The Effect of Internal Controls on the Financial Performance of Non-Governmental Organizations in Rwanda - A Case Study of Africa Indoor Residual Spraying Project

Reports by the Rwanda Governance Board (RGB) indicate that 53.3 % of the NGOs have failed to be sustainable due to fraud, embezzlement and failure to account for the funds from funding countries or organizations overseas. The purpose of this study was to investigate the effect of internal controls on the financial performance of NGOs in Rwanda with reference to Africa Indoor Residual Spraying Project. A combination of both descriptive and correlative research design using a question to collect data was conducted on sixteen (16) employees of the Africa Indoor Residual Spraying Project. The data was processed and analyzed using SPSS for both descriptive and inferential statistics. Findings revealed that there was huge outcome of financial audit processes on the financial performance of AIRSP, this was supported by 76.9 % of the respondents who strongly agreed on the objectivity of financial audit carried out by the project auditors. Secondly, the highly strongly agreed was about whether auditors at AIRSRP carry out reviews of individual systems which was at 92.3 % and this revealed the positivity on this fact since each system is reviewed individually. Also, 84.6 % of the study participants strongly agreed that better performance of the project depended on of internal controls processes. Further the coefficient for adjusted R squared was 0.787 implying that 78.7 % of the variations in financial performance amongst the NGOs could be explained by internal controls. Moreover, the p-value for the ANOVA was 0.002 which is less than alpha of 0.05 (5 %). Confirming that the internal control systems were significantly associated with financial performance. The study thus concluded that internal controls play a key role in the improvement and management of finances within amongst the NGOs in Rwanda. NGOs are thus advised to develop and adopt appropriate financial control structures for enhanced financial performance.