CORPORATE GOVERNANCE AND EFFECTIVE INTERNAL CONTROL DISCLOSURES IN SAVINGS AND CREDIT CO-OPERATIVES IN EMBU COUNTY, KENYA (original) (raw)
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Internal controls is part of internal auditing which is an integral part of the corporate governance mosaic in both the public and the private sectors. The purpose of this study was to establish the effect of internal control on corporate governance in Sacco’s in Nairobi County. The study was guided by the Agency and Stewardship theories. This study adopted descriptive research design. The study targeted 45 licensed SACCOS in Nairobi County with a population of 180 respondents who worked for 45 licensed SACCOS by SASRA in Nairobi County. The sample size for the study was 124 respondents. Purposive technique and simple random sampling was used to select a sample size that represented all employees in filling questionnaires. In order to establish the validity and reliability of the instruments, a pilot study was carried out in Eldoret town. Data was analysed using descriptive and inferential statistics. The study findings indicated that there was a statistical significant effect between internal controls and corporate governance in Sacco’s in Nairobi (t=2.412, P<0.05). The study recommended that the SACCOs should improve on the use of internal controls in monitoring their operations in order control consciousness of its employees, they should contact accounting assessment by identifying and analyzing the relevant risks to the achievement of objectives, forming a basis for how the risks should be managed, the policy makers and stakeholders should ensure that the Sacco should comply with rules and regulation of the ministry and taxes payment.
oircjournals, 2018
Internal controls is part of internal auditing which is an integral part of the corporate governance mosaic in both the public and the private sectors. The purpose of this study was to establish the effect of internal control on corporate governance in Sacco’s in Nairobi County. The study was guided by the Agency and Stewardship theories. This study adopted descriptive research design. The study targeted 45 licensed SACCOS in Nairobi County with a population of 180 respondents who worked for 45 licensed SACCOS by SASRA in Nairobi County. The sample size for the study was 124 respondents. Purposive technique and simple random sampling was used to select a sample size that represented all employees in filling questionnaires. In order to establish the validity and reliability of the instruments, a pilot study was carried out in Eldoret town. Data was analysed using descriptive and inferential statistics. The study findings indicated that there was a statistical significant effect between internal controls and corporate governance in Sacco’s in Nairobi (t=2.412, P<0.05). The study recommended that the SACCOs should improve on the use of internal controls in monitoring their operations in order control consciousness of its employees, they should contact accounting assessment by identifying and analyzing the relevant risks to the achievement of objectives, forming a basis for how the risks should be managed, the policy makers and stakeholders should ensure that the Sacco should comply with rules and regulation of the ministry and taxes payment. Keywords: Internal Controls, Corporate governance, Monitoring, Savings and Credit Corporate Societies, Kenya
The International Journal of Business and Management, 2021
Corporate Governance Practice is a management tool that was introduced by Nairobi Securities Exchange (NSE) through the Capital Markets Authority (CMA) as statutory requirement for companies listed at NSE to improve their financial performance. Though corporate governance practices have been enforced in Kenya, it has in equal measure experienced cases of mismanagement of Savings and Credit CoOperative Societies (SACCOs) that has led to collapse of a number of them and others have experienced liquidity challenges. A case in point was the mismanagement of the giant Harambee SACCO which put management of SACCOs on the spotlight. Despite several studies on Corporate Governance Practices, it is not clear how insider lending, an aspect of corporate governance, affected the financial performance of SACCOs. The study examined effect of adoption of corporate governance practices, aforementioned, on financial performance of SACCOs. Three theories guided the study, namely; Agency, Stewardship and Stakeholder theories. The study adopted descriptive research design that involved set of methods and procedures that described intended variables and how they relate to each other. The study adopted Israel, (1992) formula to sample 53 from the population of 61 SACCOs registered with the County Cooperatives Officer in Nyandarua County, and thereafter, from the 53 sampled SACCOs, two top managers were sampled. This led to a sample of 106 respondents. Primary data was collected using a structured questionnaire whereas; secondary data was collected through documentary analysis. Data was analysed using descriptive and inferential statistics and results presented in form of tables and charts. Of the 106 distributed questionnaires, 100 were duly filled and returned and therefore the response rate was 94.3%. The R square was equal to 0.778 while the adjusted R square value was 0.770 which means that 77.0% of the corresponding variation in financial performance of the SACCOs can be explained by corporate governance practices employed by the SACCOs. Multiple regression analysis indicated that insider lending had a great effect on financial performance of SACCOs with a coefficient of-0.391 while the appointment of internal auditor with a coefficient of 0.243. The variable on insider lending had a negative coefficient implying that a unit increase in insider lending led to a decrease in financial performance of the SACCOs by 0.391 units. The variables were all significant at p=0.000 and p=0.013 for the constant term. The study therefore fails to accept the null hypothesis that corporate governance practices have no statistically significant effect on the financial performance of SACCOs in Nyandarua County and states that corporate governance practices.
