THE ROLE OF INTERNAL CONTROL SYSTEM ON THE PERFORMANCE OF FINANCIAL INSTITUTION IN RWANDA. CASE STUDY OF BPR /RUBAVU BRANCH (2021-2023)

Abstract

This research sought to establish the relationship between the Internal Control System and Financial Performance of BPR. The study helped the researcher in improving knowledge in internal control and financial performance. The study used both correlation and descriptive research designs with quantitative approach the data was collected from 70 employees of BPR selected from a target population of 110 employees. The study mainly used questionnaire, interview and documentation as data collection instruments. During the investigation both primary and secondary data was used. The study used a Statistical Package for Social Sciences (SPSS). To examine the performance of BPR. To analyze the relationship between internal controls system on performance of BPR. To achieve the study, the investigator used the research methodology where the study adopted descriptive design using qualitative and quantitative methods. The primary data was collected using questionnaire as data collection tool. The results indicated the first objective was tested by table 7 where the average mean was 3.493 (very high) which explains that internal control system at BPR is very strong at very high level with very great extent view of respondents. This implies that if BPR has strong internal control system it is easier to achieve financial performance and it can effectively achieve the overall its objectives. The second objective was tested by Table 8 revealed that, the average mean was 3.355 or very high which means that respondents at very great extent agreed to the performance of BPR. This implies that BPR has registered the great performance both financial and non-financial, it also revealed that return on assets increases over the time at very high level with the mean of 3.31, there is efficiency of financial statement at very high level with the mean of 3.32 and that the equity shares of member’s increase progressively with the mean of 3.38 (very high). Generally, most of respondents at very great extent confirmed that BPR has great performance. Based on these findings the second hypothesis was tested and verified. The third objective was tested by table 9 revealed the relationship between ICS and performance of BPR with the average mean of 3.532 (very high) which indicated how strongly respondents agreed to the statement. Findings show that the positive relationship between internal control system and the performance of microfinance institutions had the mean of 3.67(very high), control environment influences ROA of BPR with the mean of 3.45 (very high), control activities boost ROE of BPR with the mean of 3.54 (very high), monitoring and evaluation assists in efficiency of operations at BPR with the mean of 3.59 (very high). The management of BPR should be aware on continuous measures to strength its internal control system which serve as tool towards performance.