Effect of Internal Control Systems on the Performance of Manufacturing Firms in Rwanda: A Case Study of SULFO Rwanda Industries Ltd

Judith Muteteri and Richard Kabanda
University of Kigali, Rwanda
Email: mutjudith11@gmail.com

Abstract: This study examined the effect of internal control system components on the performance of manufacturing firms in Rwanda, using SULFO Rwanda Industries Ltd in Kigali as a case. It was guided by four objectives: to assess the effect of risk assessment practices, control activities, information and communication systems, and monitoring mechanisms on firm performance. The study was anchored on Agency Theory, Control Theory, Institutional Theory, and the Resource-Based View. A descriptive and explanatory design with a quantitative, cross-sectional approach was adopted. The target population was 91 employees, and a census was used; 86 complete questionnaires were returned, a 94.5% response rate. Data were collected using a structured questionnaire and analyzed using descriptive statistics, Pearson correlation, and multiple regression. Correlation results showed significant positive relationships between performance and risk assessment (r = 0.981), control activities (r = 0.952), information and communication (r = 0.817), and monitoring (r = 0.935), all at p = 0.000. Regression showed the components explained 96.9% of variation in performance (adjusted R² = 0.969), each having a significant positive effect. The study concluded that effective internal control systems enhance performance and recommended strengthening segregation of duties, improving monitoring, and enhancing information systems.