Masters Research Report

MANAGEMENT CONTROL SYSTEMS IN PUBLIC INSTITUTIONS:

A STUDY OF CIVIL AVIATION AUTHORITY

Submitted by MWITABANGOMA DAVID JOHNS Registration No.: 2015/HDO6/1044U

Supervised by DR. UMAR KAKUMBA

Research project report submitted to Makerere University, College of Business and Management Sciences (COBAMS) in partial fulfillment of the requirements for the award of the degree of Master of Business Administration

November 2018

DECLARATION

APPROVAL

ACKNOWLEDGEMENTS I am greatly indebted to the College of Business and Management Sciences, Makerere University, for accepting me to the MBA Program.

I am grateful to my supervisor, Dean of the School of Business, Dr. Umar Kakumba for having guided me throughout the entire period and for providing his constructive criticisms which made me produce my best.

I also wish to thank the Director Human Resource and Administration of the Civil Aviation Authority (CAA) for allowing me carry my research within the organization. I am particularly thankful to the staff of CAA for accepting to participate and answer the questionnaire and interviews. Thank you abundantly.

Lastly, I also wish to thank my family, officemates and all my classmates in the Public Sector Management option who have been directly and indirectly instrumental in the completion of my study.

David Johns Mwitabangoma

November 2018

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TABLE OF CONTENTS DECLARATION ...... i APPROVAL...... ii ACKNOWLEDGEMENTS ...... iii TABLE OF CONTENTS ...... iv LIST OF TABLE ...... vi LIST OF FIGURES ...... vii ABSTRACT ...... viii

CHAPTER ONE ...... 1 1.0 INTRODUCTION AND BACKGROUND TO THE STUDY...... 1 1.1 Introduction ...... 1 1.2 Background to the study ...... 2 1.3 Problem statement ...... 3 1.4 Objectives of the study ...... 4 1.5 Research questions ...... 4 1.6 The significance of the study ...... 5

CHAPTER TWO ...... 6 LITERATURE REVIEW...... 6 2.0 Introduction ...... 6 2.1 Conceptualization of Management Control Systems ...... 6 2.2 Management Control Systems in Public Organizations ...... 15 2.3 Internal and External Controls ...... 16 2.4 Factors Affecting Control Systems in Public Institutions...... 17 2.5 Management Control systems at CAA...... 19

CHAPTER THREE...... 21 METHODOLOGY ...... 21 3.0 Introduction ...... 21 3.1 Research design ...... 21 3.2 Study population ...... 21 3.3 Sampling design and sample size ...... 22 3.4 Data Sources and Collection ...... 22 3.5 Data Analysis ...... 23 3.6 Validity and Reliability Tests ...... 23 3.7 Ethical Considerations ...... 23 3.8 Chapter conclusion ...... 24

CHAPTER FOUR ...... 25 PRESENTATION, INTERPRETATION AND DISCUSION OF FINDINGS ...... 25 4.0 Introduction ...... 25 4.1 Background information of respondents ...... 25 4.2 Nature of Existing Management Control Systems ...... 28

4.3 Effectiveness of the Control Systems...... 37 4.4 Mechanism to enhance control system at CAA...... 47

CHAPTER FIVE ...... 51 SUMMARY OF FINDINGS, CONCLUSIONS RECOMMENDATIONS ...... 51 5.0 Introduction ...... 51 5.1 Findings and Conclusions ...... 51 5.2 Recommendations ...... 54

REFERENCES...... 58

APPENDICES ...... 64

LIST OF TABLE Table 3.1: Shows target population and sample size ...... 22

Table 4.1 Category of respondent ...... 25

Table 4.2: Nature of existing management control systems ...... 29

Table 4.3: Models utilized to evaluate actual performance ...... 33

Table 4.4: How often are Control Systems of the organization reviewed for improvement/ strengthening? ...... 38

Table 4.5: How do you rate the performance of the designed Control System? ...... 39

Table 4.6: Shortcomings/problems that affect effective Control System ...... 41

Table 4.7: Factors responsible for the success of the Management Control Systems...... 45

Table 4.8: Mechanism to enhance control system at CAA ...... 48

LIST OF FIGURES Figure 1: Type of tenure/ employment terms...... 26

Figure 2: Gender ...... 26

Figure 3: Age of Respondent ...... 27

Figure 4: Length of Service...... 27

Figure 5: Educational level ...... 28

Figure 6: The activities which have been computerized in the department ...... 36

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ABSTRACT This study sought to analyze the nature of existing management control systems, assess their effectiveness and establish mechanisms for enhancing the effectiveness of the control systems at Civil Aviation Authority (CAA). Control as a function of management helps to ensure that organizational resources are utilized effectively and efficiently to achieve organizational objectives.

The study was conducted using both qualitative and quantitative approaches. Qualitative tools included face to face interviews with selected employees of the CAA while quantitative tools included a questionnaire that was randomly administered and used statistical methods to analyze the results.

The major finding of the study is that although CAA has put in place control tools such as rules and regulations, policies, budgets and business plans, they may not be effective because are rarely reviewed, internal managers are not consulted during their formulation, and preventive and corrective action is not taken on the basis of the information provided by the control system. And this may create loopholes in the control systems and therefore compromise accountability at CAA.

For enhancing the effectiveness of the control systems and therefore improve the accountability within CAA, the study makes a number of recommendations that include, among others, establishment of a clear accounting process and structure, capturing and storing adequate information about employee personal goals so as to assist in planning and future decision making, putting in place mechanisms for timely correction of deviations whenever discovered and reviewing the CAA organogram with a view of decentralizing some of the control functions.

It can be said that the study provides useful and relevant insights in the area of Management Control System Practices. The suggestions put forward in this study, if implemented, will go a long way in improving the existing management control system, which in turn will improve the functioning of the organization in all areas. This will trickle down to the economy and the Nation at large. The highlighted practices of the system in one public institution can be used as a framework for evaluation and to modify the existing Management control systems in other institutions.

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CHAPTER ONE 1.0 INTRODUCTION AND BACKGROUND TO THE STUDY 1.1 Introduction This study sought to analyze the existing management control systems, assess their effectiveness and establish mechanisms for their enhancement towards ensuring transparency and accountability in public institutions in Uganda.

According to Henri Fayol, “Control of an undertaking consists of seeing that everything is being carried out in accordance with the plan which has been adopted, the orders which have been given, and the principles which have been laid down. Its object is to point out mistakes in order that they may be rectified and prevented from recurring.”Both public and private organizations employ a broad number of control measures in order to achieve stated objectives and minimize waste of resources-material and human.

This study therefore sought to explore the control systems in public institutions, with specific look at the Civil Aviation Authority (CAA).

As a management function and activity, control or controlling is very important because it helps to ensure that all other functions are carried out effectively and efficiently to achieve the organizational objectives (Thornhill, 2012). Control in other words helps to check the errors and to take corrective action so that deviation from standards is minimized and stated goals of the organization are achieved in a desired manner. This implies that control superintends over all other management functions of organizing and planning.

To understand control, we consider an example of a project. Project managers exercise control over several aspects of the project including human, material and financial resources. The purpose of control is to ensure that the project is executed within the planned schedule, budget and specifications. Without controls in place, the project might incur losses and delays. Therefore, control is a necessary function of any project.

Control, according to Kakumba and Fourie (2008), as a managerial activity and process, leads to optimization and efficiency of both human and material resources usage as well as protection of employee interest and welfare in the organization. The authors conclude that control, therefore, is a precursor for accountability in public management. It should be noted

that accountability, along with transparency are important pillars upon which public administration is founded.

For control to be effective, it must be delivered through a set of tools that aid management for steering an organization toward its strategic objectives and competitive advantage. These tools are collectively called management control systems.

1.2 Background to the study There is a close link between planning and controlling. Planning is a process by which organizations objectives and the methods to achieve the objectives are established, while controlling is a process which measures and directs the actual performance against planned goals of the organization (Camillus, 1991). It can thus be deduced that that control is a continuous management process, must be embedded in each level of organizational hierarchy, should be closely linked with planning, is a tool for achieving organizational activities, helps in minimizing cost, achieving standard and helps management in monitoring performance.

1.2.1 Focus on Civil Aviation Authority (CAA): the case study The CAA was established in 1991 through CAA Ordinance number 2 of 1991, which was later replaced by CAA Statute Number 3 of 1994, Cap 354. The Act spells out the establishment, objectives, functions and powers of the Authority.

In order to keep focused on the cardinal purpose for its establishment and in line with the convention that guides the development and management of the international civil aviation system, CAA set itself a mission that seeks "to maintain the highest standards of safety, security and service in Civil Aviation." And as a way of achieving its mission, the Authority is propelled by the cardinal objective of its establishment which is "to promote the safe, secure, regular and efficient use and development of civil aviation inside and outside Uganda."

The Secondary objectives include the following: maximization of revenue by providing facilities and services on cost recovery basis to the extent possible; maintenance of a high quality, cost sensitive and well-motivated workforce; promotion and support of efforts for protection of the environment and continued improvement of the quality of services to customers of airports managed by the CAA. The CAA also advises government on policy

matters concerning civil aviation generally and on matters regarding international conventions relating to civil aviation and the adoption of measures necessary to give effect to the standards and recommended practices of the international air transport system.

CAA among the many functions also: licenses operators and aviation crew, provides air navigation services, coordinates and directs search and rescue services, certifies operators and aircraft, establishes, maintains, operates and owns aerodromes, and carries out other functions as may be conferred upon it by government or any other law (CAA Act, 1991).

The CAA has listed core values such as: accountability, flexibility, passion for technology, people-centered, quality, and transparency which signify the rationale for control of activities and behavior for the organization to achieve its objectives.

Likewise, the CAA has an organizational structure structured under five directorates: directorate of airports and aviation security, directorate of air navigation services, directorate of safety, security and economic regulation, directorate of finance, and the directorate of human resource and administration. The directorates are under the Stewardship of the office of the Managing Director who reports to the Board of Directors, appointed by the Minister of Transport. (See the organization structure in appendix A). At the heart of this organizational structure is the rationale for ensuring effective and efficient management of organizational resources and activities- which signify control purposes.

1.3 Problem statement Despite the rosy picture detailing the mission, vision, objectives and its core values, there are public concerns that occasionally feature in the media about the CAA. This is also reflected in the public comments on the social media platforms from time to time.

There has also been a concern on whether the CAA has achieved its cardinal objective of promoting a safe, secure, regular, efficient use and development of civil aviation inside and outside Uganda. Indeed, the Daily Monitor 29 March, 2017 quoted one aviator as saying: “There has been a decline in Uganda‟s aviation sector compared to our regional neighbors in Kenya, Tanzania and Rwanda”. This was after the CAA Managing Director had been fired by the Board of Directors.

The Daily Monitor 30 August, 2015 also reported that the Inspectorate of Government (IGG) was probing a Sh,18bn airport security deal, after a whistleblower had reported to the IGG that CAA delegated the purchase of security equipment without the consultation or approval of the board. More recently, on 8 July, 2017, the Daily Monitor reported fraud that had been unearthed in which it was claimed that some Shs. 3bn meant for the project had been diverted to people‟s accounts.

The new vision 21 April, 2010 also carried a story that CAA officials had been detained at Parliament after failing to explain how expenditure on airport‟s expansion project in preparation for CHOGM 2007, was revised by 200%. This was in response to Auditor General‟s report.

