Influence of internal control systems on financial performance of Saccos in Kirinyaga county, Kenya

Abstract

Internal control of a company constitutes the procedures outlined and influenced by those tasked with governance, personnel and management to give sensible confirmation about the accomplishment of institution’s objectives regarding quality feedback, adequacy and effectiveness of activities and consistence with relevant laws and controls. It takes after the internal systems are planned also actualized to take care of distinguished business hazards which undermine accomplishments of either outcome. Along these lines, a compelling inside control system should prevent, detect and disclose any unprofessional conduct or mismanagement in SACCOs and in light of full disclosure those charged with governance can make right decisions using actionable information. Consequentially it follows interfacing function of full time independent function if necessary to be the source of actionable information. This research project will be evaluating influence that internal control frameworks have on monetary execution of SACCOs in Kirinyaga County. The organizations selected for this research project have been in operation for two to fifteen years and this ensured that the information to be collected was more precise and dependable. Results are relied upon to add to the comprehension of the effect of internal control frameworks on money related execution of organizations. Organized questionnaires were utilized to gather essential information on internal control frameworks.. To ensure validity of the questionnaire the expertise of my supervisor and other lecturers were sought. Information collected through questionnaires was analyzed descriptively. The research utilized descriptive survey study design method. The objective populace was 235 managers, from which a sample was obtained. The study found out that reduction in production cost per unit improves the performance of SACCOs. Also, increase in man hours worked improves performance. The study recommends training programmes to enlighten the management and staff, regular meetings with stakeholders to discuss issues related to effectiveness as a tool of internal control, and continued adherence to laws and regulations so as to ensure compliance. The study concluded that there is a positive connection between operational effectiveness and execution of the SACCOs. The analyst suggests a wider comparative analysis on the relationship between efficiency and SACCO performance, effect of supervision on performance, challenges of improving SACCO performance, and to include the other counties for comparison.