The Relationship Between Internal Controls and the Financial Performance of Cement Manufacturing Companies in Kenya
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Date
2016-11Author
Mogunde, Bonvas M
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Large and small organizations have in place systems of controls for efficient and
effective running of their businesses to achieve their goals. Internal control systems are
becoming indispensable in both private and public sectors in modern world because of
evolving complex methods of doing business involving technology, and increased size of
business units. The study sought to determine if a relation between components of
internal controls performance in terms of ROCE of Kenyan cement manufacturing
companies exist. The research employed descriptive survey design. Four companies were
selected out of 7 registered cement manufacturing companies. Data for the study was
gathered using a questionnaire. The study also used published financial statements as a
source of secondary data. An oral interview was used to obtain information that was not
obtained through questionnaires.
Regression analysis was used to find if a relationship between internal controls and
financial performance as measured by ROCE exists. Statistical package for social
sciences analyzed the data gathered through questionnaires. The results revealed that a
positive relation exists between control environment, risk assessment, control activities,
information and communication and monitoring with financial performance (ROCE) of
cement companies incorporated in Kenya. The five components of internal control
(control activities, risk assessment, control environment, monitoring, information and
communication) were significant with values of less than 5% implying that all variables
were statistically significant. Further the coefficient of determination indicated the
independent variables contributed to 51.6% of the variation in financial performance as
was explained by of 0.516 implying the model was a good predictor. The study
concluded that a positive relationship exists between internal controls and financial
performance of cement producing companies incorporated in Kenya. Companies that had
effective internal controls experienced improved financial results.
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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