It is against this background, that the study seeks to analyze the control systems in public institutions in Uganda. This will help to examine the shortcomings and to provide suggestions towards improvement to make the systems in the various sub systems as well as the whole organization. CAA being a public institution- especially to the flying public, its efficiency has a great bearing on the working of various organizations and thus has a multiplier effect on the economy of the state as a whole.

1.4 Objectives of the study The specific objectives of the study were:

a) To analyze the nature of existing management control systems in CAA

b) To assess the effectiveness of the different control systems at CAA

c) To establish mechanisms for enhancing the effectiveness of the control systems.

1.5 Research questions a) What is the nature of control systems are used in CAA?

b) How effective are the control systems in steering the CAA to meet its stated goals and objectives?

c) How can CAA enhance the effectiveness of the control systems?

1.6 The significance of the study The results of the study on management control systems in public institutions are intended to impact on various things and/or stakeholders that include the following among others:

a) Public policy: public policy is concerned with government policies that affect the whole population. Such policies have to be formulated, evaluated, selected and implemented based on specific criteria. This study helps public policy makers with the importance of having controls in order to ensure that policies achieve their stated goals.

b) Knowledge theory-the study also adds to the existing knowledge relating to control as a function of management. Control is excised through a great number of tools that vary from organization to organization but the objective of having controls is the same across all organizations- private or public.

c) Management practice- although there is no universally accepted definition of management among scholars, for the purpose of this study, we can consider management as the organizational process that includes strategic planning, setting objectives, managing resources, deploying human and financial assets needed to achieve objectives and measuring results. This has to be achieved through a set of policies, rules and regulations that this study define as management controls.

d) Future research-although this study dealt with public institutions using a case study of CAA results of the study can be used to carry out comparative assessments in other public institutions as well as private organizations.

e) Public sector efficiency- the results of the study if utilized by public institutions could generally improve on their efficiency. This could be done through putting in place dynamic management controls that prevent public sector workers from misusing resources at their disposal.

CHAPTER TWO LITERATURE REVIEW 2.0 Introduction This chapter highlights major developments relating to management control systems (MCS) relevant for the study of the development process of control system in various organizations. In order to simplify, the literature has been classified under sections: conceptualization of MCS, management control systems in public organizations, Internal and external controls, challenges affecting control systems and a brief look at the control systems at CAA.

2.1 Conceptualization of Management Control Systems 2.1.1 Management controls Management controls may be defined as the organization, policies and procedures used to help ensure that organizational programs achieve their intended results: that the resources used to deliver these programs are consistent with the stated aims and objectives of the responsible organizations, that programs and resources are protected from waste, fraud and mismanagement; and that reliable and timely information is obtained, maintained, reported, and used for decision making (Linda, 2002).

It is important that management controls should be viewed, not as separate systems in their own right, but as mechanisms to be integrated into the systems serving the entire cycle of planning, budgeting, management, accounting, and auditing (Curristine, et al 2007). The systems should support the effectiveness and integrity of every stage of this cycle and provide continued feedback to managers. Such controls help make individual managers accountable but should not be regarded as constraints on their freedom to take decisions in areas for which they have delegated authority.

Management control is primarily a process for motivating and inspiring people to perform organizational activities that will further the organization‟s goal. It is also a process for detecting and correcting unintentional performance errors and intentional irregularities, such as theft or misuse of resources (Berry, et al 2005). Therefore management control feeds to organizational efficiency.

2.1.2 Management Control System Whereas management control is the process by which managers ensure that resources are obtained and used effectively and efficiently in the accomplishment of the organizations objective, the MCS is an organized systematic process and structure that management uses in Management control practices in any organization.

A management control system may be briefly defined as a system of organizational information seeking and gathering accountability and feed-back, designed to ensure that the organization adapts to changes in its substantial environment and that the work behavior of its employees is measured by reference to a set of operational sub-goals so that the discrepancy between the two can be reconciled and corrected. In the present age most organizations engage in the practice of management control ensuring that: Resources are used and decisions are made consistently with organizational objectives; through the medium of annual business planning or budgeting exercises; and comparison of actual versus budgeted performance especially for middle level managers. To study this system in one public institution this research work concentrated mainly in the field of finance, administration, computer usage and personnel control practices.

According to Chenhall (2003), the terms management accounting (MA), management accounting systems (MAS), management control systems (MCS) and organizational controls (OC) may be used interchangeably. In this study management control systems refer to broad application of a system that provides both financial and nonfinancial information on both internal and external factors, to managers for purposes of decision making. Thus, a MCS is a system which gathers and uses information to evaluate the performance of different organizational resources like human, physical, financial and also the organization as a whole considering the organizational strategies.

The purpose of a MCS is to assist management in coordinating the activities of the firm and in steering the activities of the firm towards achievement of the firms‟ overall purposes, goals and objectives. The following functions are involved in the management control system: planning the activities of the organization, Coordinating the activities of the organization, Communicating information to various levels of organization structure, Evaluating information to various levels of organization structure and Influencing people to change their style of functioning (Chandra, 2013).

Examples of control instruments include the budget, work instructions, performance targets, and bonuses. However there is lack of clarity regarding what constitutes a control system (Fisher, 1995). In this paragraph, therefore, I introduce the working definition of an MCS that underlies this study. This stems from Spekle (2004) and combines ideas from accounting literature and findings from previous research. Firstly, starting with rationale of the management control system, four dimensions of control and how they inter relate.

2.1.3 Characteristics of a good Management Control System A good management control system ensures success for an organization. Good management control here implies that the goals of the organization are clearly communicated to the employees, and that the employee is confident about performing his tasks well. For example, good inventory control means that employees have information about the quantity of inventory present and its availability at different locations.

Future-oriented: planning is always oriented to the future. The organization should be focused on the future. Employees should be encouraged to be flexible so as to respond effectively to change.

Clear objective: good control cannot be established unless the multiple objectives of a particular task are considered separately. For example, to assess the control system relating to production, all major performance parameters like efficiency, quality and asset management, has to be measured.

Minimum control losses: an organization achieves optimal performance when control losses are minimized. Organization can control the losses if the control process of the organization is well defined in the beginning so that the control of each activity can be measured by the line with organization objective.

2.1.4 Detailed standards for Management Control systems Documentation: the control structure (internal and external) and all transactions and significant events are to be clearly documented, and the documentation is to be readily available for examination.

Prompt and proper Recording of transactions and events: Transactions and significant events are to be promptly recorded and properly classified. Authorization and execution of transactions and significant events are to be authorized and executed only by persons acting within the scope of their authority.

Separation of duties: key duties and responsibilities in authorizing, processing, recording, and reviewing transactions and events should be separated among individuals.

Supervision: competent supervision is to be provided to ensure that internal control objectives are achieved.

Access and Accountability for Resources and Records: access to resources and records is to be limited to authorized individuals who are accountable for their custody or use. To ensure accountability, the resources are to be periodically compared with the recorded amounts to determine whether the two agree. The asset‟s vulnerability should determine the frequency of the comparison.

2.1.5 Types of organizational controls Control can focus on events before, during, or after a process. For example, an organization can focus on activities before, during, or after implementation of a project. These types of controls are normally called feed forward, concurrent, and feedback, respectively (Crossan. et al, 1999)

a) Feed forward controls: Sometimes called preventive controls, they attempt to identify and prevent deviations in the standards before they occur. They focus on human, material and financial resources within the organization. These controls are commonly applied in the recruitment of new employees. For example, organizations determine the necessary job skills that are used while advertising for vacancies. Using tests and other screening devices, organizations hire people with those pre-determined skills.

b) Concurrent controls: These monitor ongoing employee activity to ensure consistency with quality standards. These controls rely on performance standards, rules, and regulations regarding employee tasks and behavior. Their purpose is to ensure that work activities produce the desired results.

c) Feedback controls: These involve reviewing information to determine whether the performance meets the established standards. For example, if a company sets a goal of increasing production by 10 %, to ensure that this goal is reached, the company must monitor its output on a monthly or weekly basis. d) Financial controls: After the organization has strategies in place to reach its goals, funds are set aside for the necessary resources and labor. As money is spent, statements are updated to reflect how much was spent, how it was spent, and what it obtained. Managers use these financial statements such as income statements, or balance sheet, to monitor the progress of programs or plans. Financial audits, or formal investigations are regularly conducted to ensure that financial management practices follow generally accepted procedures, policies, laws and ethical guidelines. Audits may be conducted internally or externally.

 Budget controls: A budget depicts how much an organization expects to spend (expenditure) and earn (revenues) over a period of time. Budgets not only help managers plan their finances, but also help keep track of their overall spending. A budget, in reality, is both a planning tool and a control mechanism. Budget development methods are as follows: Top-down budgeting. Managers prepare the budget and send it to subordinates; Bottom-up budgeting (Figures come from the lower levels and are adjusted and coordinated as they move up the hierarchy); Zero- based budgeting (Managers develop each new budget by justifying the projected allocation against its contribution to departmental or organizational goals); and Flexible budgeting (Any budget exercise can incorporate flexible budgets, which set “meet or beat” standards that can be compared to expenditures). e) Marketing controls: Marketing controls help monitor progress toward goals for consumer satisfaction with products and services, prices, and delivery. These include market research, test marketing, and marketing statistics. f) Human Resource Controls: Human resource controls help managers regulate the quality of personnel, as well as monitor their developments and daily performances. Common control types include performance appraisals, disciplinary programs, observations, and training and development assessments. Because the quality of a

firms personnel, to a large extent, determines the firms overall effectiveness, controlling this area is very crucial.

g) Computers and Information controls: Almost all organizations have confidential and sensitive information that they would want to protect. Controlling accesses to data bases is the key to this area. Increasingly, computers are being used to collect and store information for control purposes. Many organizations privately monitor each employee‟s computer usage to measure employee performance, among other things.

Regardless of the control processes used, an effective system determines whether employees and various parts of the organization are on target in achieving organizational objectives.

2.1.6 Dimensions of control In order to realize control as a function of management, combinations of control instruments are used. For example, making knowledge that rests within the organization available for decision making can be achieved by delegation of tasks and responsibilities to those who possess the knowledge. Also, use of financial rewards provides incentives and could further certain behavior. Spekle (2004) refers to four dimensions of control to describe comprehensively the control structure: (a) the allocation of decision rights, (b) use of standards, rules, and regulations, (c) performance evaluation, and (d) rewards and incentives.

The first dimension „allocation of decision rights‟ incorporates the delegation of tasks and responsibilities by the supervisor to the manager. Choices have to be made regarding how many and which responsibilities to involve. Key control instruments are the level of decentralization and then amount of work autonomy a manager has.

The second dimension is the use of standards, rules and regulations. For example, a supervisor can rely on standard operating procedures and work instructions to coordinate the work. This type of standardization is commonly referred to as action control (Merchant, 1982). Other types of rules and regulations focus on employee behavior, specify what not to do and act as boundary systems (Simons, 1995). Rules and regulations thus play different roles within the organization. Performance targets also fall under this control dimension. Different types of these targets include financial targets, non-financial targets, emergent targets and benchmarks. A final control measure that fits in this dimension is the budget. Like rules and regulations, budgets play different roles within the organizations such as performance targets and coordination service.

