A Critical Examination of Internal Control Systems in the Public Sector , A Tool for Alleviating Financial Irregularities: Evidence from Ghana

Abstract

This paper examined the existence of internal control systems in four (4) government departments located in the central business district of Accra, Ghana. The internal control elements examined included Control environment, Communication and information, Risk Assessment, Monitoring, Control Activities and the functions of the Internal Audit unit, as an agent of good governance, accountability and commitment to ensuring reliable financial reporting.  Structured questionnaires were administered to a non-probability sample of 100 respondents from the Administrative department, Finance, Internal Audit, Human resources and other departments. Internal control system was measured using the six elements of the COSO internal control framework developed in 2002. Secondary data was captured from the Auditor General’s report on public accounts and analysed using the Statistical Package for Social Scientist (SPSS) and STATA to establish the relationship between the dependent and independent variables based on the research hypothesis. The statistical techniques deployed were regression and correlation. The study concluded that indeed there are significant relationships between internal control systems and effective public sector financial management. The study recommended an independent private audit of all public accounts to supplement the effort of government appointed Auditor General in order to guarantee assurance and transparency. Departments and ministries must practice inter-departmental monitoring to ensure due diligence and reward for outstanding performance.

Keywords: Transparency, COSO Internal Control framework, Compliance, Financial irregularities, Public Sector Efficiency.