The study investigated the role of internal control system on the management of public funds in local governments in Uganda. The objectives were to establish the influence control environment, internal audit, monitoring, risk assessment, control activities, information and communication on the management of public funds in local governments. Purposive sampling was used to select the required number of respondents that participated in the study. Data was collected using both interviews and questionnaires for the technical respondents including heads of departments, accountants for different departs and the second questionnaire targeted community leaders at district and Sub County level. Data was analyzed using statistical package for social scientist tables. Pearson’s Linear Correlation Coefficient and regression analysis conducted to measure the relationship between the independent (internal control) and dependent variables (management of public funds) and there after conclusions drawn from the tables and figures. This analysis showed that much as the there is a strong positive relationship between internal financial controls (control environment, internal audit, monitoring, risk assessment, control activities, information and communication) and management of public funds. There is much that is practically needed to ensure that service delivery is enhanced. The welfare of the general public can greatly be improved through effective and efficient utilization of public funds in service delivery. The study recommended that since the elements of internal control system used were found to be important in influencing the efficient management of public funds. They should be emphasized and enhanced by the local governments to ensure that the organization’s activities are carried out in accordance with established goals, policies and procedures. However, communities which are direct beneficiary of the services rendered by local governments should be part of internal control system for efficient management of public funds for efficient service delivery based on the value for money.