Internal control environment and financial performance of hospitality organizations in Uganda: a case of Lake Victoria Granada hotel, Entebbe.

Abstract

The study was about internal control environment and financial Performance of Lake Victoria Granada Hotel in Entebbe. The following specific objectives guided the study; to assess the effect of internal control environment on the revenue growth of Lake Victoria Granada Hotel in Entebbe, determine the effect of internal controls on the profitability performance of Lake Victoria Granada Hotel in Entebbe and examine the effect of internal control environment on the liquidity performance of Lake Victoria Granada Hotel in Entebbe. Using descriptive and case study research design, data was collected from 95 respondents using questionnaire and interview guides. The findings revealed that the control environment is an organization wide responsibility, whereby if it is done well ensures that there is proper planning for better operations. The control environment sets the tone for the organization and influences how employees conduct their activities and carry out their control responsibilities. The control environment sets the tone of the hotel’s operations, influencing the control consciousness of its staff and management. This is so because the internal control provides discipline and structure to determine whether a particular internal control system is effective as part of the control environment focusing on risk assessment, control activities, information and communication as well as monitoring are present and functioning. The internal controls affect profitability performance; hence hypothetically. The study shows that internal controls affect the profitability of the business; hence hypothetically, therefore there is a significant effect of internal controls on the profitability performance of Lake Victoria Granada Hotel in Entebbe. The internal control environment influences liquidity performance, so according to the Pearson Correlations (sig. 2-tailed), with internal controls indicated by .978 and Sig. 000, there is a significant relationship between, the internal control environment and liquidity performance of Lake Victoria Granada Hotel in Entebbe. The internal control environment significantly affects the liquidity performance of Lake Victoria Granada Hotel in Entebbe. The study recommends that it is important to strengthen the control activities by ensuring that proper controls are in place and using accounting systems and automation to verify that controls are functioning. The various internal stakeholders should communicate precisely the information the various authorities need to know about financial management in order to promote more transparency and agility in the financial reporting system and performance and the internal and external audit teams should monitor internal controls on an ongoing basis so they are able to identify when internal controls are functioning properly and when there are potential lapses in the internal controls system so that they are always improved for better financial performance in order to ensure better liquidity performance of the business.