EFFECT OF INTERNAL CONTROL SYSTEM ON THE FINANCIAL PERFORMANCE OF AN ORGANIZATION (A CASE STUDY OF LAUTECH TEACHING HOSPITAL, OGBOMOSO)

ABSTRACT This study examined the effect of internal control on the financial performance of LAUTECH Teaching Hospital, Ogbomoso. The research aimed to evaluate the effectiveness of various components of internal control, including the control environment, risk assessment, control activities, and information and communication strategies. A quantitative approach was employed, utilizing questionnaires and interviews to collect data from 105 respondents within the hospital. Data analysis was conducted using SPSS, with regression analysis used to test the hypotheses. The findings revealed a significant positive relationship between internal control mechanisms and the hospital's financial performance. Specifically, the study found that monitoring of internal controls and feedback systems had strong positive impacts on financial performance. However, a stricter code of conduct was found to have a potential negative effect. Risk assessment practices showed a significant positive correlation with financial outcomes, although some uncertainty among staff regarding the effectiveness of risk management was noted. The study concludes that while the hospital's internal control system contributes positively to financial performance, there are areas for improvement, particularly in communication and staff awareness of control mechanisms. Recommendations include reinforcing accountability, clarifying roles and responsibilities, conducting regular risk assessments, and implementing more proactive risk mitigation strategies. These findings provide valuable insights for healthcare administrators seeking to enhance financial performance through improved internal control systems.