The Effect of Internal Audit Department Function on the Performance ofthe Internal Control System ofa Public Hospital in Uganda

Abstract

This study set out to examine the effect of the internal audit department function on the performance of the internal control system in a not-profit making hospital. It focuses on Mengo Hospital in Uganda. The research was based on the premise that the hospital sector in Uganda has witnessed modest growth over the last decade with numerous financial challenges that culminated into a significant decline in service delivery. One strategy that can work to ameliorate the situation is having in place a system of internal controls that this study examines. A survey questionnaire approach was used for data collection from the different departments of the hospital. The study reveals that internal audit function has significant influence on the performance of the internal control system in public hospitals through the following; (1) management and reporting of financial information (β = .648, t = 7.508, p <0.001); (2) compliance with hospital laws and regulations (β = .311, t = 2.894, p <0.005); (3) adhering to accounting procedures (β = .600, t = 6.626, p <0.001); and (4) hospital professional finance management practice (β = .567, t = 6.072, p <0.001). It was concluded therefore that for public hospitals that are not- for profit, there is an urgent need for the governing bodies and top management to ensure that the internal audit function is not only independent as a department but also that such a department is empowered to monitor, verify and control the use of funds so that all the other departments are able to sagaciously carryout their responsibilities and obligations so as to influence the general service delivery and fulfil the mission that is geared towards patient care.