Corporate governance is of great importance for financial performance. Corporate governance issues have attracted public interest in the financial sector both locally and internationally after waves of corporate rip-offs and failures that almost led to loss of confidence in the finance sector. The general objective of this study was to determine the effect of corporate governance on financial performance of Savings and Credit Co-operatives in Kenya. The study adopted a descriptive research design. The study targeted a population of 65 active Savings and credit Co-operatives operating in Embu County. A sample size of 57 Savings and Credit Co-operatives was used in this study. Stratified sampling technique was used to select the sample. Primary data was collected using self-administered semi-structured questionnaires while secondary data was obtained from financial statements and periodicals using a record survey sheet. Pre-testing of research tool was conducted before the actual data collection was carried, to determine the reliability of the questionnaire by use of a Cronbach‘s alpha, statistical coefficient, while the validity was tested to ensure that the questions in the questionnaire provides adequate coverage to the investigative questions. Correlation and multiple regression analysis was used to establish the relationship between independent and dependent variables. The study findings indicated that corporate governance positively affected the financial performance. In specific the board composition and corporate risk management for SACCOs had a positive effect on the financial performances of the SACCOs. The study is beneficial to SACCOs management in improving the performance of Savings and Credit Co-operatives and enabling them to compete globally. The study recommends gender parity consideration and balanced mix of skilled board members during appointments of the board members. The recommendations are important to the government, especially the department of cooperatives in strengthening policies regarding cooperative societies.
2016
This study mainly analyzed the concept of corporate governance and it influence on the financial growth cooperative societies in Kirinyaga County, Kenya. This study identified some salient aspects of corporate governance and recognized it as one that is more relevant to the distinct governance features of Sacco societies. For this a descriptive research design was used. The population of interest for the study was 31 SACCOs operating in Kirinyaga County. The study targeted 327 members of SACCO's staff. A sample of 104 respondents was randomly selected. The primary data were collected through the administration of questionnaires to the staff of these SACCOs. Data was analysed using a multiple linear regression model. The study indicates that board leadership, financial performance disclosure, corporate social responsibility and compliance with legislation predict financial growth of SACCOs. The study, recommends that the SACCOs should adopt sound financial reporting and disclosur...
The International Journal of Business & Management, 2021
The declining performance in the SACCOs in terms of declining membership, increase in non-performing loans and low growth and returns, make it necessary to conduct the study. This study sought to establish the effect of internal audit practices on the financial performance of deposit taking SACCOs in Kericho County. The focus was on the internal audit practices including audit committees, internal auditor's independence, risk management and internal controls and their effect to financial performance. The study was anchored on agency theory, capture theory and contingency theory that were linked to the study variables. The study employed descriptive research design and targeted the five licensed deposittaking SACCOs operating in Kericho and the respondents included only the staff holding management positions. Primary data was collected using questionnaires and the data was then entered into SPSS and analyzed using descriptive, correlation and regression analysis. The findings showed that internal audit practices significantly affected financial performance of the DT-SACCOs in Kericho County. Risk management had the strongest relationship (R=0.655), followed by internal controls (R=0.526), then audit committee (R=0.420) and lastly auditors' independence at (R=0.357). Further results showed that 47.4% of the changes in the financial performance of the deposit-taking SACCOs in Kericho County can be explained by changes internal audit practices. The study concluded that internal audit practices positively and significantly influenced the financial performance of the deposit-taking SACCOs in Kericho County. The study recommends the adoption of internal audit practices in firms that are seeking to improve their financial performance.
Cancelation of licenses of cash-strapped savings societies thus barring them from taking deposits from the members has received significant attention from regulator and the members. This study sought to establish the relationship between internal audit function and financial performance of saving and credit cooperatives in Kenya. The study used descriptive research design and the target population for this study was 40 respondents. A sample of 10 Sacco’s was taken that was determined using stratified random sampling technique. The study relied on both primary and secondary data. Primary data was collected using structured questionnaires directed to operation managers, CEO’S, accountants and internal auditors of selected Sacco’s. While the secondary data was gathered from financial statements, library materials, internet search engines and media publications based on availability and accessibility of data. Multiple regression models was used to test whether a relationship existed between internal audit function and financial performance of Sacco’s in Kenya. The findings revealed that internal audit function department efficiency is weak due to its failure to conduct regular audit activities thus failing to produce necessary regular audit reports that guides decision making. The study concluded that there exists difficulty in the execution of controls particularly considering that the audit function is not well extended to most of the Sacco’s which clearly has adversely affected their efficiency as revealed by this study. The study recommends that there should be a deliberate attempt to match small Sacco’s so as to enable them put in place vibrant audit department, be able to carry out market research so as to minimize risks and be able to use effective and efficient internal control systems to tame adverse insider dealings.
