The effectiveness of internal controls at Lusaka city council.

The current business trends have made it imperative for almost all large organizations to uphold effective internal control systems. Internal control has attracted intense debate and scholarly attention across industries in accountancy and auditing literature over the past decades. Lusaka City Council is facing challenges in revenue collections which has resulted into failure to meet it operational obligations. In this regard, this study evaluated the components of Internal Control Systems of Lusaka City Council using COSO’s principles and attributes of assessing the effectiveness of internal control systems. The five components of internal controls; Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring and Evaluation, were individually assessed to ascertain their effectiveness in the council. A five-point Likert scale was used to measure respondent’s knowledge and perception of internal controls and the council’s internal control system effectiveness. Responses ranged from strongly agree to strongly disagree. Based on the values indicated in the questionnaires a frequency and percentage values were calculated to reflect the effectiveness of internal controls. The statistics presented the aggregated results of the all internal control activities. 17% of the respondents were strongly agreeable to the effective internal control activities in the council. Whilst, 44% were agreeable. Giving the total to 61% (17% + 44%), translating that Lusaka City Council has adequate internal control systems. The study also identified factors that are affecting the implementation of internal control activities and these are; Lack of employees’ honesty and integrity, Unachievable employee financial goals, Employees’ personal financial problems, Control measures for unusual transactions, Poor remuneration of internal control staff and Unwillingness to effect changes. It further analyzed the effect these factors have on the implementation of internal control activities by establishing correlation between the variables. The study revealed that there was a strong relationship between the Internal Control activities and the factors that are affecting their implementation. The aggregate scored 0.9 indicating that the relationship is positively strong. Therefore, the identified factors strongly have effect on the implementation of internal control activities at Lusaka City Council.
Key words: Internal controls, effectiveness and Implementation.