Mediating role of political interest on effects of internal control systems on financial management in local government authorities in Ghana

Purpose - This study aims to delve into the intricate dynamics within local government authorities in Ghana, exploring the mediating role of political interest in the relationship between internal control systems and financial management. Design/methodology/approach - Using a hypothesized model grounded on the accountability theory and survey data from 701 respondents across local government authorities in Ghana, this study used Partial Least Squares Structural Equation Modeling as the data analysis approach. Findings - The findings indicate that internal control systems have a positive influence on financial management. In addition, political interest was found to significantly mediate the relationship between internal control systems and financial management. Research limitations/implications - The study was, however, limited by the reliance on survey data obtained from the respondents. Although this study used survey data, it was not feasible to cover the entire country because this study was constrained by resources and time. Future studies may therefore explore same linkages by considering the entire country and adding other moderating variables to examine the nexuses. Future research could explore the subcomponents of internal control systems, including the control environment, control activities, risk assessment, monitoring of controls and information and communication in financial management. This would offer a nuanced understanding of how each dimension contributes to effective financial management. Practical implications - This study offers two crucial contributions from a practical standpoint. This is accomplished by first allowing practitioners and decision-makers to understand the effects of political interest on organisation’s internal control system and financial management. This information can help practitioners and policymakers develop better systems that will reduce the mediating effects of political interest on the linkage between the internal control system and financial management in the local government authorities. In addition, policymakers will be better informed on how to enact legislation, specifically including sections of autonomous operations by these public agencies in the country, which can be undermined by external pressures or the ruling party. Originality/value - To the best of authors’ knowledge, this research is the first to investigate such a phenomenon in a developing country context, such as Ghana, and it provides insights into why some local government authorities with seemingly robust internal control systems struggle with financial management issues.