Literatures on internal control system in the public sector are quite numerous, with just a few studies assessing how financial management in Federal hospitals in Southwest, Nigeria could be enhanced by the components of internal control system. This study covered this gap by examining internal control system and financial management if Federal government hospitals in Southwest, Nigeria. Descriptive research was adopted and the population covered six Federal government hospital in Southwest. 91 respondents were selected across the sampled Federal government hospitals in Southwest, Nigeria. A close-ended questionnaire was used after which, analysis was carried out via Pearson product moment correlation and multiple regression. It was discovered that there is a positive and significant relationship between the components of internal control system (control activities, control environment, risk assessment, information and communication and monitoring) and financial management (financial planning and control) in Federal government hospitals in Southwest, Nigeria. It was concluded that financial management in Federal government hospitals could be enhanced through the internal control system. Thus, it was recommended that the federal government hospital management should ensure that the internal control system is periodically monitored and evaluated to enhance their financial management productivity.