Internal Controls and Corporate Governance. Empirical Evidence from Kenya's Savings and Credit Co-Operative Societies. (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.
The aim of the study was to explore Corporate Governance and effective internal control disclosures in SACCO’S with 4 specific objectives; establish how board composition affects internal control disclosures in SACCO’S in Embu County, Kenya, assessing the extent to which management interaction affect internal control disclosures in SACCO’S in Embu County, to determine the relationship between strategic plans and internal control disclosures in Embu County, Kenya and to establish effects of Audit system on internal control disclosures in SACCO’S in Embu County, Kenya.
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Internal auditing is plays a significant role in corporate governance mosaic in both the public and the private sectors and Savings credit and cooperatives societies too. Saccos in Kenya have played a significant role since independence hence the need to have effective corporate governance mechanism. The purpose of this study was to establish the effect of internal audit on corporate governance in Sacco’s in Nairobi County. The study was guided by the following objectives: to determine the effect of risk management; to assess the effect of internal controls; to determine the effect of compliance and to establish the effect internal auditor’s work experience on corporate governance in Sacco’s in Nairobi County. The study was guided by the Agency Theory. 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. Data was analysed using descriptive and inferential statistics. The study findings indicated that auditor’s work experience had a positive and significant effect on corporate governance of Sacco’s in Kenya (B=0.160, P<0.05). The study recommended that the SACCOs should employ workers with experience in auditing in order to improve the performance of corporate governance. These work experience will equip auditors with certain soft skills such as team working, communication skills and commercial awareness which enhance corporate governance.
Assessment of Internal Control Practices on Financial Performance of State Corporations in Kenya
International Journal of Finance and Accounting
Purpose: The purpose of this study was to assess the influence of internal control practices on financial performance of state corporations in Kenya. State corporations have been identified as important drivers in accelerating national growth and2 development as well as2improving delivery of public services. However, their performance has over the years been a2matter of public2concern. Methodology: The study used descriptive research design. A study population of 561 was collected2and a sample of 234 was selected for the study randomly using Yamane (1967) formula. It involved collection of primary data on segregation of duties, transactional authorization, independent checks, documentation and records. Secondary data was collected as well to assess the performance of the state corporations. Data was obtained randomly from the corporations and analyzed using descriptive statistics and regression analysis and the outcomes were shown through tables. Findings: Upon analysis of data coll...
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.
2017
The purpose of this study was to establish the effects of internal accounting control systems on enhancing the performance of banking organization. The study was guided by agency and contingency theories. The hypothesis tested were; there is no significant relationship between internal checks and performance, there is no significant effects of test checks on performance and there is no significant effect of internal audit on performance of tier one (1) banks. The study was conducted in Kericho town by considering a sample of 141 employees of tier one banks. Data was collected by use of questionnaires and analysed by use of descriptive statistics and multiple regression analysis the results of the study showed a value of R2=0.542(p=0.01). The study established that there was significant relationship between internal accounting control system and performance of tier (1) one banks. The study recommends that the management of tier (1) one banks should strengthen their internal accountin...
Research Journal of Finance and Accounting, 2014
The study examined the role of internal audit in Kenya current corporate governance (CG) system via seeking the views of corporate managers. Despite the fact that the contribution of internal audit has been essential for organizations to achieve their business objectives, very little has been known of corporate managers' perception as to the practical functions of internal audit in the context of CG. Recent events and studies suggest that the benefits of scrutinizing governance extend beyond simply avoiding corporate collapse. Corporate governance is about the way in which boards oversee the running of a company by its managers. The study addressed the following objectives: To assess the auditor's role in corporate governance, to assess the internal audit capacity to achieve its objectives, to suggest how internal auditors' independence can be achieved. The research design used was descriptive design and data collection instrument was questionnaire. The target population was internal audit managers of all the Companies listed at the NSE. The study employed both Stratified and Systematic random sampling procedures where a sample size of 30 companies was selected to represent 50% of the population. Information about audit objectives/functions, accountability, capacity and framework was obtained. Issues relating to and practices of corporate governance and internal audit activities within companies listed at the NSE were examined. It was established that most companies consider internal controls as the most important audit objective and also is the task that takes highest proportion of internal audit time. The study as well found that all respondents strongly agreed that for internal audit to add value to governance process there should be good working relationship, independence, awareness, capacity and professionalism.
Effect Of Internal Controls On Financial Performance Of Deposit Taking SACCOs In Kenya.pdf
Internal Control Systems play an important role in every firm as it assist in realization of their financial performance goals as well as compliance to the set down laws and regulations. Most SACCOs in Kenya licensed under SASRA as at December 2016, have not met the prescribed minimum institutional capacity adequacy ratio hence risk being suspended due to breach of the compliance law. The study will be of great significance to management of DT-SACCOs in Kenya since it will highlight the major internal controls being adopted by the institutions and their effect on the financial performance of the SACCOs. The main objective of the study was to determine the effect of internal control systems and financial performance of deposit taking SACCOs in Kisii, Kenya. The target population for the study was 10 Deposit Taking SACCOs in Kisii County. The research found out that DT-SACCOs had a functional audit department as well as an audit manual management identifies appropriate objectives for the SACCO as well as risk that affect achievement of those objectives however some respondents felt that their SACCOs did not put in place mechanisms for mitigation of risks. Management did also ascertain fraud related risks. It was evident that the management identified people responsible for coordinating activities of the SACCO, communication helped evaluate how well guidelines and policies are being implemented. However the reporting system for some SACCOs did not spell out the responsibilities of each entity. The coefficient of determination proved that internal controls contributed to 43.3% of the variation in financial performance as explained by adjusted R2 of 0.433% which shows that internal controls influence Performance of DT-SACCOs.