Effect of Internal Controls on Operational Efficiency of Saccos Registered by Sacco Society Regulatory Authority in Nairobi County
Abstract
The study sought to determine the effects of internal controls on operational efficiency of
SACCOs registered by SASRA in Nairobi County. The study is significant in that SACCOs
have an important role in social and economic development in our country. These SACCOs in
essence face many challenges including mismanagement, corruption and poor governance.
Operational efficiency of these SACCOs is greatly affected by lack of proper internal controls.
The research objective was to find the effect of internal controls on operational efficiency of
the SACCOs registered by SASRA in Nairobi County. The design adopted for this study was
descriptive research design. The target population was the 42 registered SACCOs. The study
used primary and secondary data. Primary data was collected using interviewer administered
questionnaires while secondary data were obtained from annual financial statements of
SACCOs. Data obtained was analysed using SPSS version 23. Linear regression model was
used to find the relationship between internal controls variables and operational efficiency
variable and the strength upon which the independent variables affect the dependent variable.
The conclusions from the findings indicate that employing control environment has a
significant and favourable impact on operational efficiency of the selected SACCOs. It was
also deduced that employing risk assessment has positive and significant relationship with
operational efficiency. There is also a positive and significant relationship between control
activities and operational efficiency of all the SACCOs. Lastly, the study also established a
significant and positive relationship between monitoring and operational efficiency. Overall
regression analysis established that internal controls have a strong positive correlation with
operational efficiency. The study recommends that to obtain the gains linked with successful
internal controls, the SACCOs in Nairobi County need to employ control environment. The
organization should ensure they adopt sound human resource practices, a strong presence of
tight controls of budgets, and the effectiveness of a well-functioning audit with suitable
members of staff in the audit committee, commitment to competence and structure of
organization and embrace the new practices brought about by new technology. Regardless of
the fact that some SACCOs don’t employ risk assessment, efforts should be taken into
consideration to have presence of mechanisms in place for minimizing risks, have risk and
compliance department in the SACCOS and make SACCO objectives known to everyone. To
improve the operational efficiency, there is need to employ control activities in SACCOs. This
should embrace practices such as conducting of reviews in regard to performance operations,
authorization and approval of transactions by relevant persons.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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