The Effect of Internal Controls and the Audit Committee on financial Accountability in local Authorities

Abstract

Background: Local Authorities just like other government spending agencies are highlighted in Auditor General’s report for various financial and non-financial irregularities. Among the factors that prevent financial irregularities are effective internal controls and audit committees. In this study, we demonstrate how internal controls and audit committees influence financial accountability in the public sector of Zambia, with a particular interest in Local government

 Methods: The study employed a case study design. Primary data was collected from two local authorities using questionnaires. Data was analysed using regression and correlations analysis.

Results: Results from data analysis showed that both Internal Controls and Audit Committees were effective in influencing financial accountability in local governments. The results indicate that there is a significant Strong Positive Correlation between Internal Controls and Financial Accountability (r=0.78, P<0.01) and a weak Positive Correlation between Audit Committee and Financial Accountability (r=0.20, P<0.05). The regression model revealed that both Internal Controls and Audit Committees jointly explain some variation in the Financial Accountability of local authorities in Zambia

Conclusion: For policymakers, this indicates that strengthening the internal controls will improve financial accountability in local authorities. Further, the weak influence of the audit committee on financial accountability may indicate the need to improve the audit committee's effectiveness in the local councils in Zambia.