Title:
INFLUENCE OF INTERNAL CONTROLS ON FINANCIAL DISTRESS OF SASRA REGULATED SACCOS

Authors:
Halldess Nguta Munene, Kenya

Abstract:
Financial distress in SACCOs can be attributed to internal controls instituted by the board by the board of directors. While SACCOs are deemed to be stable and well governed by a board of directors who are accountable to SASRA for all internal controls of a firm, at times the controls put in place have not detected and or prevented fraudulent activities from taking place hence causing financial distress in SACCOs. This study was designed to evaluate internal controls instituted by the SACCOs and the relationship between internal controls and financial distress of SACCOs in Kenya. Descriptive research design as employed on sample size of 46 SACCOs based in Nairobi as a cluster sample within a population of 176 SACCOs registered by sasra. Purposive sampling was used within the cluster to select the chief executive officer, the accountant and the internal auditor of each SACCO. Questionnaires were employed to collect primary data which was analyzed by descriptive statistics to establish means and standard deviations in variables. A regression model was used to establish the relationship between variables and to provide description of the data and to explain the achievement of the study. The study established a mutual effect of internal controls and financial distress of SACCOs in Kenya. The study thereby recommends that the government through SASRA should ensure that committee reports are properly implemented; there should be a follow up to check on the extent of implementation of the audit subcommittee reports as this will help to safeguard members’ funds.