The third dimension, regarding performance evaluation, a supervisor‟s critical question is the choice of a rationale for evaluation. Evaluation can strictly be based on compliance with rules and procedures or hinge on target achievement. Sometimes a supervisor can use subjective judgement, or choose to tag achievements to long term organizational goals.

The final dimension of control represents the reward system and incentives. The reward is as important as the conditions of being granted one. Short term benefits related to a bonus as well as career perspectives play an important role when it comes to rewards and incentives. (Anne-Marie, 1977).

The four dimensions of control form the platform for a working definition to study MCSs. Together, they represent a broad view of control. Considering these four dimensions each with numerous control instruments, the potential number of different control systems is endless. However, a number of control elements can be combined to make effective MCSs. Thus MCSs should be conceptualized as packages of interrelated elements that as a set establish control (Otley, 1980; Abernethy and Chua, 1996).

2.1.7 Rationale for control Kakumba and Fourie (2008) have argued that “the rationale for control and accountability in public administration and management is to ensure efficient and effective resource utilization to foster public service provision, good governance and development”. Accountability is an assurance that an individual or organization will be evaluated on their performance or behavior related to something for which they are responsible. This implies that accountability is not only expected at individual/personal level but also at the organizational level. Control is just a means of limiting or regulating something. In management, control is exercised through a set of tools such as policies, rules, regulations, budgets, guidelines, etc that assist managers to make certain decisions within their authority. Control therefore shapes managers behavior and provides an environment in which this accountability is provided.

Within organizations, the management control system serves several purposes. The control system provides a framework for measurement and evaluation of performance (Jensen and Meckling, 1992). They further argue that the organization‟s control system compensates for lacking „invisible hand‟ (Smith, 1776) that coordinates activities in the market place, with a system that partitions decision rights. Spekle (2004) adheres to a similarly broad view of

management control systems. He summarizes the main purposes of the MCS as knowledge capturing, coordination, and providing incentives through rewarding and punishment.

Management control ensures continuous business survival and prosperity by creating a mechanism through which the organization adapts to external environment according to stipulated criteria. It also sets a foundation for human relationships and rules for personal accountability within the context of organizational structures and objectives and mission (Lowe and Mclnnes, 1971). It follows therefore that the study of controls in management is important is understanding both individual and organizational behavior.

2.1.8 Control solutions: archetypes Generally, management control systems provide solutions to control problems. However not all control systems are effective under all circumstances. The Transaction Theory of Management Control articulates a framework of five archetypes: arm‟s length control, result oriented machine control, action oriented machine control, exploratory control, and boundary control. The archetypes derive their effectiveness from their ability to deal with specific control problems in a coherent way. The theory gives rich descriptions of all archetypes covering the four dimensions of control. The table below gives an over view of their main characteristics.

Characteristics of the control archetypes Arm’s Machine Machine Exploratory Boundary Length Control Control Control Control Control (Result (Action Oriented) Oriented) Structure Relative Decentralized Well defined Relatively flat Elative autonomy: with clearly tasks, strict hierarchy; autonomy involvement defined areas hierarchy; fluid and within higher level of limited room permeable defined management responsibility for matrix-like boundaries limited as and discretionary project long as accountability behavior structures; performance vague is satisfactory responsibilities Standardization Market – Predefined Standardization No ex ante Prospective related performance of behavior standards and codes of outcome targets of detailed rules, targets; do conduct; requirements: administrative norms, and your best boundary external origins instructions emerging systems; performance standards emphasis on benchmarks behavior to be avoided Monitoring and Performance Monitoring Monitoring and Based on Focused on performance assessment focused on supervision to emerging compliance evaluation relative to target ensure standards; observance “the market achievement; compliance to subjectively of performance norms and assessed interdictions; assessment standards contributions external relative to to long term audits targets organizational performance Reward & Performance Performance No direct link Career Emphasis on incentive dependent dependent between prospects threat of structure bonuses bonuses performance dependent on punishment and rewards long term past of rule- performance; breaking peer pressure behavior; tie-in through „hostages‟ Source: Spekle, 2004

2.2 Management Control Systems in Public Organizations Management Control Systems were introduced in the public sector in the New Public Management (NPM) reforms in the eighties as a way of reinforcing the efficiency of public organization activities (Merriem, 1999). However, despite adoption of several control systems by public institutions, there glaring questions regarding transparency and accountability in these questions.

Historically, management control systems have been invented for use in measuring performance in private organizations (levant, De La Villarmois, 2001). However, Berland and Dreveton (2006) state that they are an important program for public organizations, as a result of the reforms undertaken during the new Public Management paradigm of public administration in the eighties. These systems can address such questions as: is the quality of public service sufficient? Are the financial resources well used? Are the users of public services satisfied? Is the price of the service right?

The control system in government organizations are characterized by:

a) Strategic planning: Strategic planning is of great importance in government organizations. The objective of strategic planning is to allocate resources judiciously. Governments employ the benefit/cost analysis method to make strategic decisions. Political pressure often influences managers‟ decisions. For instance CAA has a department of strategic planning whose mandate is to prepare strategic plans, measure management performance against set targets, process statistical information and carry out corporate planning to guide the authority

b) Performance measurement: Governments have developed nonmonetary indicators for performance measurement (Bourne, et al 2003). These measures can be classified in various ways. On the basis of measurement, they can be classified as Results measures, process measures, and social indicators. A results measure, also known as outcome measure, measures the output that is supposedly related to the organization‟s objectives. A process measure relates to an activity carried on by the organization. A social indicator is a broad measure is a broad measure of output, which reflects the overall achievement of the organization.

c) Political Influences: Public institutions work under high political pressure, (Curristine, et al 2007). Politically elected officials often exert pressure on managers which, in turn, inhibits managers from taking sound decisions. For example, managers may have to favor certain suppliers. A case in point is reflected in New Vision article of August 31. 2018 titled “MPs want CAA out of airport management”, in which MPs on the physical infrastructure committee want the Government to get the CAA out the management of Entebbe Airport. Whereas the MPs argument of separating CAAs regulatory roles with those service provision is valid, the Ministry of Works and Transport under whose docket CAA falls, is opposed to the move because of funding implications.

d) Public information: Public institutions are under constant watch of the press and the public (Udai, 2011). This means that in a purely democratic society, the public assumes that it has the right to know everything about government organizations. But due to exaggeration by the media, at times, even minor issues appear to be major ones. Therefore, to discourage unfavorable media coverage, managers in government organizations exercise greater control on their tasks and try to limit the outflow of sensitive information about the company that flows through the formal management control system.

e) Attitude towards Clients: The main source of revenues for any organization is its clients. Public institutions provide their services to the general public. In case of profit-seeking organizations, more clients mean more revenues, hence additional profits. But for government organizations, an increase in client base is a burden.

f) Management Compensation: Managers working in private organizations perceive their counterparts in public institutions to be less remunerated compared themselves (Bullock, et al 2015). Due to this the best managers do not prefer to work in government organizations.

2.3 Internal and External Controls Public sector institutions have many control systems available to them to guide them to eliminate waste, use human and material resources effectively, protect general welfare and provide public accountability. These controls are both internal and external.

i) Internal Controls

According to Kakumba (2008), Internal controls relate to a plan or measures adopted within an institution or agency to safeguard the agency‟s assets; check the accuracy and reliability of its accounting systems; promote operational efficiency; and ensure adherence to prescribed managerial policy.

Majority of public institutions have in place several internal controls that are meant to be used for conducting self-checks so as to prevent misuse of organizational resources. These include, approved structures, policies, reporting, rules and regulations, standing orders, business plans, budgets, budget ceilings, codes of conduct and many others. But despite these controls, cases of mismanagement and abuse of office in public institutions, whether factual or mere allegations, continue to dominate the public debate, both in print and social media. ii) External controls

External control systems are organizational arrangements operating under the framework of parliamentary control, but are set out from the boundaries of the organization, with the cardinal aim of ensuring accountability, effective and efficient performance in the public sector agencies.

External control arrangements include the office of the auditor general (OAG), Inspectorate of Government (IG), as well as the Parliaments‟ Public Accounts Committee (PAC) (Kakumba, 2008). These external control agencies are mandated by the constitution of Uganda (Art. 163 & 225) to enhance, accountability and performance in the public sector institutions. But despite, the existence of these external control agencies, questions of accountability in public sector institutions remain unanswered.

2.4 Factors Affecting Control Systems in Public Institutions Organizational Structure: organizational structure is related to the formal specifications of different roles of staff, or office, to ensure that the activities of the organization are carried out. Abernethy (1990), argues that large, more decentralized organizations tend to be associated with more formal, traditional MCS and vice versa. Leadership style can also impact MCS. Team based structures are associated with participation and comprehensive performance measures.

Organizational size: Elmore (1990) postulates that as firms grow larger, MCS tend to become more formal and controlling. These are primarily administrative controls and rules. In small firms, MCS focuses on interpersonal controls.

Technology: this covers hardware, materials, people, software, and knowledge. The more technologies are standardized and formally incorporated in the work processes, the more formal and traditional the MCS (Canada, 2005). Also, the more uncertain the task, the less formal and traditional the MCS. The more interdependent the technologies, the less formal and traditional the MCS.

External environment: many studies narrow the effect of external environment on MCS to uncertainty and risk assessments. Chenhall (2003) argues that the major concerns of external environment are that uncertainty that leads to open/ externally focused MCS. Hostility and turbulence are also associated with reliance on formal controls. Even when MCS are tightly controlled in an uncertain environment, flexibility and interpersonal interactions also exist.

Organizational strategy: langfield-Smith (1997) highlights two forms of strategy that have been associated with MCS, at business unit level”. These are conservative and entrepreneurial strategies. Conservative strategies (defender and cost leadership) are associated with formal MCS while entrepreneurial strategies (also known as competitor- focused strategies) combine formal and informal MCS.

National culture:

Kyung and Kang (1991), argue that culture has as much influence on organizational effectiveness as technical and managerial procedures and the formal structure of jobs. The role of culture in controlling employee behavior is significant in that coordination and control within multinational firms may reside largely in the individual rather than through external and formal application of sanctions and rewards. Members of different cultural groups may react differently to the same control mechanism or require different control procedures to achieve the same degree of control. In other words, management cannot choose a management control system at will; what is effective depends to a large extent on the cultural conditioning of the employee value system.

2.5 Management Control systems at CAA This section briefly outlines the MCS at CAA based on the four dimensions as pointed out by spekle (2004), that is (A) the allocation of decision rights, (B) use of standards, rules, and regulations, (C) performance evaluation, and (D) rewards and incentives.

A) The allocation of decision rights

The Civil Aviation Authority is established by the Civil Aviation Authority Act, 1991. (Cap 354). The Act provides for the establishment, duties, powers and management of the authority. The governing body of the authority is the Board of directors, appointed by the minister responsible for transport and or aviation.

Section 11 of the Act states that the board (of directors) shall be responsible for the general control of the performance and management of the undertakings and affairs of the authority; and stipulates the functions of the board as, determine the general performance of the authority, approve business plans, determine and approve estimates of income and expenditure, review the performance of top management officials, monitor the deployment and utilization of the movable and immovable property. This implies that the Board effectively carries out the overall control function at the authority, by ensuring that the provisions of the Act are complied with at a corporate and strategic level. The day to day running of the CAA is vested with management which is headed by the Managing Director (MD) and consists of the Deputy Managing Director, Corporation Secretary, all Directors and some managers. Management is answerable to the Board of Directors.

