INTERNAL CONTROL SYSTEMS AND FINANCIAL PERFORMANCE OF COMPANIES LISTED IN NAIROBI SECURITIES EXCHANGE
Abstract
Internal control systems involve various methods and measures the organisation takes to safeguard assets, accurately check financial reports, enhance operational efficiency and execute managerial policies to achieve their financial objectives. The study sought to determine how internal control systems influence the financial performance of Nairobi Securities Exchange (NSE) listed companies in Kenya. Specifically, the study sought to assess the effect of risk assessment, internal control environment and information and communication systems on the financial performance of the listed companies in NSE. The study adopted a descriptive research design. The target population comprised 63 listed companies in NSE as of 30th June 2023. A sample of 39 companies was drawn from the target population using a stratified random sampling technique. The study used primary data collected using structured questionnaires. Data analysis was carried out using descriptive and inferential statistical methods. The results were presented using tables and charts. The study found that internal control systems positively and significantly influenced the financial performance of the listed companies in NSE. The study recommended that to improve the financial performance of these firms, the management needs to determine and implement the optimal combination of effective and efficient internal control mechanisms.
JEL: G20; L10; L20; M10
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DOI: http://dx.doi.org/10.46827/ejefr.v8i3.1713
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