Analysis of the Effect of Internal Control on Financial Accountability of Selected Humanitarian Organizations in Nairobi City County, Kenya

Abstract

Humanitarian organizations are mandated to ensure efficient financial accountability so as to enable efficiency in their operations, hence, maximum utilization of resources. Most of the humanitarian organizations have largely developed inculcated internal controls, however it is largely unclear to what extend the operationalization of internal controls has taken place since we continuously witness some organizations still struggling to fulfil their mandate due on their financial accountability. The objective of this study was to determine the effect of preventive, detective and corrective controls on financial accountability of selected humanitarian organizations in Nairobi City County, Kenya. The study was guided by; Positive Accounting Theory, Stewardship Theory and the Agency theory. The study adopted a descriptive research design, with a target population of 70 employees of three Humanitarian organizations in Nairobi City County; World Vision, Compassion International Inc and Give Directly Kenya. The study employed a census sampling technique. Information was collected using a semi structured self-administered questionnaire to be filled by all respondents from the target population. The data from the main research was entered into a statistical package for social sciences (SPSS) for analysis within the framework of multiple linear regression model and relative frequencies. Then the results were presented in tables' graphs and bar charts for ease of understanding by the users of this statistical information. From the findings, internal controls positively and significantly affect financial accountability of the humanitarian organizations in Nairobi City County. It is recommended that to improve their financial accountability, there is need for organisations to put in place preventive controls such as having a cheque co-signing policy, segregation of duty, having a chart that clearly defines lines of authority and responsibility and an organization structures to point out all responsibilities of each section. There is also need to have a clear understanding of importance of internal controls and division of responsibility among all the employees to mitigate possibility of fraud and also create common awareness of the expectation in adhering to set standards.