B) Use of standard rules and regulations.

There are many national and international regulations related to the conduct and regulation of air transport. A number of these regulations are listed on the civil aviation authority website (www.caa.co.ug). Additionally, there are a number a number of rules and regulations regarding the conduct of employees.

C) Performance Evaluation

Section 27 (1) of the Act provides that the accounts of the authority shall, in respect of each financial year, be audited by the Auditor General or an auditor appointed by him or her. The section further states that the “Auditor General shall have access to all books of account,

vouchers and other financial records of the authority and be entitled to have any information and explanation required by him or her in relation to those records”. This in effect affirms that the authority, like any other public institution is subjected to the external control of the OAG.

Sections 28 and 30 provide for Business plans and Annual report respectively. The business plan contains financial targets and performance indicators for the authority and informs the budgeting process. On the other hand the annual report, prepared at the end of each financial year, is a report on the performance of its functions during that year and includes among other things, an audited financial statement. The Business plans, budgets and annual reports have to be presented and approved by the minister. This implies that the activities of the CAA are still subjected to political approval. This is echoed in section 55 (1), wherein it is stated that “the minister may give the authority written directions as to the performance of its functions, which directions shall be orderly of a general nature”.

D) Reward and incentive structure.

According to William, K et al (2016), their study on rewards, Job security and employee turnover in parastatal organizations in Uganda recommended that Civil Aviation Authority should improve rewards in the form of staff remuneration and fringe benefits. This study will examine if there has been any improvements towards this end.

Conclusion

This study therefore sought to analyze the nature of existing management control systems, assess their effectiveness and establish mechanisms for enhancing the effectiveness of the control systems at Civil Aviation Authority based on the four dimensions of control. These dimensions are allocations of decision rights, use of rules and regulations, performance measurement and evaluation, and use of incentives.

CHAPTER THREE METHODOLOGY

3.0 Introduction This chapter presents the research design, sampling procedures, sources of data, sample size, analytical procedures, and ethical considerations and how the researcher plans to ensure validity and reliability of the research instrument. This is designed to answer the three research questions which are:

a) What is the nature of control systems are used in CAA?

b) How effective are the control systems in steering the CAA to meet its stated goals and objectives?

c) How can CAA enhance the effectiveness of the control systems?

3.1 Research design The study was undertaken using both quantitative and qualitative approaches using CAA as a case study. Thus the units of analysis were staff of the Civil Aviation Authority. Being a case study, the design does not arrive from a particular social-scientific tradition and is descriptive in nature and therefore only describes the characteristics of the population being studied. Descriptive research was preferred because it allows the researcher to observe the phenomenon in a completely natural and unchanged environment and also gives the opportunity to integrate quantitative and qualitative methods of data collection.

3.2 Study population A population is the specific parameter about which information is sought and it may include a set of people, services, elements and events, group of things that are being investigated (Kothari, 2011). This research was strictly carried out within the CAA at Entebbe International Airport, specifically targeting staff selected from all the five directorates. These were officers, senior officers and principal officers and managers. According to CAA employment budget estimates for financial year 2017/2018, this population is approximately 110 staff.

3.3 Sampling design and sample size Out of the target population of 110 staff, a sample of 86 is selected for the study using the sampling table of Krejcie and Morgan (1970)- see Appendix C. Simple random sampling techniques were adopted as probability design to access the lower level staff, this gave equal chances to all respondents to participate in the study. However, purposive sampling was also employed for face to face interviews with selected managers because they were believed to possess more detailed knowledge of the MCS than others.

Table 3.1: Shows target population and sample size

Branch Population (N) Sample (S) Sample technique Managers 5 5 purposive Principals 17 13 Simple random Seniors 21 18 Simple random Officers 32 23 Simple random Support staff 35 27 Simple random Total 110 86

Source: Primary data, modified by the Author following sample size table by Krejcie and Morgan (1970).

3.4 Data Sources and Collection

The study used Primary and Secondary data sources. Primary data was collected by use of self-administered questionnaires and face to face interviews from sampled target accessible respondents. Questionnaire was preferred because of its higher speed of data collection and higher objectivity compared to many alternative means of primary data collection.

For face to face interviews, the study adopted an interview guide with unstructured, but general questions related to the objectives of the study. This was intended to allow the respondents flexibility to discuss what they thought was most relevant to the Control systems in CAA.

Secondary data was gathered from Auditor General Reports, CAA documents and manuals, Textbooks, Research Papers, and Published Dissertations to review the related literature and identify missing gaps. These documents were very useful because they contained information

that was used to supplement the results from primary data. However, the CAA website and accessible reports were used to back up the findings.

3.5 Data Analysis The study used a quantitative data collection method by use of self-administered questionnaires (SAQ) with questions designed following the research objectives on the five point Likert scale range that is; 1(Strong disagree), 2(Disagree), 3(Neutral), 4(Agree), 5(Strongly agree). Information was captured from respondents at minimal costs and in the shortest time possible, given the fact that respondents have many commitments and are occupied with work. SAQs are the most suitable to collect data from a large sample (Gay, 1996).

Data collected with questionnaires was edited, coded and entered in the SPSS to generate descriptive statistics including frequency distributions/mode, Mean, Standard deviation, and Pie-charts for easy interpretation. Data from interviews and documents was analyzed qualitatively using content analysis following developed themes related to the objectives of the study and making comparison with findings collected from the questionnaire.

3.6 Validity and Reliability Tests Bryman and Bell (2003), validity and reliability in research design refer to the need to ensure that concepts used in the study measure what they are actually intended to and that this measurement is consistent and stable for all respondents. Content validity is refers to the extent to which the instrument a measure the represents for all facets of a given construct (Walford (2009). Content validity of the questionnaire was ensured by designing the questions in conformity with the three study objectives. The supervisor and expert opinion evaluated the relevance, wording and clarity of questions in the instrument as recommended by Fray (2010).

3.7 Ethical Considerations The researcher followed standard ethical considerations in the process of carrying out the research project study include consent from respondents, plagiarism, privacy, confidentiality, anonymity, responsibility among others for example by not requiring respondents names on the questionnaires and obtaining consent from the then Director of human resources and administration.

3.8 Chapter conclusion This chapter presents the research methods and procedure adopted in answering the research questions raised in chapter-one. It has the research design, target population, sample size, sampling design, and source of data, reliability and validity, data collection instrument, data analysis and ethical consideration. The next chapter presents the study findings.

CHAPTER FOUR PRESENTATION, INTERPRETATION AND DISCUSION OF FINDINGS 4.0 Introduction This chapter involves presentation, interpretation and discussion of findings in relation to the study objectives. This study sought to analyze the nature of existing management control systems, assess their effectiveness and establish mechanisms for enhancing the effectiveness of the control systems at CAA.

4.1 Background information of respondents Findings on the background information of respondents were captured and results are evidenced below.

Table 4.1 Category of respondent

Frequency Valid Percent

Valid Manager 5 5.8

Principal 13 15.1 Senior 18 20.9 Officer 23 26.7 Assistant 14 16.3 Data management 2 2.3 Revenue 2 2.3 Trainee 4 4.7 Accountant 2 2.3 Assistant manager 2 2.3 Specialist 1 1.2 Total 86 100.0 Source: Primary Data

From the table above, 5.8% of the respondents were managers, 15.1% principal, 20.9% seniors, 26.7% officers, 16.3% assistants, 2.3% data management, 2.3% revenue collectors, 4.7% trainees, 2.3% assistant managers, and 1.2% specialists. This implies that most information was got from cross section of people meaning that it was reliable.

22% Temporary

Contract Permanent 76%

Source: Primary Data Figure 1: Type of tenure/ employment terms

From the figure above, 2.3% of the respondents had temporary employment, 22.1% had contract, and 75.6% had permanent. This implies that most people were on permanent terms of employment implying that they were more stable and knowledgeable about providing information.

Female 44% Male 56%

Source: Primary Data Figure 2: Gender

From the figure above, 55.8% of the respondents were male, and 44.2% were female. This implies that there was no gender bias.

Age of respondents 50 45 40 35 30 FREQUENCY 25 20 15 Frequency 10 5 0

18-25 26-35 36-45 46-55 56 and above

YEARS

Source: Primary Data Figure 3: Age of Respondent

From the figure above, 7 respondents representing 8.1% of the respondents were between 18 to 25years of age, 27.9% were between 26 to 35years, 52.3% were between 36 to 45years, 4.7% were between 46 to 55years, and 7% were 56years and above. This implies that most respondents were mature and reasonable enough to answer questions related to the study.

Length of service 40 F 35 r 30 e 25 q 20 u 15 e Frequency 10 n 5 c 0 y 1-3 years 3-5 years 6-10 years 10 and above Duration

Source: Primary Data Figure 4: Length of Service

From the figure above, 15.1% of the respondents have been in service for a period between 1 to 3years, 17.4% for a period between 3 to 5years, 43% for a period between 6 to 10years, and 24.4% for a period between 10years and above. This implies that most respondents had experience with the organization under study.

2% 2%

4% 8%

O LEVEL A LEVEL 42% DIPLOMA GRADUATE POST GRADUATE

42% MASTERS

Source: Primary Data Figure 5: Educational level

From the figure above, 2.3% of the respondents were educated up to O-Level, 3.5% A-Level, 8.1% diploma, 41.9% graduates, 41.9% post graduates, and 2.3% masters. This means that most respondents had the capacity to interpret questions in the questionnaire.

4.2 Nature of Existing Management Control Systems The first objective of this study sought to analyze the nature of existing management control systems in CAA. Respondents were asked to rank on how they agreed with the existing MCS at CAA on a five point scale whereby 1= Strongly Agree, 2= Agree, 3= Neutral, 4= Disagree and 5= Strongly Disagree.

Findings on the nature of existing management control systems were captured and results are evidenced below.

