Internal Control System and Financial Performance of Non-Governmental Organisations in Nigeria
Downloads
This study examined the impact of each of the internal control components such as control environment, risk assessment, and control activities on the financial performance of some selected NGOs in Nigeria. The study was anchored on stakeholders’ theory and adopted a descriptive survey research design to describe the relationship between the variables. The population consists of 200 key staff of the 20 purposely selected NGOs in Nigeria. A structured questionnaire was used to collect data from the respondents and the data collected were analysed using the descriptive statistic of mean and standard deviation while a linear regression model was used to test the relationship between the variables. The findings revealed that control environment and risk assessment to some extent influence the financial performance of surveyed NGOs while control activities have a significant effect. The study concluded that each of the internal control components considered in the study has an impact on financial performance. Inadequacy or nonexistence of any will negatively affect the financial performance of an NGO and vice versa. This study recommended that the management of NGOs should create and maintain a strong internal control system since the organisation's financial success is influenced by the strength of the control system. This can be accomplished by establishing standards, processes, and organisational structures that serve as the pivot for internal control throughout the organisation.
Abdulrashid, A. & Aliyu, Z. (2019). Internal control system, sustainable management and service delivery of non-governmental organizations in Nigeria: An empirical analysis. International Review of Management and Marketing, 9(2).
Adedeji, A. & Olubodun, O. (2018). Effect of internal control system on employee performance of small-scale manufacturing enterprises in Ondo State, Nigeria, Human Resource Research, 2(1), 48-49.
Afolabi, S., Ogunleye, K. & Olukoya, O. (2020). Effect of internal control systems on the financial performance of deposit money banks in Osun State. World Journal of Innovative Research, 9(1), 59.
Akinyemi, A., Ogbebor, P. I. & Cole, A. A. (2021). Internal control system and financial performance of manufacturing companies listed in Nigeria. International Journal of Current Research, 13(8).
Akwaa-Sekyi, E.K., & Gené, J.M. (2016). Bank internal controls and credit risk in Europe: A quantitative measurement approach. World Academy of Science, Engineering and Technology, International Journal of Economics and Management Engineering, 3.
BC Campus Open Publishing. (2021). Internal control and their purpose within an organization. Retrieved from https://opentextbc.ca/principlesofaccountingv1openstax/chapter/define-and-explain-internal-controls-and-their-purpose-within-an-organization/
Bett, J. C. & Memba, F. S. (2017). Effects of internal control on the financial performance of processing firms in Kenya: A case of Menengai company. International Journal of Recent Research in Commerce Economics and Management, 4(1), 105-115.
Chelangat, V. & Sang, P. K. (2018). Financial monitoring and evaluation on financial sustainability of public governance non-governmental organizations in Nairobi County, Kenya. International Journal of Current Aspects, 2(5), 29-36.
Chen, A. Y., Beasley, M. & Nunez, K. (2006). Working hand in hand: balanced scorecard and enterprise risk management. Strategic Finance Topic, 49-51.
Chowdhury, E. K. (2021). Does internal control influence financial performance of commercial banks? Evidence from Bangladesh. South Asian Journal of Management, 6(1), 59-74.
Committee of Sponsoring Organisation of the Treadway Commison. (2021). Internal control integrated. Retrieved from
https://www.coso.org/documents/coso-crowe-coso-internal-control-integrated-framework.pdf
Corporate Finance Institute. (2021). Resources, knowledge, finance and financial performance. Retrieved from
https://corporatefinanceinstitute.com/resources/knowledge/finance/financial-performance/
Doyle, M. W., Stanley, E. H., Strayer, D. L., Jacobson, R. B. & Schmidt, J. C. (2005). Effective discharge analysis of ecological processes in streams. Water Resources Research, 41. Retrieved from https://earthref.org/ERR/91056/
Ejoh, N. & Ejom, P. (2014). The impact of internal control activities on financial performance of tertiary institutions in Nigeria. Journal of Economics and Sustainable Development, 5(16), 133-143
Eke, G. (2018). Internal control and financial performance of hospitality organisations in Rivers State. European Journal of Accounting, Auditing and Finance Research, 6(3), 32-52.
Friedman, A. L. & Miles, S. (2006). Stakeholders: Theory and practice. Oxford University Press, Oxford.
Growth Force. (2021). A quick guide to non-profit surpluses and deficits. Retrieved from https://www.growthforce.com/blog/a-quick-guide-to-nonprofit-surpluses-and-deficits
Harvard Business School Online. (2021). Cashflow vs. profit. Retrieved from
https://online.hbs.edu/blog/post/cash-flow-vs-profit
Hussaini, U. & Muhammed, U. (2019). The effect of internal control on performance of commercial banks in Nigeria. International Journal of Management Research & Review, 8(6), 13. Retrieved from
https://www.researchgate.net/publication/330169333
Jusni, D. F. & Mochklas, M. (2018). How measuring financial performance. International Journal of Civil Engineering and Technology, 9(6), 553-557.
Kenton, W. (2021) Internal controls. Retrieved from https://www.investopedia.com/terms/i/internalcontrols.asp
Kumuthinidevi, S. (2016), A study on effectiveness of the internal control system in the Private Banks of Trincomalee. International Journal of Scientific and Research Publications, 6(6), 600-612. Retrieved from http://www.ijsrp.org/research-paper-0616/ijsrp-p5482.pdf
Lagat, C. K., Okelo, C. A. & Terer, E. (2016). Effect of internal control systems on financial management in baringo county government, Kenya. Journal of Economics, Finance and Accounting, 3(1), 1-14.
Mohamed, M. M. (2018). Internal control system and financial management in selected local non-government organizations in Mogadishu, Somalia. MBA research work, Kampala International University, 1-58.
Ofei, E. F., Asante, C. & Andoh, O. M. (2020). Assessing the effects of internal control environment and control activities on financial performance of banks in Ghana. African Journal of Accounting and Financial Research, 3(1), 98.
Ogbebor, P., Osundina, O. & Oyamendan, N. (2020). Internal control and the financial performance of selected deposit money banks listed in Nigeria. Developing Country Studies, 10(4), 61-73
Oyetunji, O. I. O. (2005). Auditing principles and practice in Nigeria, 1st ed. (Ibadan: Oritoso Commercial Press). 56.
Rumenya, H. & Kisimbi, J. M. (2020). Influence of monitoring and evaluation system on performance of projects in non-governmental organization: A case study of education projects in Mombasa County, Kenya. Journal of Entrepreneurship and Project Management, 5(2), 46-66.
Singleton, T., Singleton, A., Bologna, J. & Lindquist, R. (2006). Fraud auditing and forensic accounting. USA: Wiley. Retrieved from https://www.wiley.com/en-us/Fraud+Auditing+and+Forensic+Accounting%2C+3rd+Edition-p-9780470053720
The Global Fund. (2021). The global fund to fight AIDS, Tuberculosis and Malaria. Retrieved from https://www.theglobalfund.org/en/oig/updates/2021-03-15-audit-of-global-fund-internal-financial-controls/
Umar, H. & Umar, M. (2019). The effect of internal control on performance of commercial banks in Nigeria. International Journal of Management Research and Review, 8(6), 13.
