A survey of financial management practices among development NGOs in Kenya

Abstract

The objectives of this study were to identify financial management practices of development NGOs and determine the strengths of the practices in ensuring sound financial management. Thirty four development NGOs responded to the questionnaire out of 50 sampled for the study, giving a response rate of 68%. The literature explored the definition of development NGOs and financial management practices. The literature recognized the role of the development NGOs in supplementing governments' development effort, the history of NGOs in Kenya, NGOs financial management practices, challenges to the NGOs financial management and causes of financial mismanagement. The methodology was based on the fact the study was a cross sectional survey. This method allowed for collection of a large amount of data that could be statistically analyzed. The data was collected from development NGOs that were randomly selected to ensure that a wide range of NGOs were represented in the study. Data was collected through closed ended questionnaire using the drop and pick approach. The respondents were the executive/managing directors of the NGOs or the chief financial officers. Data analysis was done through use of content analysis. The findings were that the financial manaqernent practices of deyelopment NGOs partially conforms which the laid down procedures of International Financial Reporting Standards. Inadequate budget forecasts was notably present which results in poor financial planning. The study also revealed inadequate regulatory financial structure in which NGOs operate and key weaknesses in financial management practices of internal control namely: Fiscal policies and financial oversight, analysis of service cost on regular basis, establishment of guidelines to invest idle funds, implementation of audit recommendations for systems and procedural improvements that covers financial compliance. Vlll