Internal Controls and Operational Efficiency of Human Rights Organizations in Nairobi City County, Kenya
Carolyn Wanjiru Njange *
Department of Accounting and Finance, School of Business, Economics and Tourism, Kenyatta University, Kenya.
CPA Anthony Thuo
Department of Accounting and Finance, School of Business, Economics and Tourism, Kenyatta University, Kenya.
*Author to whom correspondence should be addressed.
Abstract
The study aimed to determine the connection between internal controls and operational efficiency of Human Rights Organizations in Nairobi, Kenya. Specifically, the study sought to: evaluate the impact of reporting controls on the accuracy and timeliness of financial information, assess the level of compliance with local, international and internal regulations and policies, assess the effectiveness of communication and information controls, examine the effectiveness of monitoring and evaluation controls in ensuring optimum implementation and ascertain the moderating effect of Board resolutions on the relationship between internal controls and operational efficiency of Human Rights Organizations in Nairobi, Kenya. The following theories guided the study: Agency theory; Stewardship theory as well as Contingency theory. The researcher utilized a descriptive research design on a sample survey of 101 Human Rights Organizations operating in Nairobi, Kenya during the 5-years period covering 2015-2019. Both primary and secondary data were used. Questionnaires were utilized to collect primary data while secondary data was collected through a desk review of the Organizations’ annual reports covering the period under study. That financial reporting controls were generally viewed positively, particularly for the accuracy and timeliness of reports. Secondly, compliance controls emerged as a critical factor with strong correlations to other governance mechanisms, especially board resolutions. Thirdly, communication information controls showed a significant, but negative, impact on operational efficiency, indicating that while communication systems are essential for transparency and stakeholder engagement, inefficiencies in these systems can hinder performance. The M&E controls were highly rated, particularly for the measurement of outcomes and the frequency of monitoring activities. Board resolutions stood out as a critical governance mechanism with strong positive ratings for providing oversight and aligning with organizational vision.
Keywords: Internal controls, operational efficiency, human rights organizations