Table 4.2: Nature of existing management control systems

N Min Max Mean Std. Dev CAA has existing Rules and Regulations pertaining to financial 86 1.00 3.00 1.5349 .58807 management CAA has existing Rules and Regulations pertaining to human 86 1.00 3.00 1.6279 .53240 resource management CAA has existing Rules and Regulations pertaining to 86 1.00 2.00 1.6279 .48620 administrative management CAA has existing Rules and Regulations pertaining to operations 86 1.00 2.00 1.5465 .50075 management CAA has competent and available Human resources in different 86 1.00 5.00 2.0000 .89443 departments Management decisions at CAA are taken and implemented within 86 1.00 5.00 3.2791 .91589 defined time limits All members of staff are knowledgeable about the internal controls 86 1.00 5.00 3.0116 .96399 in the organization Management decisions are influenced by the actions of the following external agencies of government-office of auditor 86 1.00 5.00 3.0698 1.37019 general Management decisions are influenced by the actions of the following external agencies of government - inspectorate 86 1.00 5.00 3.0465 1.36258 government Management decisions are influenced by the actions of the following external agencies of government - public accounts 86 1.00 5.00 3.2326 1.50821 committee CAA annual budget, Business plan are informed by the 86 2.00 5.00 4.2326 .66287 organizational strategic objectives CAA regularly reviews its rules, regulations, policies 86 1.00 5.00 3.8256 .65425 For developing any control system in CAA, the new control system 86 1.00 5.00 3.8605 .78460 is developed by: internal managers For developing any control system in CAA, the new control system 86 1.00 5.00 3.7442 .75438 is developed by: external consultants For developing any control system in CAA, the new control system 86 3.00 5.00 4.0000 .66862 is developed by: both internal managers and external consultants CAA takes preventive actions on the basis of information provided 86 2.00 5.00 3.9186 .55762 by the control system If deviations are identified in the control systems, corrective action 86 3.00 5.00 4.1163 .51834 is initiated through the following: review meetings are held

If deviations are identified in the control systems, corrective action is initiated through the following: deviations are communicated to 86 2.00 5.00 3.9419 .49360 concerned and warns issued If deviations are identified in the control systems, corrective action is initiated through the following: responsibilities are fixed and 86 2.00 5.00 3.7209 .62593 punitive action against the defaulters initiated If deviations are identified in the control systems, corrective action is initiated through the following: deviations are studied and 86 1.00 5.00 3.6512 .80830 standards reviewed Valid N (listwise) 86 Source: Primary data

From the table above, most respondents generally agreed that CAA has existing Rules and Regulations pertaining to financial management (Mean =1.5349), human resource management (Mean=1.6279), administrative management (Mean =1.6279) and operations management (Mean=1.5465). This means that CAA has several rules and Regulations within the organization. Such rules and regulations include documents like General Terms and Conditions of Service (GTCS), Comprehensive Bargaining Agreement (CBA), Specific Operating Instructions, the CAA services charter, the safety policy, the HIV policy, the Quality police, among others that guide management to make decisions pertaining to the organizational functions. Studies have also indicated that organizational performance is closely linked with effective organizational policies pertaining to recruitment, promotion, training, health and safety, benefits (Katou & Budhwar, 2006).

Most respondents agreed that CAA has competent and available Human resources in different departments (Mean=2.0000). This implies that CAA has competent and available Human resources in different departments. Having the right people in the right job positions at the right time is critical in achieving the stated mission of the organization. If we recall, CAA mission is “to maintain the highest standards of safety, security and service in civil aviation”. To achieve such a mission requires a team of competent human resources. Delaney and Huselid (2017) state that human resource management practices are strong foundation for organizational effectiveness and performance. The organization is as strong as its human resources. Through the human resources, the organization set the agenda, is held accountable, provides leadership, and ensures that the organization is profitable and sustainable (Garavan & McGuire, 2010).

Most respondents disagreed that Management decisions at CAA are taken and implemented within defined time limits (Mean=3.2791). This poses serious risks within the organization. Management is charged with the daily running of the organization business. For the organization whose mission is to maintain the highest standards of safety, security and service there needs to be a clearly defined timeframe within which decisions taken by management are implemented. The work of a manager includes not only making decisions or participating in their making but also communicating such decisions to the subordinates and monitoring how those decisions will be implemented (Simon, 2012). When management decisions are implemented with a defined time frame, organizations effectiveness is enhanced.

More so, most respondents generally disagreed that all members of staff are knowledgeable about the internal controls in the organization (Mean=3.0116). This implies that most members of staff are generally not knowledgeable about the internal controls in the organization. It should be noted that the objectives of having internal controls is to protect the organization from financial fraud. Lately a lot of financial fraud legislation relies heavily on whistle blowing for enforcement. But the aspect of whistle blowing decision also depends on whether or not members of the organization are aware of the fraud and measures in place to safeguard against such fraud (Robinson, et al 2012). Thus, the general rules within the CAA should be clear and every employee ought to understand these rules to protect the organizational resources.

However, when asked if Management decisions are influenced by external agencies of government namely Office of Auditor General (OAG), Inspectorate of Government (IG) and Parliaments Public Accounts Committee (PAC), most respondents generally disagreed (mean= 3.0968). However, Kakumba and Fourie (2008) stress that external control agency of the OAG and IG play a key role in making government departments more accountable through improved processes. Thus, CAA should embrace the involvement of these external control agencies as factors contributing to its accountability values.

Most respondents disagreed that CAA annual budget, Business plan are informed by the organizational strategic objectives (Mean =4.2326). This implies that CAA annual budget, Business plan are not informed by the organizational strategic objectives. This finding needs particular attention because if budgets and business plans and therefore expenditure are not aligned to the organizational strategic objectives, then CAA might incur unnecessary losses

through commitment of resources in non-critical activities. This is evidenced in recent media reports where the Inspectorate of Government has ordered CAA to recover huge amounts of money that was irregularly paid to one of the contractors/supplier hence causing Government loss (Daily Monitor, October 18, 2018).

More to that, most respondents disagreed that CAA regularly reviews its rules, regulations, policies (Mean =3.8256). This implies that the controls at CAA are hardly dynamic. If rules and policies are not reviewed regularly, it might create an avenue for some people to discover loopholes in the system and to misuse the organizations resources.

When asked about developing any control system, most respondents disagreed that internal managers and external consultants are involved. This finding is puzzling because if neither internal managers nor external consultants are involved, then who develops control systems at the CAA? This may point to a danger in the organization whereby the control system may not adequately address the loopholes in the organization and therefore likely to cause significant losses to the organization.

Most of the respondents disagreed that CAA takes preventive actions on the basis of information provided by the control system (Mean =3.9186). This is also another interesting finding. If CAA does not take preventive actions on the basis of information provided by the control system, then how are the organizations resources safeguarded against abuse? However there are reports that that the IGG has recently asked the CAA to recover huge amounts of money that was irregularly paid to one of the contractors/supplier hence causing Government loss (Daily Monitor, October 18, 2018). This directive came with implementation timelines and therefore CAA is obliged to comply, and undertake not to repeat a similar mistake in future, at least by law. This revelation by the respondents to think that the CAA does not take preventive actions could be a perception that requires further investigation.

Furthermore, when respondents were asked how corrective action is initiated if deviations are identified in the control system, most disagreed that review meetings are held (Mean =4.1163), they also disagreed that deviations are communicated to concerned staff and warnings issued (Mean =3.9419), they also disagreed that responsibilities are fixed and punitive action initiated against defaulters (Mean =3.7209). Lastly they also disagreed that deviations are studied and standards reviewed (Mean =3.6512). All the above is indicative of

the absence of any form of corrective action in the systems at CAA even if deviations were identified. This is capable of breeding impunity among staff once they know that no form of punitive action is meted to defaulters. But again this leads the researcher to ask the importance of the rules, regulations and policies which most respondents agreed that they exist within the organization.

Respondents were also asked on how often CAA utilizes the various models to evaluate actual performance. On the five point scale: 1=very often, 2=always, 3= frequently, 4= rarely and 5 = never. The findings are presented in the table below.

Table 4.3: Models utilized to evaluate actual performance

N Min Max Mean Std. Dev Budgets 86 1.00 3.00 1.7093 .74937 Capital Budgeting 86 1.00 4.00 1.9070 .80627 Internal Audit 86 1.00 5.00 1.9070 .84891 Accounting Ratios 86 1.00 4.00 2.1860 .81906 Cash flow statements 86 1.00 4.00 2.1047 .81210 Return on investment 86 1.00 4.00 2.3488 .79361 Management Audit 86 1.00 4.00 2.4186 .81839 Manpower Planning & forecasting system 86 1.00 5.00 2.9302 1.12502 Performance Appraisal 86 1.00 4.00 2.1628 .83821 Incentives and Award system 86 1.00 5.00 2.7326 1.05635 Personal information systems 86 1.00 5.00 2.8140 1.03482 Inventory control Models 86 1.00 5.00 2.8140 1.11156 Statistical Control 86 1.00 5.00 2.5465 .95372 Valid N (listwise) 86 Source: Primary Data

From the table above, most respondents noted that CAA always utilizes budgets as models to evaluate actual performance (Mean =1.7093). A budget contains estimates on revenue and expenditure for a given accounting period, notably a financial year. It can be a good measure of performance for as long as all activities are restricted within the approved budget. The Civil Aviation Authority Act (CAP 354 section 22) requires CAA, within three months before the commencement of each financial year, to prepare and submit to the Minister of Transport for approval, estimates of income and expenditure for the next ensuing year as may be approved by the Board. Also, the Public Finance Management Act (2015) section 13 (11f)

requires that the annual budget of Uganda includes all budgets for public corporations. This implies that CAA‟s budget conforms to the requirements of the Ministry of Finance Planning and Economic Development.

Most respondents also noted that CAA always utilizes Capital Budgeting as models to evaluate actual performance (Mean =1.9070). Capital projects, by their nature take huge amounts of financial resource, and time. According to CAA‟s budget for the financial year 2018/2019, in preparing the budget, the organization paid particular attention to the following objectives: enhancement of safety and security in the aviation industry, promote competitiveness of Uganda‟s aviation industry, enhance sustainability and revenue growth, promote quality and management and assurance and enhance management and development of CAA‟s human resource. In the said budget, CAA has committed 53.56 billion shillings to funding her capital budget.

Most respondents noted that CAA always utilizes Internal Audit as models to evaluate actual performance (Mean =1.9070). Internal audit is an important component of good governance in the public sector because it serves as an objective source of assurance and advice and can provide top management with insight of the organization‟s governance, operations and risk management. It‟s also a good measure of actual performance for it safeguards the organization against risks of fraud and other forms of wastage. On cross checking with the structure of the CAA, internal audit is a separate department in the office of the Managing Director, who is the accounting officer of the organization.

Most respondents noted that CAA frequently utilizes Accounting Ratios as models to evaluate actual performance (Mean =2.1860). This research did not dig deeper to find out which ratios are actually used by the accountants but these ratios are good indicator for financial decision making.

More so, most respondents noted that CAA frequently utilizes Cash flow statements as models to evaluate actual performance (Mean =2.1047). Cash flow statements show how the organizations income (revenue) is spent (expenditure). This comprehensive statement of revenue against expenditure is a good tool for actual performance for any organization.

Most respondents noted that CAA frequently utilizes Return on investment as models to evaluate actual performance (Mean =2.3488). Return on Investment (ROI) is also an important model of appraising investment decisions. If a projects ROI is lower than that expected, then the decision would be not to invest in the said project.

Most respondents noted that CAA frequently utilizes Management Audit (Mean =2.4186) as well as manpower Planning & forecasting system (Mean =2.9302) as models to evaluate actual performance. These tools help to ensure that the organizational material and human resources are adequate in number, and prevent CAA from unnecessary losses.

Besides that, most respondents noted that CAA frequently utilizes Performance Appraisal as models to evaluate actual performance (Mean =2.1628). Performance Appraisal is a human resource tool through which the organization is able to track individual staff performance, in terms of targets, achievements, weaknesses, strengths, qualifications, career plans, etc. it‟s an agreement between the supervisor and supervisee and important for identifying staff needs and helps determine actual performance of the organization. During interaction with the Manager Human resources at CAA, the researcher learnt that performance appraisal is carried out on an annual basis at the beginning of the financial year and is an important tool for determining staff promotion.

Furthermore, most respondents noted that CAA frequently utilizes Incentives and Award systems (Mean =2.7326) as well as Personal information systems (Mean =2.8140) as models to evaluate actual performance. Incentives and awards are widely used by human resource managers as compensation tools for performance. The incentive and award system is complimented by well-structured personal information and performance appraisal systems. According to the CBA, article 22 states “the Authority shall employee a talent and performance management system where every employee shall be continuously assessed for his/her present and poetical productivity. The system shall also be used for analysis, identification and support for training and development needs. The talent and performance management shall be aligned and be supportive of the Authority‟s strategic plan as well as its culture.”

