International Journal of Research and Innovation in Social Science (IJRISS) | Volume II, Issue XI, November 2018 | ISSN 2454–6186

The Impact of Internal Control Challenges on Organizational Financial Performance for Selected Local Government Authorities in Arumeru District, Arusha Tanzania

Dr. Ndalahwa Musa Masanja

PhD., Lecturer of Accounting and Management, University of Arusha, Tanzania

Abstract: – The article examines the impact of internal control challenges on financial performance in selected Local government Authority in Arumeru district, Arusha, Tanzania. The study used the descript to-explanatory research design. The study was conducted in three local government authorities wards located in Kikatiti, Majiya Chai and Usa-river. A total of 113 respondents working in those departments were involved in this study. Purposive sampling procedure was used to determine the research participants.The validity of research instrument was determined through content validity index and factorial analysis for construct validity.Reliability was tested by the Cronbach Coefficient Alpha with a result of 0.877. The data analysis will include both descriptive and inferential statistics. Descriptive statistics was be used to analyze the demographic characteristics of research participants. Inferential statistics was used to analyze the relationship between internal control challenges and organizational financial performance in the Local government authorities.The major challenge was unethical behavior of employees, insufficient remuneration and impunity for fraudulent behavior with local government Authority in Arumeru District. However, the participant disagreed that employee pressure, unnoticed misconduct, inadequate fraud control and prevention were among the critical challenges facing the local government authorities in Arumeru District. There was a statistically significant relationship between poor remuneration, inadequate fraud control and prevention, unnoticed misconduct, impunity and organizational financial performance. On the other hand, challenges such as the Employee pressure, Unethical Behavior, and lack of internal control measures were statistically insignificant.

Keywords: internal control, financial performance, organizational performance, Tanzania

I. INTRODUCTION

Internal control system is a critical topic in all local government in Tanzania. This is due to fact that most local government authorities are weak in the implementation of internal control system.