The Role of Internal Controls on Procurement Efficiency and Financial Compliance in Government Agencies

Abstract

Globally, procurement is currently viewed as a tactical function for the effective and efficient operations of both private and governmental organisations. The implementation of internal control is essential to all organisations and more so to the public sector organisations, particularly government agencies, to manage public funds in a responsible and transparent manner. The study focused on three components of internal controls, namely, control environment, risk assessment and monitoring. This study applied correlational research design and followed quantitative approach. The study carried out in 30 government organizations from which 270 respondents were randomly selected to represent a study sample. Data were collected using self administered questionnaire, analysed by descriptive and inferential statistics. The descriptive results revealed that, to a greater degree government agencies have established internal control systems, and effectively implement them. In one hand, the findings of the first regression model indicate that two components of internal control; control environment and monitoring have negative and highly significant association with lead time as proxy of procurement efficiency, while risk assessment has negative but moderate significant relationship with procurement efficiency. On the other hand, the findings of the second regression model show that all three variables; control environment, risk assessment and monitoring have positive and highly significant relationship with financial compliance in procurement process in the government agencies. Based on the study findings, it implies that control environment, risk assessment and monitoring are important elements which have potential to contribute to the procurement efficiency and compliance with rules and regulation.