Internal Controls and Organizational Performance at Zimpapers Private Limited, Zimbabwe

Abstract

The main objective of the study was to examine the relationship between financial controls and Organizational performance for the Zimpapers Group. The study adopted a descriptive research design which used both primary and secondary data as well as both qualitative and quantitative methods. Primary data was collected using questionnaires and secondary data was obtained from newspapers, journals, magazines, internet and other published reports. The study was based on a sample of 120 respondents drawn from the strategic business units of the Zimpapers Group. The data was analysed through descriptive statistics which utilized frequency tables and summary measures. Data analysis was also done through SPSS and a correlation and regression analysis was performed on the study’s variables. The study found out that the most adopted financial controls at Zimpapers are segregation of duties, internal audit, reconciliations, internal checks and the use of appropriate documentation. From the correlation matrix the study found out that firm performance and risk assessment positively and strongly correlate, return on equity was strongly positively correlated with the firms internal control activities and Control activities and risk assessment has the strongest positive relationship with net profit with a regression coefficient of 0.752 and 0.682 respectively. The study also found out that management override, costs, resistance, excessive, redundant and obsolete systems, lack of managerial commitment and weak internal audit and collusion are the major challenges to the successful application of the financial controls. The study concluded that Zimpapers have weak financial controls with segregation of duties, internal audit, reconciliations, internal checks and the use of appropriate documentation as the major financial controls in place. The study also concluded that a positive relationship exists between the control environment and organizational performance, risk assessment and organization performance, control activities has an impact to the return on investment and that information and communication significantly impact on the firms’ revenue generation. The study concluded that firm performance and risk assessment are positively and strongly correlated while return on equity is strongly positively correlated with the firms internal control activities and risk assessment has the strongest positive relationship with net profit. The study also concluded that lack of management commitment to devote resources hinders the adoption and successful implementation internal controls.