Examining the Effect of Internal Control Systems on Business Profitability among Selected Commercial Banks in Ghana

Abstract

Abstract:Internal control systems are viewed as an important aspect of operations of organizations since its direct how the activities of an organization are carried out. It also helps to prevent misallocation of resources and brings efficiency in an entity's activities. Recently most Banks in Ghana have not achieved their operational target, employees, both in public and private sector engage in fraudulent activities which tarnish the corporate image of these organizations leading to waste of resources to regain the tainted image which affect their operations and profitability. The core objective of this study was to examine the effectiveness of internal control systems on business profitability among selected commercial banks in Ghana. The study employed quantitative approach and used multiple regression model to analyze the primary data collected with the help of Likert scale. The study revealed internal control system has a positive effect on the profitability of the commercial banks. There exists a positive and significant relationship between internal control components (control environment, risk assessment, information and communication and control activities) and banks' profitability.