Dissertation (MA Business Administration)Local Government Authorities have authority of collecting and spending public funds, also are responsible for delivering public services such as Primary education, Secondary education, Local health services, Agriculture extension and live stock, Water supply and Local road maintenance. Financial management is very important to LGAs in order to convince the public that their funds are properly used according to laws and regulations governing the authorities. The general objective of the study is to assess the performance of financial management system in Local authorities; the study made an investigation into the areas of internal financial management in Bahi District Council and the causes of it. The study examined the financial management system existing in the council, the budgeting system, Revenue collection and how the internal audit unit functions. The study involved questionnaires and interviews with different respondents, the respondent included Council staffs, Councilors, NGOs and general Public. Basing on findings BDC is performing well in exercising strong internal control and maintaining its budget although there are some weaknesses to be rectified. On other side the researcher observed that the BDC does not comply with laws and regulations. Also is highly recommended that the BDC should ensure that its laws and regulations are knows by the council staffs, this will help them to be aware with their council. Also periodic rotation is recommended especially in Finance department.