Internal control system and financial performance in petroleum industry a case of Vivo energy Uganda
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The objectives of the study were to examine the effect of internal control environment on financial performance in vivo energy Uganda, to analyze the effect of internal audit function on financial performance in vivo energy Uganda and to assess the effect of internal control activities on financial performance in vivo energy Uganda. Three null hypotheses were tested based on the objectives. The study aimed at examining the effect of internal control system on financial performance in petroleum industry a case of vivo energy Uganda. The study was underpinned on the agency theory. A case study design was utilized and both qualitative and quantitative data was collected using questionnaires and interviews. A total population of 165 respondents was considered to obtain quantitative data using questionnaires and a sample of 159 was obtained using available primary data. Data was obtained from only 150 respondents from different departments using quota sampling and simple random sampling methods giving a response rate of 96.6%. Qualitative data from interviews was obtained from 13 respondents using purposive sampling method. Data was analyzed using descriptive statistics, Pearson correlation, coefficient, regression analysis; significance level was found and the hypothesis testing proved that there is a positive relationship between internal control systems and financial performance in vivo energy Uganda. The multiple correlation results revealed that internal control environment enhance financial performance, internal audit function and internal control activities also enhances financial performance in vivo energy Uganda. The study concluded that the institution has an effective internal audit function but with challenges in its implementation; on financial performance, there is no appropriate procedures for accountability and financial reporting; and it also concluded that there is a positive and significant effect of internal control system on financial performance in vivo energy Uganda. The study recommended competence profiling in the internal audit department; it also recommended an establishment of additional finance generation strategy; and it finally recommended a deliberate attempt to conduct a study on the relationship between managements’ commitment and factors that are external to the organization.