INTERNAL CONTROLS AND FINANCIAL MANAGEMENT OF HUMANITARIAN NON-GOVERNMENTAL ORGANIZATIONS IN NAIROBI CITY COUNTY, KENYA
Abstract
Purpose of the study: The study sought to investigate the effect of internal control system on financial management of humanitarian non-government organizations in Nairobi city county, Kenya. NGOs support the society by providing community development, disaster relief, social movements and sustainable system development, among others.
Statement of the problem: Despite the various internal controls’ measures in place, financial management remains a concern among NGOs in Kenya. Information on inefficient budget utilization, organization's assets misuse, misappropriation of donor funds and late financial reporting have been reported. As stated by Global Fund Audit, several NGOs were barred from applying for new funding programs and have lost offers for project implementation awards as a result of their organizations' ineffective internal2control2system.
Research methodology: A descriptive research design was adopted. The data was gathered from 185 participants selected from accounting, administration and operations departments of humanitarian NGOs in Nairobi2City2County. Data was analyzed using descriptive and inferential statistics.
Findings: The study found that internal control system of humanitarian NGOs is a significant determinant of financial their financial management. Regression results revealed that internal audits have beneficial2influence on financial2management of humanitarian NGOs2in Nairobi2County. Also, internal control environment has beneficial effects on financial management of humanitarian NGOs in Nairobi city. The study revealed that information communication has beneficial effects on financial management of NGOs in Nairobi city. Finally, it was also established that risk assessment has beneficial effects on financial management of NGOs in Nairobi city.
Recommendations: The study recommends humanitarian NGOs in Nairobi City County to invest in effective internal audit departments, improving the control environment of their organizations and help automate data flow, give real-time information, and integrate their accounting and other business-related tools to encourage accountability and transparency in financial management.
Keywords: Internal Control System, Internal Audit, Internal Control Environment, Information Communication, Risk Assessment
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