Internal Control Systems and Financial Performance of Banque Populaire du Rwanda, Karongi Branch
Nyiramuhoza Marie Delphine – Mount Kenya University
Malgit Amos Akims – Mount Kigali University
Email: delumuhoza@gmail.com
Abstract: This study evaluated the influence of internal control systems on the financial performance of Banque Populaire du Rwanda (BPR), Karongi Branch. Four specific objectives were investigated: the effects of risk assessment, control activities,monitoring activities, and information and communication on financial performance. Grounded in Agency Theory, Contingency Theory, and the Resource-Based View (RBV), the study employed a descriptive and correlational research design using a census of all 57 employees, of whom 49 responded, representing an 86% response rate. Data were collected through structured questionnaires, document review, and observation checklists, then analyzed using SPSS Version 23 through descriptive statistics, Pearson correlation, and multiple linear regression. Findings revealed a positive but statistically insignificant effect of risk assessment (β = .162; p = .425) and a negative insignificant effect of both control activities (β = -.147; p = .462) and monitoring activities (β = -.231; p = .169) on financial performance. Information and communication practices, however, demonstrated a positive effect that was marginally significant at the 10% level (β = .324; p = .082), but not at the conventional 5% level. The regression model explained 12.2% of the variance in financial performance (R² = .122). The study concludes that while internal controls are fundamentally important, their individual contribution to financial performance at BPR Karongi remains modest, with information and communication serving as the most impactful driver. The study recommends implementing enterprise resource planning (ERP) systems, introducing biometric physical controls, establishing bi-monthly audit cycles, and conducting quarterly risk assessment training to enhance overall internal control effectiveness and financial performance.
