Internal Controls and Financial Performance of Deposit Taking Savings and Credit Co-Operative Societies in Nairobi City County, Kenya
DOI:
https://doi.org/10.53819/81018102t30102Abstract
Savings and credit cooperatives play a significant role in this country's financial well-being, promoting savings and providing accessible loans to members of all social classes. This study aimed to investigate the impact of internal controls on the financial performance of Savings and Credit Cooperative Societies (SACCOs) operating in Nairobi County, Kenya. More specifically, the research sought to understand the effects of segregation of duties, approval controls, physical controls, arithmetic controls, and organizational plans on the financial performance of deposit-taking SACCOs in Kenya. The study was grounded in agency theory, stakeholder theory, and systems theory. It utilized a descriptive survey design and focused on a target population of 42 registered deposit-taking SACCOs. A census survey technique was adopted, incorporating all 42 SACCOs in Nairobi County. Primary and secondary data were gathered via structured questionnaires, administered using a drop-and-pick method. The data was analyzed using the Statistical Package for Social Sciences (SPSS) software, with descriptive statistics such as mean and standard deviation and inferential statistics including correlation and regression analyses used. The study found that the segregation of duties, approval of accounting transactions, physical controls, arithmetic controls, and the organization's plan significantly influence the financial performance of SACCOs in Nairobi County. Thus, the study concluded that these variables greatly impact the performance of deposit-taking SACCOs in the county. The study further recommended that government bodies such as the Sacco Societies Regulatory Authority (SASRA) should develop policies guiding deposit-taking SACCOs on improving their segregation of duties, approval of accounting transactions, physical controls, arithmetic controls, and organizational plans. This will substantially enhance the financial performance of these firms.
Keywords: Internal Controls, Financial Performance, Deposit Taking, SACCOs, Nairobi City County
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