International Journal of Scientific and Research Publications, 2022
Corporate governance is the backbone of transparency, accountability, integrity and security of shareholders’ interest in an organization. An organization with poor corporate governance structure is likely to fail to achieve its objectives as well as have exposure to financial losses. The purpose of this study is to examine the effect of corporate governance on the financial performance of Deposit-taking Savings and Credit Co-operative Societies in Nairobi City County, Kenya A purposive sampling method integrating qualitative and quantitative design methods was employed in this study. The target and sample population were all the 42 Deposit-taking Savings and Credit Co-operative Societies in Nairobi City County, Kenya while a sample of 30 deposit-taking SACCOS was used for this study. For the 30 deposit-taking SACCOS, the company secretaries and other two executive top management members were each subjected to the study through the administration of questionnaires, hence three respondents per deposit-taking SACCOS. The published annual reports of the of 30 deposit-taking SACCOS were used to collect secondary data. SPSS research analysis tool was used emphasizing on the Multiple Regression Analysis and the Spearman Correlation Coefficient among others to assess the magnitude and relationship and thus come up with a finding of the relationship of the independent and dependent variables. The research found that corporate governance practices greatly affect Deposit-taking Savings and Credit Co-operative Societies in Nairobi City County, Kenya
Savings and Credit Cooperative Societies (SACCOs) currently are predominant form of external financing for small and micro enterprises in most developing countries. In the year 2012, the SACCOs industry's total assets grew by 17.8% to Ksh.292.9 billion from Ksh.248.7 billion in 2013. In Kenya, SACCOS have been noted to contribute over 13.5% of GDP, and it is estimated that at least one out of every two Kenyans directly or indirectly derives his /her livelihood from these kinds of cooperative movements. It is important to emphasize that good corporate governance practices in the SACCOs is imperative if the cooperative movement is to effectively play a key role in the overall development in Kenya. This has also received much attention in the accounting literature, with studies focusing on the impact of corporate governance and the financial performance of the firm. However, previous research has shown that corporate governance in SACCO'S in Kenya has not been effectively regulated and supervised and thus the constant decline in performance of these SACCOs. Therefore the purpose of this study was to analyze the effect of corporate governance practices on financial performance of Saccos; a case of KITE Sacco society in Kisumu city. The specific objectives of the study were to: assess the effects of board composition, establish the effects of number of non-executive directors and determine the influence of SACCO leadership on the financial performance of KITE SACCO society. The study was guided by a self-conceptualized framework with corporate governance practices as independent variables and financial performance of Saccos as the dependent variable. It adopted causal research design with all the 19 targeted staff members of the Sacco forming the sample size. The study used both primary and secondary data. A semi-structured self-administered questionnaire to the Board of the Sacco, and staff members was used to collect primary data. Secondary data was collected through content analysis. Validity and reliability of the instrument was checked using expert reviews. Descriptive statistics such as mean and standard deviation was employed to analyze the data and inferential statistics such as Pearson's correlation. Presentation was done by the use of tables and charts. The study revealed that board composition is the most prevailing factor that affects financial performance at KITE Sacco (0.658, p< 0.05) and strongly affects Sacco leadership (0.789, p<0.001). Also realized was that Sacco Leadership strongly affects financial performance at KITE (0.835, p<0.01). Besides, the study evidenced that existence of non-executive directors positively affects financial performance (0.381, p<0.05), weakly affects board composition (0.436, p>0.01) and strongly affects Sacco leadership (0.053, p<0.05). The study concludes that board composition is the most prevailing factor that affects financial performance at KITE Sacco and as well affects the Sacco leadership. Also, the study showed that existence of non-executive directors within the Sacco positively affects financial performance but weakly affects board composition and strongly affects KITE Sacco leadership. These findings may assist KITE Sacco leadership identify how various aspects of corporate governance practices (board composition, existence of non-executive directors) affect their operations as well as ensure that the breakdown of spending across projects is clear, and accounting records properly maintained. Further, the study may provide information to potential and current scholars in regard to the relationship between corporate governance and financial performance of SACCO societies.