by helping managers to identify and control the factors that can threaten their ability to achieve their goals. Emander (2005) further stresses that all organizations face risks in everything they do. The profession of internal audit is fundamentally concerned with providing assurance by evaluating an organizations management of risk. An important part of the job of an effective senior management team is setting in place systems which show how well the entire complex processes to manage risks are working.    

The majority of the respondents agreed that   the Municipality employees are accountable for their actions. It’s the responsibility of an employee to account and just like any other civil servants in Uganda.  Gulu Municipality employees too are responsible for their own actions. Every employee is responsible for his actions, no one can claim that is out of the vicinity of the law. Gulu Municipality normally has meetings and when one acts contrary he/she is normally pinned for that kind of behavior. Sometimes, people keep minutes of a meeting in order to keep track of next steps and who is accountable for them, but this only works if people read the minutes. 

Further findings revealed that accountability in Gulu Municipality is both an instrument and a goal in the local government today. This was also noted in Derk (2004) who observed that accountability brings about efficiency in the running of the organization. What started as an instrument to enhance the effectiveness and efficiency of public governance, has gradually become a goal in itself. As a concept in this municipality, accountability is rather elusive. It has become a hurrah-word like “learning”, “irresponsibility” or “solidarity” to which no one can object. In Gulu municipality, it is one of those evocative political words that can be used to patch up a rambling argument, to evoke an image of trustworthiness, fidelity and justice or to hold critics at bay. This is in line with the Local Government Act CAP 243(1998) that provides for accountability and the consequences of failure to account

Findings revealed that the internal audit department does not do its work independent from any external influence. The same findings were observed in Muluuta (2002) who noted that audit independence is essentially a state of mind'. Internal auditors cannot be physically independent from the organization they are working for, but they can always stay objective.
In order to stay objective, internal auditors should not assume any management responsibilities and should avoid auditing anything that they have direct or indirect authority or responsibility for.  This is also consistent with Lubaala (2005) who asserts that in order to perform their role effectively, internal auditors require organizational independence from management, to enable unrestricted evaluation of management activities and personnel. 

5.3.3 Research question three: Challenges of the internal audit function in relation to performance in local governments

In an attempt to answer this research question, respondents were asked many questions and their feedback indicated that; first of all, when asked whether the Local Government internal Audit unit has adequate resources to audit every transaction were negative. Many felt that little is allocated to the internal audit department during the budget exercise to help it in its work.  The issue of procedure also created much dust; procedure is at times not followed by the internal audit unit. There was also a feeling that audit reports always have so many cases of non-conformities and these are normally noticed with time. Most of the respondents were of the view that the internal audit process is always carried out with management support. This is in with Munene (2009) who observed that in order to add credibility and reliability the internal audit process should be carried out with management support.

However the researcher further found out that enough time is allocated to audit preparations and writing up final results. The reports produced by the internal audit are then taken by the management as final. They serve as a basis for detection of irregularities within the council. 

The study also revealed that the internal audit department does not have people with the required skills that are vital in helping the staff accomplish their tasks. Some employees had not done accounting or any commercial course but were simply given the jobs in the department on the basis of their long stay in the municipality. This is contrary to Gupta (2005) who stresses that auditors should be highly educated people and poses the relevant skills that can enable them perform their work efficiently. 

Findings revealed that limited resources are available to the internal auditor which sometimes limits the accomplishment of the set tasks.  Mulumba (2005) asserts that in order for the audit function to be effective resources must be availed to the audit units. The limited resources at the disposal of the audit unit hamper some of the services of the internal audit department for example sometimes the auditors  want to do certain duties but because of lack of resources they  end up postponing them. The findings are inconsistent with Lwanga (2008) who asserts that auditors should do decent work using the limited resources that are available at their disposal. 

The majority of the respondents agreed that the audit reports don’t have so many cases of non conformities. This is consistent with Munaaba (2008) who asserts that different levels in an organization need different information from the audit function process. A company needs to report to its stakeholders on a regular basis and these reports should not have a lot of inconsistencies. 

Findings revealed that treasury guidance on what internal audit should deliver is not sufficiently specific, leading to expectations of internal audit being unclear. This was also observed by Maerkel (2006) who stated that the auditors should base their work on the stipulated guidelines. This is in line with Lubaale (2005) who states that treasury guidance on what internal audit should deliver is not sufficiently specific, leading to expectations of internal audit being unclear. Variations in quality and coverage mean that the local governments often cannot take assurance from internal audit work, and it is often of insufficient scope or quality for the spending watchdog’s external audit work. Users of internal audit identified particular gaps in such areas as the usefulness and relevance of reports; the expertise of staff, including expertise on IT-based information systems; the identification of efficiencies in the organization; and the ability to offer advice to senior management. 
Findings revealed that the internal audit department helps managers to identify and control the factors that can threaten their ability to achieve their goals. In order to have this, the independence of the audit unit must be observed. This is in line with Munene (2007) states that to ensure their independence; internal auditors must carry out their work freely and objectively. They cannot subordinate their judgment on audit matters to that of others, and they should have the support of senior management, the board of directors and the audit committee. Use the following to determine internal audit independence. 