Most respondents noted that CAA frequently utilizes Inventory control Models as models to evaluate actual performance (Mean =2.8140). These models help track both the quality and quantity of all organizational assets, and prevent them from wastage. A case in point is the

Auditor General‟s March 2010 Value for Money audit report on procurement and storage of drugs by National Medical Stores (NMS)-Uganda in which one of the main findings was that NMS stores drugs without regard to buffer stock levels. As a result, there had been general countrywide concerns about people dying of treatable diseases arising out of patient‟s failure to access drugs in public health facilities while drugs worth billions of shillings remain expired in NMS facilities, stores in referral hospitals, district health offices and health units. Three main factors in inventory control decision making process are: the cost of holding stock, the cost of placing an order and the cost of shortage.

Lastly, most respondents noted that CAA frequently utilizes Statistical Control as models to evaluate actual performance (Mean =2.5465). Statistical controls compliment other models in ensuring that resources of the organization are mitigated against risks of misuse and fraudulent activities.

From the above findings it can be concluded that the CAA has some models in place for evaluating the actual performance of the organization.

We then asked the respondents to identify (by ticking) which activities had been computerized in their departments. The results are presented in the table below.

Activities which have been computerised 80 R 70 e 60 s 50 40 p 30 o 20 n 10 s 0 e Responses s

Activity

Source: Primary Data Figure 6: The activities which have been computerized in the department

From the figure above, it can be noted that there is some computerization in most activities investigated. However most respondents indicated checking theft and malpractice followed by collection of billing amount, preparation of bills, payroll controls as well as inventory control topped computerization activities whereas computerized maintenance, log in systems and target tracking appeared to be among the least computerized systems. The organization therefore needs to pay extra attention to the ease less computerized systems in order to have safeguards against their abuse and losses.

In their book titled. “Information Technology for Good Governance”, Magno and Serafica (2001) argue that IT promotes good governance in three basic ways: 1) by increasing transparency, information and accountability; 2) by facilitating accurate decision making and public participation; and 3) by enhancing the effective delivery of public goods and services.

The Government of Uganda has, since 2006, established ministry of Information Communication Technology which is charged with ensuring sustainable, efficient and effective development. Harnessing and utilization of ICT in all spheres of life to enable the country achieve its national development goals. Thus the usage of computers in organizational processes is supported by the National ICT policy, laws and regulations.

4.3 Effectiveness of the Control Systems

The second objective of this study sought to examine the effectiveness of the current control systems at CAA, the findings of which were captured and results are evidenced in the following tables.

Table 4.4: How often are Control Systems of the organization reviewed for improvement/ strengthening?

Std. N Min Max Mean Dev Financial Control-setting of targets 86 1.00 4.00 2.3837 .84253 Financial Control- Actual Targets 86 1.00 5.00 2.5930 .70923 Financial Control- Comparisons 86 2.00 4.00 2.9070 .76124 Financial Control- Corrective Actions 86 1.00 5.00 2.8256 .97247 Administrative Control- Setting of Targets 86 1.00 4.00 2.2326 .71413 Administrative Control- Actual Performances 86 1.00 5.00 2.6047 .81571 Administrative Control- Comparisons 86 1.00 4.00 2.8488 .84738 Administrative Control- Corrective actions 86 1.00 5.00 3.2326 .89013 Human Resource Control - Setting of Targets 86 1.00 4.00 2.1395 .79945 Human Resource Control - Actual Performance 86 1.00 4.00 2.4884 .86425 Human Resource Control - Comparisons 86 1.00 4.00 2.9186 .87063 Human Resource Control - Corrective actions 86 1.00 4.00 2.9535 .89320 Valid N (listwise) 86 Source: Primary Data

From the results indicated in the table above, most respondents generally noted that setting of targets, actual targets, comparisons and corrective actions for financial, administrative and human resource controls were frequently reviewed for improvement and strengthening. After the management of the organization has set standards, they must track and monitor performance. Systems require on going modifications and adjustments in order to reach the stated targets or objectives.

For instance financial controls include income statements, balance sheets and cash flow statements. Balance sheets help the organization determine the financial strength, that is, liabilities and assets at a given time and the management can determine if the organization has the resources to sustain its operations. Income statements track revenue and expenditure over a defined duration. Managers can review expenses item by item to track if they are in conformity with the budget or adjust the budget if circumstances require such adjustment. Administrative controls include documented guidelines, specifications, work instructions, policies and procedures which should cut across all other sections of the organization.

On the other hand human resource aspect focuses on the processes for hiring, training, and recruitment of new staff as well managing and developing the existing employees. Controls not only define how employees should conduct themselves and perform job duties but also include techniques for assessing employee‟s skills to ensure the organization has staff with the required skills to enable it reach the stated objectives. These controls should cut across the whole organization from the lowest to the highest level of the organizational structure. Failure to human resource controls can lead managers to make decisions that can result in costly litigations against the organization. An example is the labor dispute no. 016/2014 of Margaret Kagendo versus CAA where the Industrial Court determined that Kagendo had been unlawfully terminated and awarded her costs.

Then the respondents were asked to rate the performance of the designed control system. The findings are presented in the table below.

Table 4.5: How do you rate the performance of the designed Control System?

On the five point scale: 1=very effective, 2= effective, 3= not sure, 4= ineffective, 5= very ineffective.

N Min Max Mean Std. Dev Financial Control- Setting of Targets 86 1.00 4.00 2.0465 .63072 Financial Control- Actual Targets 86 1.00 4.00 2.2791 .69707 Financial Control- Comparisons 86 1.00 4.00 2.6279 .65163 Financial Control- Corrective Actions 86 1.00 5.00 2.4186 .71068 Administrative Control- Setting of Targets 86 1.00 5.00 2.1163 .75799 Administrative Control- Actual Performances 86 1.00 5.00 2.3488 .76339 Administrative Control- Comparisons 86 1.00 5.00 2.7326 .92577 Administrative Control- Corrective actions 86 1.00 4.00 2.3837 .78469 Human Resource Control - Setting of Targets 86 1.00 4.00 2.0814 .68967 Human Resource Control - Actual Performance 86 1.00 5.00 2.5000 .76312 Human Resource Control - Comparisons 86 1.00 5.00 2.6860 .78608 Human Resource Control - Corrective actions 86 1.00 5.00 2.5116 .82240 Valid N (listwise) 86 Source: Primary data

From the table above, most respondents noted that they were not sure in the performance of the designed control system at CAA. In other words, respondents could not tell whether Setting of Targets, actual targets realized, comparisons, and corrective actions in financial, administrative and human resource controls were effective or not. This finding also needs careful attention by the management so that members of staff do not find loopholes in the control system and take advantage of such loopholes to squander organization resources- financial, material or human. It should be noted that the purpose of having controls in the organization is to ensure that the entity‟s resources are safeguarded from abuse.

Such loopholes mentioned in the preceding paragraph are evidenced in the 2017 Inspectorate of Government report to parliament where CAA is reported to have awarded a cleaning contract irregularly. The same report notes one of the challenges of the Inspectorate of Government as “prevalence and complexity of corruption and maladministration in the public sector” where corruption no longer covers favors and bribes to a few individuals but now “encompasses grand syndicated corruption where controls are deliberately circumnavigated in a systematic way involving networks of corrupt officials from another MDA, Local government and the private sector”.

Thereafter respondents were asked on what they thought were the problems that are affect effective control system. The findings are presented in the table below.

Table 4.6: Shortcomings/problems that affect effective Control System

On the five point scale: 1= strongly agree, 2= agree, 3= neither agree nor disagree, 4= disagree, 5= strongly disagree.

N Min Max Mean Std. Dev Targets are set by other departments 86 1.00 5.00 1.9535 1.28252 No time investment in target setting 86 1.00 5.00 2.4767 1.20515 Targets are not realistic or adequate 86 1.00 5.00 2.9884 1.22229 Targets once fixed, are not reviewed 86 1.00 4.00 2.9070 1.23315 Information systems provides late information 86 1.00 5.00 3.2442 1.06203 Information provided is not adequate 86 1.00 5.00 3.1744 1.13958 Motivation for self-control is lacking 86 1.00 5.00 2.8605 1.32986 Personal goals of the employees are neglected 86 1.00 5.00 2.6977 1.28402 Proper Analysis of information is not done 86 1.00 5.00 2.9767 1.23647 Deviations are not properly taken up 86 1.00 5.00 3.0233 1.25536 Corrective actions are not initiated in time 86 1.00 5.00 2.9884 1.28790 Incentive system is not fair 86 1.00 5.00 2.7674 1.37776 Preventive measures are not taken 86 1.00 5.00 3.0698 1.29061 Efficiency measurement techniques are inappropriate 86 1.00 5.00 3.2674 1.31439 Control reports may place you in an embarrassing situation 86 1.00 5.00 2.5698 1.30646 Control System lays emphasis on the tangibility aspect of 86 1.00 5.00 3.2907 1.21623 work only Management Control System merely finds defects and 86 1.00 5.00 3.3721 1.20827 does not take corrective action MCS suffers from the problem of co-ordination 86 1.00 5.00 3.0814 1.33914 Valid N (listwise) 86 Source: primary data

From the table above, most respondents agreed that targets are set by other departments are one of the problems that affect effective control systems in the department (Mean =1.9535). This implies individual departments are not empowered to set their own targets. This poses serious challenges to these departments because an entity outside the department may not adequately understand the constraints within which the department works and therefore poses a risk of setting either an excessively high or low target. This position was amplified by one manager whom the researcher interviewed and had this to say: “the finance department determines and sets budget ceilings for each department, a practice that tends to limit the

performance of other departments. The ideal situation would have been a decentralized system whereby each department sets its own targets that aggregately contributes to the organizational objectives and goals”.

In addition, most respondents neither agreed nor disagreed that no time investment in target setting are one of the problems that affect effective control systems in the department (Mean =2.4767). This finding somehow complements the previous one where respondents agreed that targets are set by other departments. It basically implies that some managers don‟t find any incentive for setting their own targets and this is likely to compromise the organizational effort to achieve the stated objectives. An effective control system entails managers setting targets as well as a mechanism for monitoring the performance of such managers in achieving the set targets in line with organizational objectives (Merchant and Van der Stede, 2007).

Findings further revealed that most respondents neither nor disagreed that Targets are not realistic or adequate (Mean =2.9884). This could partly due to the fact that these targets are set by other departments and partly because no time is invested in setting these targets by individual departments as indicated in the previous findings. Relatedly, most respondents neither agreed nor disagreed that Targets once fixed, are not reviewed as one of the problems that affect effective control systems in the department (Mean =2.9070). An effective control system requires periodic review of targets depending on the circumstances. This requires continuous monitoring and evaluation or internal audit to check if the department activities and resources are tailored to the purposes for which they were intended (Sarens and Beelde, 2006).

Most respondents generally disagreed that Information systems provides late information are one of the problems that affect effective control systems in the department (Mean =3.2442). This implies that Information is obtained in time when it is needed and is update. This is important for an effective management control system. More so, most respondents disagreed that Information provided is not adequate (Mean =3.1744). This implies that control systems in the departments provide adequate information for management functions. This is also an important aspect for effective control system and compliments the previous finding.

