EFFECT OF INTERNAL CONTROL SYSTEMS ON FINANCIAL PERFORMANCE OF THE TEA FACTORIES IN KISII COUNTY, KENYA
Abstract
Internal control is characterized as a measure that is embraced by an association so as to guarantee an accomplishment of its goals in operational adequacy and effectiveness, solid monetary revealing, and consistence with laws, guidelines and approaches. The purpose of the study was to establish the effect of internal control systems on the financial performance of tea processing firms in Kisii County, Kenya. The specific objectives included; to determine the effect of audit on financial performance of tea processing firms in Kisii County, Kenya, to establish the effect of separation of duties on financial performance of tea processing firms in Kisii County, Kenya, to evaluate the effect of access regulation on financial performance of tea processing firms in Kisii County, Kenya and establish the effect of standardized documentation on financial performance of tea processing firms in Kisii County, Kenya. This study anchored on four theories to explain the influence of the independent variables on the dependent variable. The theories are the Agency theory, Stewardship theory, Positive Accounting Theory and the Contingency Theory. The study applied descriptive research design. The target population of the comprised of 6 tea factories in Kisii County which were categorized as account chiefs and heads of inside review among the 6 factories making a sum of 12 respondents. This population of 12 factories resulted to 72 respondents for the study. The study utilized descriptive and inferential statistics to analyze data collected. The study concluded that Standardized documentation of the factory has a significant influence its documents and communications. The factory had an access authorization system for all firm documents and records. The study concluded that there was a positive correlation between separation of duties and financial performance. The study recommended that tea factories should embrace on accessibility to internal control systems for them to improve their ratio of financial performance based on correlations values. Another study can be conducted to examine the effect of internal control systems on financial performance of other sectors.
Keywords: Audit, Separation of Duties, Access Regulation, Standardized Documentation
CITATION: Moenga, O. O., & Mereipei, T. (2021). Effect of internal control systems on financial performance of the tea factories in Kisii County, Kenya. The Strategic Journal of Business & Change Management, 8 (2), 485 – 500.
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DOI: http://dx.doi.org/10.61426/sjbcm.v8i2.2015
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