 The findings of the study are consistent with Lasher and William (2008) who asserts that role of an internal audit department is to help the organization achieve its strategic objectives. It does this by helping managers to identify and control the factors that can threaten their ability to achieve their goals. All organizations face risks in everything they do. The profession of internal audit is fundamentally concerned with providing assurance by evaluating an organizations management of risk. An important part of the job of an effective senior management team is setting in place systems which show how well the entire complex processes to manage risks are working. In this ideal context, the role of the internal auditor is to evaluate, across all parts of an organization, the quality of those systems of internal control, risk management and corporate governance processes and then report this directly and independently to the senior management. How well they recognize, understand and manage those risks will play a critical part in the success (or failure) of the organization and consequently the value delivered to customers, shareholders and stakeholders. As well as this ongoing assurance provision, the internal auditors’ knowledge of the management of risk enables them to act as consultant and catalyst for improvement in an organization’s practices.

5.4 Conclusions
Study conclusions were drawn basing on the different research questions as shown below; 
Depending on the environment in which the internal auditors work, the relationship between internal audit and accountability will vary. The employees of the Municipality are always held accountable for their action. When they fail to perform their duties diligently, they are brought to book. The head of internal audit always decides which department of the municipality to focus on and will divide the work up into audit assignments. Typically, these assignments involve looking at one particular department of the municipality and can take as little as a few days, or as long as several weeks to complete.

 The role of an internal audit department is to help the municipality achieve its strategic objectives. It does this by helping managers to identify and control the factors that can threaten their ability to achieve their goals. All local governments face risks in everything they do. The profession of internal audit is fundamentally concerned with providing assurance by evaluating the municipality management of risk. In this ideal context, the role of the internal auditor is to evaluate, across all parts of the municipality, the quality of those systems of internal control, risk management and corporate governance processes and then report this directly and independently to the senior management. 

Variations in quality and coverage mean that the local governments often cannot take assurance from internal audit work, and it is often of insufficient scope or quality for the spending watchdog’s internal audit work. The findings revealed that internal audit unit lacks valuable resources to enable it accomplish all the tasks it is supposed to accomplish. The independence of the internal audit unit has been interfered with by a section of the stakeholders in the local governments.
   
   5.5 Recommendations
The researcher recommended that; 
The audit process needs to be governed in a more effective manner so that risks of substandard audits can be minimized and/or their effectiveness enhanced. The two key measures in this regard are the reporting structure of the internal audit to ensure their independence and the performance of audits according to some audit standards, preferably the standards of internal audit

New auditing techniques for the local government level governance control needs to be developed to mitigate the risks prevalent at this level. The traditional sample testing of the transaction techniques do not apply here and therefore a better understanding of the influence of these mechanisms has to be well understood. Only then will the internal audit unit be able to make meaningful recommendation on how to strengthen and institutionalize these within the institution. 

With the continued increase in regulations, the compliance requirements faced by the local governments will continue to increase and pose a challenge. The internal auditing unit needs to work with the municipality senior administrator to have these seamlessly integrated in the governance and control framework rather than inefficiently overlay new requirements on a piece meal basis. Employee performance should be encouraged through involvement in teamwork activities.  

5.6 Areas for further research
1.	There is need to do research on the effectiveness of internal audit management in local governments.

2.	Study should be made on challenges and responsibilities of internal auditing in local governments in Uganda

5.7 The contribution of the study to new knowledge
The study identified a gap between the age bracket and the level of education of the internal audit unit. Basing on the level of education there was a mismatch with the job specifications.  The internal audit unit had young and inexperienced employees who could not meet the demands of the mature experienced Administrators in Gulu municipality hence creating a performance gaps within the department.  

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APPENDICES

 APPENDIX 1
QUESTIONNAIRE FOR ALL MUNICIPALITY STAFF

Dear respondent,
I am Abeho Munene Ann a Master of Public Administration student of Uganda Management Institute carrying out an academic study on Government controls and Performance in the Local Government of Gulu. In your position, you have useful information to contribute to the success of the study. You can readily contribute this information by answering the question in this instrument. All information given will be treated confidentially for purely academic purposes and please do not indicate your name anywhere on the questionnaire.

Thank you for your cooperation.

SECTION A:             BIO-DATA.

