The Effectiveness of Internal Controls in Rural Community Banks: Evidence from Ghana

Abstract

Internal control is relevant in every business establishment, though its presence may not be a guarantee that fraud and corporate scandals would cease to occur. From the rural banking communities in Ghana, this study examines the significance of internal control element on the performance of elected rural banks. The statistical analysis and inferential judgment is based on the responses gathered from 650 bank employees on the functioning of internal controls. Based on the quantitative results and analysis, the study found a highly significant relationship between internal controls and performance of banks with respect to the principles prescribed by the Committee of Sponsoring Organization of the Treadway Commission framework –COSO. There exist a very strong internal control systems in the rural banks of Ghana, however monitoring, control activities and issues of corporate governance need to be addressed.

A Study of Internal Control Systems at the Ghana Prisons Service

“…Katushabe ( 2016) argues further that monitoring should be continuous in order to yield the desire results. Jianguo et al (2019) identified with this by observing that monitoring, like other control components requires consistency, persistency, and repetitiveness to achieve needed results. According to Bukenya and Kinatta (2012), the efficacy of the procedures put in place to trace ongoing monitoring determine the scope and frequency of monitoring required to achieve set organizational objectives in the control process.…”

“…Katushabe (2016) observes that control activities include all activities that are put in place as part of internal controls by an organization to remove the element(s) of risk and thus reasonably assure achievement of organizational objectives. Jianguo et al (2019) complement this by adding that control activities include all the measures that are established to identify and address risk within an organization. According to Hayes et al (2014), control activities comprise a set of policies and processes set in motion by an organization to mitigate against the effect of risk and put an organization on a path towards sustained growth and development.…”

“…This finding of the study is supported by Katushabe ( 2016) who observed that control activities include all activities that are put in place as part of internal controls by an organization to remove the element(s) of risk and thus reasonably assure achievement of organizational objectives. Further, Jianguo et al (2019) complement this by adding that control activities include all the measures that are established to identify and address risk within an organization. When asked whether these control systems are fully operationalized, (30, 100%) of the respondents agreed as illustrated by Table 4.2.2 that all the listed control systems in the Ghana Prison Services were fully operationalized.…”