Effect of internal control systems on the performance of selected microfinance institutions in the Central Region

Abstract

The purpose of this study is to examine the effect of internal control practices on the performance of microfinance institutions in the Central Region of Ghana. Primary data was gathered using questionnaires on internal controls designed to meet the Committee of the Sponsoring Organizations of the Treadway Commission 1992 report for microfinance institutions.The study adopted a quantitative approach with a descriptive survey method. A primary data were collected using self-administered questionnaires. The study revealed that internal control systems of microfinance institutions are effective and integrated into the daily operations of these microfinance institutions. Another finding was that, microfinance institutions can only achieve their corporate objectives if the internal control systems are effective. Poor internal control systems are due to highcost involved in implementing it and small size of organization to have an internal audit department to ensure effective internal controls. The study recommended that there should be adequate segregation of duties in the control activities, adequate managerial oversight and proper policies and procedures for microfinance institutions to operate effectively to achieve their objectives.