A study to examine the impact of internal control system on financial performance of manufacturing firms located in amhara region.

The study investigated and sought to establish the relationship between internal control systems and financial performance in manufacturing firms in Amhara region Metropolitan cities. Internal controls were looked at from the perspective of Control Environment, Internal Audit and Control Activities whereas Financial performance focused on Liquidity, profitable and Reporting as the measures of Financial performance. The Researcher set out to establish the causes of persistent poor financial performance from the perspective of internal controls.The research was conducted using both quantitative and qualitative approaches using Survey, Correlation and multiple liner regressions as Research and Designs Data was collected using Questionnaires and Interview guide as well as review of available documents and records targeting basically Finance Departments, supply department and prosperity Administration department Management and staff as respondents from a population of 281 which are located in Amhara region Metropolitan cities. Data was analyzed using the Statistical Package for Social Scientists (SPSS) where conclusions were drawn from tables, graphs from the Package.

The study found that management of the company is committed to the control systems, actively participates in monitoring and supervision of the all operation of the organizations, all the activities are initiated by the top level management, that the internal audit department is efficient, well-staffed, conduct regular audit activities and produce regular audit reports although the reports produced by the internal audit department address weaknesses in the system. It was further revealed that there is a clear separation of roles and weaknesses in the system are addressed, organization. However, the study also found out that there is good of information sharing and adequate security to safeguard the assets of organizations. It was also noted that there is enough cash to meet intended organization goals.

The Study therefore concludes that internal control systems that there is a significant relationship between internal control systems and financial performance in manufacturing firms in Amhara region Metropolitan cities.

The study established a significant relationship between internal control system and financial performance. The investigation recommends there should be strategies improve the organization of additional continual improvement.