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The Impact of Internal Control Systems on Financial Performance: The Case of Health Institutions in Upper West Region of Ghana

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  • Sahabi Ibrahim
  • Gordon Diibuzie
  • Mohammed Abubakari

Abstract

The significance of upholding effective internal control system in organizations have been persistently and immensely emphasized, due to its positive effects on financial performance. Efficient internal control enables the prevention and detection of fraudulent activities in the institution. In line with this, persistent efforts by policy makers to pursue policies that would improve internal control system in the ministry of health have yielded abysmal results with regards to financial performance in health institutions in the Upper West Region of Ghana. This study sought to determine the impact of internal control variables on financial performance among five health institutions in the region using an ordered logistic regression model for a sample of fifty (50) respondents. We found a positive relationship between internal controls and financial performance. But only three of the control variables remained significant with pvalues less than 5%. It is recommended that the governing body of the institutions, possibly supported by the audit reports implementation committee (ARIC), ensure that the appropriate internal control systems recommended by the auditors in health institutions are monitored periodically.

Suggested Citation

  • Sahabi Ibrahim & Gordon Diibuzie & Mohammed Abubakari, 2017. "The Impact of Internal Control Systems on Financial Performance: The Case of Health Institutions in Upper West Region of Ghana," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(4), pages 684-696, April.
    • Handle: RePEc:hur:ijarbs:v:7:y:2017:i:4:p:684-696
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    References listed on IDEAS

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    1. Weisbach, Michael S., 1988. "Outside directors and CEO turnover," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 431-460, January.
    2. Doyle, Jeffrey & Ge, Weili & McVay, Sarah, 2007. "Determinants of weaknesses in internal control over financial reporting," Journal of Accounting and Economics, Elsevier, vol. 44(1-2), pages 193-223, September.
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    1. Ngeta Jacqueline & Evusa Zablon & Wahome Ndirangu, 2022. "The Impact of Internal Control Systems on the Financial Performance of Listed Commercial Banks in Machakos Town, Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(6), pages 62-73, June.
    2. ALASHE, Abdulganiyy Kayode & ADEFOLURIN, Festus Adesegun & BELLO, Abass Oyeshola, 2022. "The relationship between internal control system and business survival in the COVID-19 pandemic era," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(1), pages 129-135, January.
    3. Yemisi Oluwafunmilayo AYORINDE & Ayoola Abayomi AREMO, 2022. "Management Control System and Organisational Effectiveness of Deposit Money Banks in Nigeria," Noble International Journal of Business and Management Research, Noble Academic Publsiher, vol. 6(3), pages 34-39, September.
    4. A. E. Adegboyegun & E. Ben-Caleb & A. O. Ademola & E. O. Oladutire & G. M. Sodeinde, 2020. "Internal Control Systems and Operating Performance: Evidence from Small and Medium Enterprises (SMEs) in Ondo State," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(4), pages 469-479, April.
    5. Njeri M. N. & Dr Muhoho J. & Kiarie J., 2020. "Financial Management Practices and Financial Performance of Construction Companies in Nairobi County," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(8), pages 665-670, August.

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