Corporate governance and internal controls over financial reporting in Ugandan MFIs
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Date
2017
Journal Title
Journal ISSN
Volume Title
Publisher
Journal of Accounting in Emerging Economies
Abstract
The purpose of this paper is to investigate the relationship between corporate governance and
internal controls over financial reporting (ICFR) of microfinance institutions (MFIs) in Uganda.
Design/methodology/approach – This study was cross-sectional and correlational. In all, 70 Ugandan
MFIs were surveyed and the data were analyzed using SPSS Version 20 to test the nine hypotheses which
were put forward. The hypothesized relationships were tested using the ordinary least squares regression.
Findings – The findings based on multiple regression analysis suggest that board role performance,
expertise and Association of Microfinance Institutions in Uganda (AMFIU) membership are significant
predictors of the ICFR. However, board independence and separation of CEO and chairman roles are not
significant predictors. The results also show that the firm-specific control variables (auditor type, size,
accounting qualification and age) are also not significant.
Research limitations/implications – This study has limitations in that it is cross-sectional, thus limiting
monitoring changes in behavior over time and also because the effectiveness of the ICFR was assessed using
perceptions.
Practical implications – Efforts by regulators and other stakeholders to improve the ICFR must focus on
the corporate governance aspects such as board expertise and ensure that the board performs its roles.
Originality/value – The paper adds to the existing literature on the corporate governance and ICFR by
documenting the relationship between the corporate governance and ICFR. The study complements the
previous studies on the ICFR by demonstrating that board expertise and board role performance improve
the ICFR. Such evidence does not currently exist. The findings also indicate that an MFI which is a member of
AMFIU was found to have better ICFR supporting self-regulation.
Description
Keywords
Corporate governance, Microfinance, Internal controls over financial reporting
Citation
Nalukenge, I., Tauringana, V., & Ntayi, J. M. (2017). Corporate governance and internal controls over financial reporting in Ugandan MFIs. Journal of Accounting in Emerging Economies. DOI 10.1108/JAEE-02-2016-0018