Most respondents neither agreed nor disagreed that Motivation for self-control is lacking (Mean =2.8605). This implies that the organization probably has not put in place programs to encourage staff to have self-control. Self-control should be important for staff members that are charged with the organizational resources so that they are not diverted to personal use at

the company‟s expense. In his paper, titled risks of corruption and development of self- control of public officials. Aleksejs Snitnikovs (2016) avers that “ethics or the ethical self- control of public officials is considered to be one of the principal factors on which proper use of administrative discretion depends.”

In addition, most respondents neither agreed nor disagreed that Personal goals of the employees are neglected as one of the problems that affect effective control systems in the department (Mean =2.6977). Whereas every individual member of staff should be contributing towards the realization of the objectives of the organization, management should take time to know the personal goals of staff. This should be in a structured and documented format where each staff meets and agrees with their supervisors on both organizational and personal targets to be achieved in given period. This information should be accurately stored to help in planning and future decision making. This in the long term motivates staff. This finding is also complimented by respondents when asked if proper analysis of information is not done as one of the problems that affect effective control systems in the department. Most respondents could neither agree nor disagree (Mean =2.9767). Information plays a critical role in management control systems.

Most respondents disagreed when asked if deviations are not properly taken up as one of the problems that affect effective control systems in the department (Mean =3.0233). This implies that management takes up deviations, once discovered in the system, with a view of correcting them. This ensures that all activities and organizational resources are not diverted to the uses they were not meat for. Consequently this prevents wastage. However, when asked if Corrective actions are not initiated in time is one of the problems that affect effective control systems in the department, most respondents could neither agree nor disagree (Mean =2.9884). An effective control system would entail timely corrective action once deviations are discovered so as to minimize further damage or loss.

Most respondents neither agreed nor disagreed when we asked if the Incentive system is not fair (Mean =2.7674). This implies that there could be unresolved issues between the staff and management regarding the incentive system. On further probing, some employees decried the delayed report of the Job evaluation consultancy in which the CAA contracted an external consultant to reevaluate jobs after the previous evaluation had also left gaps. As Crittenden and Crittenden (2008) states, a fair and well formulated incentive policy motivates staff and contributes realization of the organization objectives, mission and goals.

When asked if preventive measures are not done, most respondents disagreed (Mean =3.0698). This is important because it implies that the control systems in the departments are intended to prevent the organization‟s resources from misuse or loss. Furthermore, most respondents disagreed that efficiency measurement techniques are inappropriate (Mean =3.2674). This implies that there are appropriate techniques in the organization to measure efficiency. A number of staff the researcher interacted with indicated that this efficiency is measured through routine monitoring and evaluation audits carried out internally by a team comprised of experts auditors drawn from several departments. It was also found out that the monitoring and evaluation team members are trained by the CAA on how to conduct quality audits.

Most respondents neither agreed nor disagreed that control reports may place you in an embarrassing situation (Mean =2.5698). This finding also points to the probability of some existence of some weaknesses in the control system to the extent that some staff may or may not feel embarrassed if some reports arising from controls found them guilty of some misconduct. Indeed many employees the researcher interacted with could not recall any incident when anyone was held accountable for breaching any company regulations or policies. An effective control system should have mechanisms of ensuring that employees are not attracted to negative control reports (Merchant and Van der Stede, 2007)

Nevertheless, most respondents disagreed that Control System lays emphasis on the tangibility aspect of work only (Mean =3.2907). They also disagreed that Management Control System merely finds defects and does not take corrective action are one of the problems that affect effective control systems in the department (Mean = 3.3721). This implies that Management Control System does not stop at finding defects but goes further into taking corrective action. Thus the MCS is proactive.

Lastly, most respondents disagreed that MCS suffers from the problem of co-ordination (Mean =3.0814). This implies that there is some level of coordination. Coordination is a very critical management function. Thus an effective MCS should ensure that the organizational activities are executed in a coordinated manner in order to avoid waste, duplication of roles, and ensure sustained efficiency. An example for this lack of coordination was identified in the management of the staff attendance system. The CAA has an electronic attendance reporting system controlled by the directorate of human resources and administration. Some

respondents complained that even when an officer is away on official duty, the attendance records that officer as absent. This is a clear lack of coordination.

Finally, respondents were also asked on the factors responsible for the success of the control system and the findings are presented in the table below.

Table 4.7: Factors responsible for the success of the Management Control Systems

On the five point scale: 1=strongly agree, 2= agree, 3= neither agree nor disagree, 4= disagree, 5= strongly disagree.

N Min Max Mean Std. Dev Well planned control system 86 1.00 3.00 2.0233 .37501 Trained man power 86 1.00 3.00 1.7791 .56153 Management awareness towards the need of effective 86 1.00 4.00 2.2209 .75772 control Timely and effective decision making 86 1.00 4.00 2.5698 .83371 Proper delegation of responsibility and authority 86 1.00 5.00 2.3023 .88211 Motivation of employees 86 1.00 5.00 2.5349 1.03694 Top management involvement 86 1.00 5.00 2.1744 .65425 Clear cut organizational structure 86 1.00 5.00 2.3023 .90839 Accounting system which supports control 86 1.00 5.00 2.2209 .72601 Control by exception 86 1.00 5.00 2.2674 .78851 Sound communication system 86 1.00 5.00 2.3953 .93657 Sound reporting system 86 1.00 5.00 2.3721 .84082 Participation by the employees in standard setting 86 1.00 4.00 2.4302 .83371 Using adequate controlling techniques as per 86 1.00 5.00 2.3953 .89809 requirement Presence and involvement of UPDF staff 86 1.00 5.00 3.1047 1.32868 Valid N (listwise) 86 Source: Primary Data

From the table above, most respondents neither agreed nor disagreed that well planned control system is one of the factors responsible for the success of management control system at CAA (Mean =2.0233). This implies that the management control system at CAA may not be successful according to some of the respondents. Management therefore should commit some time to establish why some staff is not sure that the controls are well planned with a view of making it more successful.

Most respondents agreed that trained man power is one of the factors responsible for the success of management control system at CAA (Mean =1.7791). This implies that the man power at CAA is adequately trained and therefore would interpret the company‟s laws, regulations, policies and act within the set guidelines of the MCS. This is an important factor the any MCS to be successful. However, most respondents neither agreed nor disagreed that Management awareness towards the need of effective control is one of the factors responsible for the success of management control system at CAA (Mean =2.2209). This implies that majority of staff doubt or is not sure that management is concerned about need for effective control within the organization. It should be emphasized that trained manpower and management awareness of the need for effective control are critical factors for success of MCS (Marshall, et al, 1995).

Furthermore, most respondents neither agreed nor disagreed that Timely and effective decision making (Mean =2.5698) and proper delegation of responsibility and authority (Mean =2.3023) are among the factors responsible for the success of management control system at CAA. These two factors- timely decision making and delegation of authority are complimentary. A successful MCS should entail that certain decisions are taken promptly and/or timely. However, to achieve timely decision making, there is need for line managers and or supervisors to have certain authority to make such decisions.

Besides that, most respondents neither agreed nor disagreed that motivation of employees (mean =2.5349) and top management involvement (Mean =2.1744) are among the factors responsible for the success of management control system at CAA. This implies the staff is not confident to tell they are motivated to execute a successful MCS, and that Top management involvement is responsible for the success of management control system at CAA. Ugboro and Obeng (2000) stated that Top management involvement in organizations motivates staff and prevents staff from engaging in wasteful actions, which ultimately increases organizational efficiency.

More still, most respondents neither agreed nor disagreed that clear cut organizational structure (Mean =2.3023) and the accounting system which supports control (Mean =2.2209) among the factors responsible for the success of management control system at CAA. As pointed out in chapter 2, (section 2.5), the organizational structure relates to the formal specifications of different roles of staff, or office, to ensure that the activities of the organization are carried out. It also shows the accounting arrangement within the

organization with the officers in the lower level of the structure accounting to the offices in the upper levels. This accounting and accountability is important for the success of the MCS and is best represented in a clear and unambiguous structure (Fowler, 1996).

Nevertheless, most respondents also could not agree or disagreed that Control by exception (Mean =2.2674), Sound communication system (Mean =2.3953), sound reporting system (mean=2.3721), Participation by the employees in standard setting (Mean =2.4302) and using adequate controlling techniques as per requirement (Mean =2.3953) are factors responsible for the success of management control system at CAA. Doyle and McVay (2007) found out that the success of an effective control system depends on many factors including a sound reporting system, involvement of departmental employees in standard and target setting, and ensuring that the system of communication is also sound.

However, most respondents disagreed that Presence and involvement of UPDF staff is one of the factors responsible for the success of management control system at CAA (Mean = 3.1047). This implies that if there is involvement of the national army in the management of CAA, it may not have made the organization more efficient. Therefore management needs to assess the cost benefit analysis of using the staff from other organizations to improve the management control system in place.

4.4 Mechanism to enhance control system at CAA The third objective of the study sought to establish mechanisms to enhance the control system at CAA, and the findings were captured and results are evidenced below.

Table 4.8: Mechanism to enhance control system at CAA

On the five point scale: 1=strongly agree, 2= agree, 3= neither agree nor disagree, 4= disagree, 5= strongly disagree

N Min Max Mean Std. Dev Continuous monitoring and periodic evaluation 86 1.00 5.00 2.2326 1.19484 Recruit more trained and professional staff 86 1.00 5.00 2.8023 1.43748 Provide adequate Finance 86 1.00 5.00 2.3488 1.29039 Increase employee motivation 86 1.00 5.00 2.7791 1.27788 Provide short term seminars on MCS 86 1.00 5.00 2.5581 1.26123 Change the organizational structure 86 1.00 5.00 2.5000 1.11408 Align MCS as per the requirements of the department 86 1.00 5.00 2.5930 .95027 Distribute work into responsibility centers 86 1.00 5.00 2.8372 1.25427 Make individual departments self-accounting 86 1.00 5.00 2.6977 1.24683 Enforce government rules regulations and restrictions 86 1.00 5.00 3.2326 1.41150 Separate CAA from Government 86 1.00 5.00 2.6163 1.44848 Streamline the reward and punishment system 86 1.00 5.00 3.1744 1.45676 Valid N (listwise) 86 Source: Primary Data

From the table above, most respondents agreed that continuous monitoring and periodic evaluation is one of the mechanisms to enhance the control system at CAA. This implies that the current level of monitoring and evaluation (M&E) at CAA may be adequate. According to CAA structure, M&E function is centred in the office of the deputy managing director and they move from department to department assessing the progress of implementation of planned activities as well as studying the constraints encountered during implementation.

Also most respondents agreed recruiting more trained and professional staff would be a good mechanism to enhance the control system at the organization. According to the interviews with employees in the department of human resource management as well as records in the General Terms and Conditions of Service (GT&CS) handbook, CAA has in place several categories of employment that include permanent employee, contract employee, casual and temporary employee.

Furthermore, most respondents strongly agreed that provision of adequate Finance is one of the mechanisms to enhance the management control system (Mean=2.3488). This implies that Inadequate Finance is one of the factors responsible for the failure of management control system, thus the management should explore several mechanisms of making finances available to the departments.

Most respondents also agreed that increasing employee motivation would be one of the factors to enhance the control system (Mean =2.7791). This implies that Lack of employees‟ motivation could fail management control system. Corporate commercial success depends on optimally motivated employees, who collectively form teams of knowledgeable employees, whom as a team have enough knowledge, experience and skills.

