The Effect of Internal Control System on Financial Performance of Church Organization Compassion Centers: A Case of Nyamagana District

Abstract

The paper generally aimed to study the effect of the internal control system on the financial performance of church organization compassion centres in the Nyamagana district. Specifically, the study centred on three areas, namely, the control environment, control activities and monitoring. The study applied the principal/agency theory. Data were collected at once through close-ended questionnaires where a cross-sectional research design was fitted. The study’s unity of analysis involved 100 people (church leaders, compassion centre board members, personal coordinators, social workers, accountants, and auditors). A binary logistic regression was used to analyze the relationship between the internal control system (ICS) and financial performance (FP) of church organization compassion centres. The outcomes depicted that the control environment has a positive significant relationship with the FP of compassion centres (r=0.838, β=0.512, p=0.000). Moreover, control activities have a positive significant relationship (r=0.828, β=0.521, p=0.000), while monitoring has a positive significant relationship with FP of compassion centres (r=0.751, β=0.629, p=0.000).