Internal Controls and Financial Performance of Small and Medium Enterprises in Mbale City, Uganda

Isaac Peter Otai and Barbra Deborah Erima Birungi
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Isaac Peter Otai: Department of Accounting, Finance and Microfinance, School of Management and Entrepreneurship, Kyambogo University, Kampala, Uganda
Barbra Deborah Erima Birungi: Department of Accounting, Finance and Microfinance, School of Management and Entrepreneurship, Kyambogo University, Kampala, Uganda

CECCAR Business Review, 2025, vol. 6, issue 3, 73-82

Abstract: The objective of the research was to examine the impact of small and medium enterprises’ internal controls on their financial performance in Mbale city, Uganda. In this study, internal control was proxied using two of the five components of internal control as set out by the Committee of Sponsoring Organizations, control environment and control activities, while financial performance was measured using profitability. Descriptive research design was endorsed due to its potential to describe the connection between components of internal controls and SMEs financial performance. The study randomly sampled 87 SMEs in Mbale city. Primary data was gathered using structured questionnaire. Inferential statistics involving nonparametric correlations and ordinal regression were used to analyze the data. The study findings revealed that internal controls have no significant association with the financial performance of SMEs.

Keywords: internal control; control environment; control activities; financial performance; small and medium enterprises (search for similar items in EconPapers)
JEL-codes: M00 M19 M49 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ahd:journl:v:6:y:2025:i:3:p:73-82

DOI: 10.37945/cbr.2025.03.07

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