| dc.description.abstract | Internal control system is fundamental in every organization for the business entity to achieve its
objective. Internal control is the plan of organization and the coordinated procedures used within
an entity to; safeguard its assets from loss by fraud or errors, check the accuracy and reliability of
accounting data which management uses in decision making, and promotion of operational
efficiency and encourage adherence to adopted policies in those areas in which the accounting
and financial departments have direct or indirect responsibilities. Financial performance is a
measure of how well a firm can use assets from its primary mode of business and generate
revenues. It is a general measure of an entity financial health over a given period of time and can
be used to compare similar firms across the same industry or sector. A sample of 30 SMEs was
studied. The sample was collected from Communication Commission of Kenya and Nairobi City
Council. The sample was matched with data from Kenya National Bureau of Statistics (KNBS)
to relate the SME and the number of staff and to ensure the number of staff was 5 and above.
From the data obtained from KNBS a random sample was done to obtain a sample of 30 SMEs.
Financial success was measured by the level of profitability of the firm over 5 years. On the
other hand the overall effectiveness of internal controls was measured by the extent to which
control environment, risk assessment, control activities, information and communication and
monitoring factors were adhered to in the organization. A multiple regression analysis was used
to measure the quantitative data which was analyzed using the statistical package SPSS. Using
multiple regression analysis, the researcher established that there is a strong positive relationship
between the internal control – control environment, internal control – control activities, risk
assessment, information and communication, monitoring and evaluation and financial success | en_US |
