Empirical Research On The Determinants Of Internal Control Effectiveness In The Public Sector Of Ghana

This research investigates the determinants of internal control effectiveness in public organizations in Ghana based on the principles of internal controls.Internal controls is a concept that explains how organizations get aligned with best ethical practices and standards.In other words,Internal Controls refers to the policies and procedures organizations apply on routine basis to ensure that activities,operations are aligned with the strategic objectives.Therefore,the effectiveness of internal controls can be determined by measuring the level compliance with ethical standards.In the public sector perspective,effectiveness of internal controls is assessed based on the level of transparency in accounting reports and how efficient public resources are accounted for.Based on this underlining factors the study examined how internal control principles can enhance compliance but with specific emphasis on quality reporting and efficiency.The last empirical analysis focused of improving internal controls in the public sector after assessing the effectiveness and compliance of control in chapter five and six.This study focused on the effectiveness of internal controls in public organizations in Ghana because of the increasing demand for accountability by stakeholders.Secondly,public organizations draws high expenditure from the national budget which is not properly accounted for by beneficiary organizations.More so,the Auditor-Generals reports frequently highlights the lack of compliance with ethical practices in most public organizations leading to high financial irregularities.This requires an empirical investigation to identify whether public organizations practice internal control principles and then determine how effective they are before decide on how to improve them.In order to do this,the researcher drafted a set of questionnaires and administered to 85 public organizations in Ghana for the purposes of obtaining primary evidence about the existence of internal controls in these public organizations.The analysis was conducted using multivariate regression,structural equation modelling,Partial least squares,logistic regression and principal component analysis.The findings in this study is categorised into three separate empirical results found in chapter five,six and seven.The first empirical study revealed that the determinants of internal control effectiveness in most public organizations in Ghana are control environment,monitoring,control activities,risk assessment and information and communication.Based on the outcome the researcher observed that these variables are having a strong impact on internal controls according to the structural equation modeling(SEM)results.However,information communication and monitoring are relatively weak in terms of their impact on internal controls effectiveness.This outcome also implies that public organizations require proper internal communication channels and effective monitoring to be able to achieve their strategic objectives and goals.However,information and communication is a vital principle of internal control which mediates or enhances the effectiveness of all other principles of internal controls.The second empirical result in chapter six revealed how compliance with internal control can be achieved and the factors responsible for that include management objectivity which can improve internal control compliance by enhancing quality reporting and efficiency of operational activities as a result of objective and decisive control policies.Additionally,when public organizations engage external evaluators such as professionally certified chartered accountants and auditors to verify their internal control practices from time to time it enhances internal control effectiveness and compliance and remain guided by principles of best practices.The findings also revealed that most public organizations rely on supervisory committees who monitor and judge the effectiveness of internal control practices.In another observation in chapter six is that,the five internal control principle do not only ensure effectiveness but they enhance compliance,which means the organizations will always act within all applicable laws and regulations guiding the public sector.However,the supervisory committee whose responsibility include tightening internal control requirements to encourage compliance is not entirely satisfactory.The results also suggest that,information and communication which is the heart of internal controls is not being applied effectively to achieve maximum compliance.The results implies that,in the Ghanaian institutional context,external evaluators play a critical role in strengthening internal controls.Additionally,management takes critical decisions to improve compliance with best standards and practices.The supervisory committee also ensures that management is exercising effective controls which includes sufficiently committed to their oversight duties,since they are responsible for designing internal control policies for the whole organization.This confirms that public organizations are capable of taking good decision concerning internal controls to support their operations.It is a strong indication from the opinions of the management,directors,internal auditors,senior management and employees that public organizations in Ghana demonstrate reasonable commitment to internal control standards.In chapter seven the result suggested several ways to improve internal controls through regular performance review,ethical values,commitment and segregation of duties to avoid any inconsistency with exiting control principles.In addition to these the study recommends a strong internal communication mechanism to improve efficient internal controls.The study suggests that management must improve commitment to ethical values whiles the implications of risks should be embedded in the minds of public sector workers as part of the organizational culture that will complement existing tools and techniques of internal controls.The theoretical implications of the findings are that,the selected public organizations comply with the principles of internal controls and it is a positive assurance from management and oversight responsibility of board of directors in these public organizations.However,lack of better communication channels may have a negative impact on the effectiveness of internal control policies and how management communicate their policies and guidelines to employees since internal control depends on effective communication tools.