Internal Audit Practices and Financial Performance of Savings and Credit Co-Operative Societies: A Case Study of Ukulima Sacco – Nairobi, Kenya
Makokha, Griffin Omukhango
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Saving and credit cooperative societies have been adopting internal audit practices to ensure consistency and improvement in financial performance. However, despite the adoption of these internal audit practices, the financial performance of Ukulima SACCO still remains poor. This study aimed at assessing the relationship between internal auditing practices and financial performance with specific focus to Ukulima SACCO, Kenya. In order to achieve its purpose, the study was driven by specific objectives which include; relationship between internal audit planning, audit committees, involvement of stakeholders and practices of audit reporting in relation to financial performance of Ukulima SACCO, Kenya. Relevant theories including Agency theory, theory of stakeholder, financial agency theory as well as positive auditing theory have been used to gain greater overview. Empirical review of previous studies and research gaps has been identified in order to emphasize the need for the study. In addition descriptive survey research approach was adopted. In the investigation, the study targeted 148 employees in Ukulima SACCO, Nairobi branch who operate in various departments. The study adopted census method; this ensured the whole population was represented. The study utilized primary data collected using Questionnaires. Moreover, the study used descriptive and also inferential statistics to analyze quantitative data with the help of SPSS. Moreover, descriptive statistics include mean, standard deviation, percentages and frequencies. Inferential statistics included both correlation and multi-regression analysis. Data presentation after SPSS analysis was presented using figures (bar charts and pie charts) and tables. The study found that internal audit planning practices, audit committees, stakeholders‘ involvement in internal auditing practices and internal audit reporting practices influences the financial performance of Ukulima SACCO significantly. The study therefore recommends that the management of Ukulima SACCO should identify audit risks, allocate time for audit and set up regulations for compliance so as to improve the SACCOs financial performance. In addition, the management of SACCOs should involve stakeholders in internal auditing through stakeholders identification, training and selection of stakeholders with experience. The management needs to select stakeholders with experience in auditing and they should be involved in internal auditing process since this enables the auditors to explain SACCO audit value while trying to know the expectations of the stakeholder. The study also recommends that frequent auditing ought to be conducted and findings reported on time and should be free from material omissions, errors and fraud. Also, the study recommends that government of Kenya through SASRA and policy makers should develop more policies and revise the current policies on internal audit reporting practices among SACCOs.