Factors Influencing Financial Control Practices in Community Based Organizations: A Case Study of CBOs in Migori County, Kenya

Abstract

Studies  reveal  that  weaknesses  in  financial  control practices  in  CBOs  have  led  to corruption, embezzlement of funds by CBO officials and even the organizations’ risk to lose funding by donors. Therefore, the overall objective of this study was to analyze the factors influencing financial control practices of CBOs in Migori County. The specific objectives of the study were to: analyze the influence of technical skills of CBO officials; internal controls systems and budgeting; bookkeeping and auditing on financial control practices of CBOs in Migori County. The study used survey research design targeting CBOs in the County. Stratified sampling design was adopted targeting 142 management staff of the different CBOs from eight sub counties in the area. The sample of 142 was selected from a population of 220 CBOs in Migori County. Data was collected using questionnaires and analyzed using both descriptive and inferential statistics. The findings revealed that technical skills of the CBO officials (r = 0.478, α = 0.01), Auditing (r = 0.435, α = 0.01), Bookkeeping (r = 0.268, α = 0. 05) and Internal control systems and budgeting (r = 0.220 α = 0.05) were positively correlated with financial control practices respectively. Multiple linear regression analysis results showed that Technical skills (β = 0.347) and Auditing (β = 0.285) are significant while Internal control systems and budgeting (β = 0.095) and Bookkeeping (β = 0.024) are not significant.  The study further found out that most CBOs in the area were audited annually although there was need to ensure compliance among all to be subjected to an audit at least once a year. The technical skills of the CBO officials  in  the  area  needed  to  be  strengthened  especially  with  regard  to  spending priorities. The study was very important since the findings will inform the donors and other stakeholders to address the gaps in CBOs to ensure they give the best to the community. It is recommended that standardized accounting and reporting should be provided by the government in order to make the financial activities of the CBOs tractable through sharing of information on a common and acceptable platform. More studies should however be done on the effects of regulations governing funding of CBOs on their performance and on the influence of ICT on the financial performance of CBOs.

Keywords: Community Based Organizations, Financial control, Capacity assessment