Effects of Internal Controls on Performance of Nongovernmental Organizations in Nairobi City County, Kenya

Abstract

The interplay between internal controls and performance was explored in this inquiry. The adopted design was descriptive and 1,882 NGOs were targeted. From these, 330 were sampled and covered. Information was sought from first hand sources and processing was done descriptively and inferentially. Relevant diagnostic tests covering normality, multicollionearity and autocorrelation were conducted and appropriately interpreted before running regression analysis. The study established that compliance with accounting standards (β=.394, p<0.05) exerted the greatest positive and significant effect on performance of the NGOs in Nairobi followed by fraud audits (β=.213, p<0.05), separation of duties (β=.207, p<0.05) and lastly management control (β=.117, p<0.05). The study concludes that those internal controls have positive and significant effect on performance of the NGOs. It was recommended that finance managers of the NGOs in Nairobi should ensure there is strict compliance with the accounting standards. The internal auditors of the NGOs in Nairobi should closely work with independent external auditors to carry out fraud audits. The Human Resource managers of the NGOs in Nairobi should ensure there is clear separation of duties as this also contribute towards performance. The internal audits of the NGOs in Kenya should strengthen the effectiveness of the management controls in place so as to enhance performance.