Please tick or circle.
1. Age
     18-28                      29-35                   36-50               Above50

vvvvvvvvvvvvv

vvvvvvvvvvvvv

vvvvvvvvvvvvv

vvvvvvvvvvvvv

2. Sex

    Male                                            Female

3. Marital status

   Married                              single                            widowed                           divorced
4. Highest level of education

    Certificate                           Diploma                               Bachelors                           

    Post graduate diploma                                    others specify.
5. Number of years spent on the job

                1-3                                       4-6                            above 10                         

Instructions from question 6- tick the number that best indicate your opinion on the questions using the following scale.
Scale	1	2	3	4	5	
	Strongly disagree	disagree	Neither agree nor disagree	Agree	Strongly agree	

SECTION B           
1. INTERNAL AUDITING
		SD
1	D
2	N
3	A
4	SA
5	
1	District’s level of functioning is satisfactory						
2	Internal Auditors have access to independent audit information						
3	Internal Auditors have enhanced and strengthened accountability						
4	PAC conducts investigations to access the efficiency, effectiveness and accountability of public sector						
5	The auditing process helps to crack on people who mismanage funds						
6	Auditing has facilitated internal control						
7	The financial reports are analyzed and reviewed						
8	Internal audit task risks						
9	The audit function has helped to improve management						
10	The audit function has exposed fraud in the district						
11	The District avails its financial data for auditing						

 2. ACCOUNTABILITY
							
12	The municipality employees are accountable for their actions						
13	Before making expenditure there is always a budget drawn						
14	The Municipality employees work with dedication						
15	The consequences of failure to perform are grave						
16	The municipality employees can defend themselves against accusations of malpractice of any kind whenever they behave in an ethical fashion inconsistent with professional standards.						
17	Documentation helps in defending one's actions and makes a person's professional actions "transparent" or easily assessed.						
18	Municipality employees strive to incorporate the highest values into their work and aspire to do their work in the best possible way.						
19	In Gulu Municipality there is practicing beyond the scope of the said practice						
20	I work with openness, fairness and integrity						
21	Iam authentic and open without regard to my own vulnerabilities, biases and uncertainties.						
22	I make a distinction between a person and the practices (emotional, behavioral, cognitive and health related practices) that the person has developed.						
23	I have the responsibility to be honest, and to be disciplined and to be authentic.						

SECTION C
 4. PERFOMANCE
							
24	There is efficiency in the execution of tasks and delivery of service						
25	There is quality delivery of services						
26	There is an increase in the resources						
27	There is an increase in the amount of resources						
28	There is effective management of the municipality						
29	There is an increase in donor funding						
30	Increase in the  number of employees is growing						
31	The organization has expanded in size						
32	There is timely accomplishment of tasks						

APPENDIX 2

 INTERVIEW GUIDE FOR TOWN CLERK
    INTERNAL AUDITING
1.	When did you join the local government
2.	What is your view about the level of graft in the District
3.	What is your opinion on the action taken by the PAC and other relevant members of the public on audit findings?
4.	What is your view about internal control and internal audit (inspection section) in Municipality?
ACCOUNTABILITY
5.	Do central government ministries purchase bulk items through central tender procedures (PPDA guidelines) and do they always adhere to the regulations of the tender?
6.	How does the district handle the culprits of embezzlement and abuse of office
7.	When does the district submit accountability reports?
8.	Who is responsible for drafting and submitting them? 
9.	Comment on the degree of accountability in the Municipality?
PERFORMANCE
10.	What was the ranking of Gulu Municipality in terms of performance?
11.	How is the Municipality trying to improve the performance of the workers?
12.	Is the current financial mismanagement or financial malpractices in the public sector due to ineffectiveness of audit function structure?
13.	What measures have you put in place to strengthen the audit function in the Municipality?

                                          APPENDIX 4
KREJCIE, MORGAN AND ROBERT SAMPLE SIZE (S) TABLES (1970) FOR THE GIVEN POPULATION SIZES (N)

N	S	N	S	N	S	N	S	N	S	
10	10	100	80	280	162	800	260	2800	338	
15	14	110	86	290	165	850	256	300	341	
20	19	120	92	300	169	900	269	3500	346	
25	24	130	97	320	175	950	274	4000	351	
30	28	140	103	340	181	1000	278	4500	354	
35	32	150	108	360	186	1100	285	5000	357	
40	36	160	113	380	191	1200	291	6000	361	
45	40	170	118	400	196	1300	297	7000	364	
50	44	180	123	420	201	1400	302	8000	367	
55	48	190	127	440	205	1500	306	9000	368	
60	52	200	132	460	210	1600	310	10000	370	
65	56	210	136	480	214	1700	313	15000	375	
70	59	220	140	500	217	1800	317	20000	377	
75	63	230	144	550	226	1900	320	30000	379	
80	66	240	148	600	234	2000	322	40000	380	
85	70	250	152	650	242	2200	327	50000	381	
90	73	260	155	700	248	2400	331	75000	382	
95	76	270	159	750	254	2600	335	100000	384