Abstract:
Kenyan SACCO segment makes up a considerable percentage of the country's
economic growth and social improvement. It need been created that interior nature's
domain need an incredible bearing on the execution of SACCOs. This research
investigated the relationship between internal control systems and performance in
SACCOs in Nyeri Central Sub-County and was guided and was guided by the
following theories; Restitution and Internal Control Theory, Agency theory and
Control theory. Internal controls were looked at from the perspective of Control
Environment, control activities, Risk Assessment and monitoring all focused on the
performance which measured profitability and ROI. The target population was 78
employees working in the SACCOs in Nyeri central sub-county, the staffs working in
SACCOs were categorized into three categories, that is, the Loan Manager, Internal
Auditor and then Financial Analyst. The research was conducted using both
quantitative and qualitative approaches; adopting cross-sectional survey research
design. The relevant data was collected using questionnaires from 68 respondents
representing 87.2% response rate out of the probable 78. Collected data was analyzed
using statistical package for social sciences (SPSS) to generate descriptive and
inferential statistics. Effects of internal controls on the financial performance of
SACCOs in Nyeri central sub-county were measured using multiple regression
analysis. The findings of the study revealed that internal control environment, risk
assessment control and activity control had a positive and statistically significant
effect on financial performance of SACCOs. Monitoring had a positive but
statistically insignificant effect on financial performance of SACCOs. The study
recommended that SACCOs should develop internal control system and a policy to
ensure that ICS is adhered to. In addition, SACCOs should come up with policy to
ensure that risk assessment and control is done at different levels and corrective
and/or preventive measures are taken in order to mitigate the effect. SACCOs should
also come up with a policy and procedure that ensure that there is regular and
systematic review of the internal control systems and ensure that issues raised are
addressed appropriately. The study suggests that future research could focus on the
challenges SACCOs face when developing and implementing internal control
systems.