Most respondents agreed that seminars and workshops on MCS is also a mechanism to enhance controls in the organization (Mean =2.5581). This implies that face to face interactions between management and staff about controls could yield dividends. This can be coordinated by the department of human resource to allow senior managers to conduct workshops across several departments focusing on the various control systems in the organization. Management should therefore consider holding seminars on MCS in place to increase staff awareness.

Most respondents agreed that changing the organizational structure is also a mechanism to enhance the controls at CAA (Mean =2.5000). This implies that the management should consider procuring consultants to redesign the organogram with a view of making the organization controls more effective. The CAA records indicate that there are fifteen salary levels from top management to junior staff. Zheng, et al (2010) have indicated that most effective organizations tend to have a flatter structure than those with a tall structure.

Besides the above, most respondents agreed that aligning the MCS as per the requirements of the department (Mean =2.5930) and distributing work into responsibility centres (Mean =2.8372) are some of the mechanisms to enhance the MCS at the CAA. Indeed different departments perform distinct functions thus controls should differ according to the functions and roles of the department. Thus controls should be structured according to the functions of the department and work should be decentralized to make the controls more effective. Furthermore, most respondents agreed (Mean =2.6977) that making individual departments self-accounting is also a mechanism to enhance management controls within the organization.

Indeed, if activities are decentralized, and made self-accounting, then control may be effective than when accounting is left at the centre.

However, most respondents disagreed that enforcing Government rules, regulations and restrictions is one of the mechanisms to enhance management control system (Mean =3.2326). In addition, most respondents agreed that separating CAA from government would enhance controls in the organization (Mean =2.6163). This indicates that government should stay clear of CAA activities. However, this is untenable because according to the CAA Act, Government is the sole shareholder of the CAA, therefore it retains a controlling stake over the entity and then two cannot be divorced. It should be noted that CAA does its functions on behalf of the Government of Uganda and is therefore to ensure Accountability and transparency, it should be subject to external controls of the office of the Auditor General and Inspectorate of Government among others.

Also most respondents disagreed that streamlining the reward structure would enhance the controls in the organization (Mean =3.1744). This indicates the respondents are comfortable with the current status quo regarding the reward structure. According to CAA‟s comprehensive Bargaining agreement (CBA) the reward structure includes, salary, several allowances, and annual and meritorious salary increment among others.

CHAPTER FIVE SUMMARY OF FINDINGS, CONCLUSIONS RECOMMENDATIONS 5.0 Introduction The study has highlighted various important findings regarding the nature, effectiveness as well as mechanisms of enhancing control systems, which can be of great use for the management of CAA. In light of these findings and opinions of the employees of the institution, the following recommendations and conclusions can be made based on the objectives of the study.

5.1 Findings and Conclusions 5.1.1 Nature of the existing Management Control System The study revealed that CAA has rules and regulations, policies pertaining to finance, administration and human resource functions but management decisions are not taken and implemented within defined time limits. This poses risks to the organization and might limit the organization from achieving its mission.

Respondents also indicated that they are generally not knowledgeable about internal controls within the organization and that management decisions are not influenced by the external control agencies of Government: namely the office of the Auditor General and the Inspectorate of Government. This indicates basically no form of internal and external control within the CAA.

The CAA Business plan is not informed by organizational strategic objectives. This implies that CAA may never achieve her mission- the reason the CAA exists. Organizational objectives should fit into the mission of the organization; consequently the business plan and budget should be tailored to meet the objectives of the organization.

The study also revealed that rules, regulations and policies are rarely reviewed neither are internal managers involved in developing the control system. This implies that targets are set at the top management level but the managers at the operational level are not so aware because they are not given opportunity in the designing process. This could point to a likelihood of insufficient communication in the organization that policies formulated at top level do not reach the lower level.

Various important activities such as computerized maintenance, log in systems and target tracking systems are required to be computerized. However, the organization is not in position to computerize these functions because of problems of finance and availability of personnel. Whereas other reason such as lack of approval by top management, fear of redundancy, resistance to change have not been mentioned for limited use of computers in these functions.

In conclusion some aspects of the existing control system within CAA are inadequate with the current controlling requirement therefore require some modification for the organization to be able to meet its objectives.

5.1.2 Effectiveness of the Control Systems Discussion led to the conclusion that some members of staff are not sure if the control system is effective or not. They are not sure if the controls in finance, administration and human resource function properly. This implies that employees are aware of some inadequacies in the systems and are capable of taking advantage of such loopholes to squander organizational resources.

The Management control system is not effective in the area of human resource area mainly due to discontentment among some members of staff because the system suffers from lack of coordination. More and effective coordination is required between the lower level employees and the top management. For example employees stationed at upcountry stations are not satisfied with the attendance system.

The study also revealed that management does not properly analyze the information provided by the control system or the system itself does not provide feedback to management. This affects the effectiveness of the control system. An effective control system involves management setting targets, measuring performance, detecting deviations and making corrections.

The employees at the CAA are not sure about both the fairness of the incentive system and also whether reports from the control system may place one in an embarrassing situation. This point to the probability that the rules, policies and other control tools and repercussion for violations are not communicated properly to employees and this limits the effectiveness of the control system.

There is general disagreement that timely and effective decision making as well as delegation of authority takes place in the CAA. This could be an indication of weak or ineffective controls; or rather controls are not effectively enforced within the organization. There is a link between decision making and delegation of authority. Controls are supposed to help in decision making at all management levels. When controls are weak, even management may not be in position to delegate certain functions.

The study also revealed general dissatisfaction on the clarity of the organizations structure, accounting system, communication and reporting system in the CAA. Any company‟s structure or organogram is an important control tool because it indicates the reporting as well as accounting structure. It also depicts the flow of information or communication. All these are important ingredients of accountability and transparency.

5.1.3 Mechanisms to enhance effectiveness of the control systems This study highlighted a number of mechanisms that CAA can adapt in order to enhance the effectiveness of her control systems as indicated hereunder.

Increased monitoring and evaluation (M&E) exercises can help improve the control systems in the organization. M&E creates forum where top management interacts with managers at the functional or operational level that are charged with implementing the organizations projects and or policies. This interaction enables top management assess whether organizational resources are being committed to the activities they were planned for and also identify any deviations and recommend corrective action.

Recruiting more trained and professional employees is also seen as a strong mechanism to enhance controls within the organization. Having the right people in the right jobs at the right time is a critical human resource control that contributes to efficiency in service delivery and ultimately increases the organizational productivity or performance. The whole purpose of controls is to ensure that the organizational resources (human, finance and material) are used efficiently to meet organizational objectives.

Provision of seminars and/or workshops on the control systems is also highlighted as contributing factor in enhancing the controls in the organization. These workshops and seminars are a means of educating all categories of employees about the controls and importance of having such controls. If members of staff are knowledgeable about controls

within the organization, and repercussions of violating those controls, it is likely to prevent misuse and therefore lead to organizational efficiency and accountability.

Changing the organizational structure and aligning the controls as per the requirements of the specific department or section is also agreed as enhancing the effectiveness of the controls within the CAA. Discussions led to the conclusion that the current organization structure is tall, that is there appears a very large gap between the top management and the lowest level and this inhibits the effectiveness of the control systems.

There is also general disagreement that enforcing government rules, regulations and restrictions would enhance the controls within the organization. Employees are not concerned about government directives yet this is an agency of the same government. Discussions with some members revealed that they were not sure if the public service code of conduct applied to them as well.

5.2 Recommendations

5.2.1 Nature of the existing Management Control System For the MCS to achieve its purpose, management decisions must be implemented within defined time limits. The organization must strengthen this discipline and employees or managers must act within defined authority and responsibility. In addition, an orientation program for all employees on the internal controls in the organization should be done as a matter of priority.

It is also observed that management‟s decisions are not influenced by external agencies of Government such as the Office of the Auditor General, Inspectorate of Government and Parliaments Public Accounts Committee. It‟s recommended that the attitude of the managers of the company towards these external agencies change. They should be made to understand that these agencies have constitutional mandate to check activities of public institutions and officers.

It is also strongly recommended that the organization‟s annual budget and business plan be aligned to her strategic objectives and mission. This would prevent CAA from incurring unnecessary losses through commitment of resources in non-critical activities.

The rules, regulations and policies at the CAA must always be reviewed for their effectiveness. The rules once set, must be reviewed on a continuous basis and be revised, if needed. If not reviewed, some unscrupulous individuals might exploit some loopholes and plunder the organizations resources. And for developing any new control system, participation of the managers from all levels should be encouraged as they understand the problems in detail.

The present information system of the organization needs particular attention so that the new controls makes use of accurate and right information and at the right time. In order to avoid making faulty decisions, preventive information on critical elements must be utilized regularly.

It is also observed that corrective action is not initiated if deviations are identified in the control system. The efficiency of the present control system tends to decline at the step of taking corrective actions, thus, it is recommended that the management should monitor the existing control system mainly at the design and implementation aspects.

It is also recommended that the organization considers increasing the level of computerization in all areas but more effort is critically required in the areas of maintenance, log in systems, and target racking systems. Computerization saves time and allows for quick monitoring of performance and identification of faults in the system.

5.2.2 Effectiveness of the control system In the finance area, it is recommended that the staff should be notified about the desired level of investment, and the various accounting ratios which enable managers make comparisons between profitability and expenditure of the previous year, and to be expected in the current year, so that they can create a number of cost centers and be able to make accurate forecasts of future performance.

In the administration area, the application of inventory control models such as ABC analysis, level setting techniques, and other scientific models such as Critical Path Method and PERT are required to be increased and records to be maintained up to the mark in order to better set targets, measure actual performance, make comparisons and corrective actions.

In the personnel area, scientific models such as awards and incentive systems, proper manpower planning system and management information system are recommended in place of existing traditional methods. The organization should deliberate new reward systems for better performance in all areas.

Review meetings at all levels- managerial and operational must be held frequently in order to make the management Control System more effective. There must be coordination in the departments to achieve collaborative decision making.

To maintain and update the present control system it is recommended that organization should provide proper planning, a clear cut design of MCS and an effective information and communication system. The involvement of the top management and high motivation of all staff is also recommended to change the control system.

The problem of discontentment among the employees creates a number of problems at the personal level. It is recommended that the self-motivation level of the employees should be stepped up to alleviate this problem and to increase coordination. For example, some members of staff interviewed indicated that the organization‟s study policy is not fair as members who apply for study leave are asked to resign.

5.2.3 Mechanisms to enhance effectiveness of the control systems It is recommended that the organization maintains its monitoring and evaluation functions and provides adequate finance to meet its activities.

Seminars and workshops on controls should also be conducted to increase employee awareness of the importance and nature of controls within the organization.

The management should consider modifying the current organogram with a view of contracting the gap between the top level and lowest level to improve the flow of communication and accounting structure.

There is need to educate the employees of CAA that government rules and regulations apply to them in the same measure as they do to other public employees.

In conclusion, the study provides important and relevant insights in the field of management control systems. The recommendations suggested in the study will go a long way in improving the management control system, which in turn will improve the prevent wastage of resources in the organization. This will have positive impact on the economy of the country at large.

The highlighted controls in Civil Aviation Authority can be used as a framework for assessment and evaluation of controls in other public institutions.

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