Effect of Internal Control System on Financial Performance of Transport Companies in Rwanda. A Case of Rwanda Interlink Transport Company Limited

The aim of this study was to establish the effect of internal control systems on financial performance of transport companies in Rwanda. The area scope of the study was Rwanda Interlink Transport Company Limited (Ritco Ltd). This study was guided by attribution theory, agency theory, and institutional theory. The study used mixed methods, both quantitative and qualitative. The nature of data was both primary and secondary data and were collected to enable the researcher to reach the conclusion. This study employed descriptive and correlational research design. The target population was the employees of Rwanda Interlink Transport Company Limited. The sample size was determined using stratified and simple random techniques. The total number of sampled respondents was 155 to represent the total population. Data was collected using questionnaire and interview guide as data collection instruments. The data was analyzed using SPSS software by determining descriptive statistics such as simple percentages, means and standard deviations. Regression analysis was also used to determine the relationship or correlation level between independent and dependent variables. The study found strong positive correlations between control environment (r = 0.625**, p = 0.000) and control activities (r = 0.946**, p = 0.000) with financial performance. Similarly, risk assessment (r = 0.764**, p = 0.000), information and communication (r = 0.605**, p = 0.000), and monitoring of controls (r = 0.634**, p = 0.000) also showed strong positive correlations with financial performance. The overall prediction of these variables on financial performance was high (r = 0.980), with an R square of 0.961, indicating that 96.1% of the changes in financial performance could be explained by these predictors. The study concluded based on the findings that internal control system has significant effect on the financial performance of Rwanda Interlink Transport Company Limited. The study recommends the management of the company under review and government agencies to ensure improved efficiency in application of internal control system in their operations.