Impact of internal control procedures and monitoring on financial performance of saccos in Kenya A case of Tharaka Nithi county

The Savings and Credit Cooperative Societies sector is considered both economically and socially important. The sector has continued to mobilize savings and developed demand driven financial products which has encouraged members to save additional resources to finance education from primary to university through affordable loans to the members. However, sectoral report indicates that nearly 5% of Savings and Credit Cooperative Societies collapse every year and registered members withdraw their membership annually. Therefore, there was the need to investigate the real cause of this problem. The main aim of the study was to establish the impact of internal control procedures and monitoring on financial performance of Savings and Credit Cooperative Societies in Kenya. The specific objectives of the study were to establish the impact of internal control procedures and monitoring on financial performance of Savings and Credit Cooperative Societies in Tharaka Nithi County. The study adopted descriptive research design on the target population of 208 members of staff from ten Savings and Credit Cooperative Societies within Tharaka Nithi County. The study employed a non-probabilistic purposive sampling technique to come up with a sample of 69 members of staff. The study used both primary and secondary data. The questionnaires were pre-tested to ensure validity and reliability. The study used secondary data for three years (2013-2015). Multiple regression analysis was used to determine the relationship between dependent and independent variables. A t-test and F-ratio were applied to test hypotheses and overall significance of the regression model at 5% significance level. Findings of the study indicated that both control procedures and monitoring had a positive and significant impact on financial performance of Savings and Credit Cooperative Societies. This implies that both internal procedures and monitoring are major determinants of financial performance of Savings and Credit Cooperative Societies. The study findings would benefit Savings and Credit Cooperative Societies, government and other policy makers in providing policies that are backed with research findings. The study recommends the Savings and Credit Cooperative Societies to put in place effective policies to ensure proper implementation of control procedures and monitoring measures.