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INTERNAL CONTROLS AND PERFORMANCE IN NON-GOVERNMENTAL

ORGANIZATIONS: A CASE STUDY OF MANAGEMENT SCIENCES FOR HEALTH
SOUTH...
DECLARATION
I Abraham Ayom Ayom hereby declare that this is my original work and has never been
presented by any academic ...
APPROVAL
This to certify that this Research Reportentitled “Internal Controls and Performance of
Non-Governmental Organiza...
DEDICATION
I dedicate this book to my children; Ayom Junior and Achai Abraham, my wife Susan and my
younger brothers& Sist...
ACKNOWLEDEMENT
I take this opportunity to thank all people who made a contribution in my academic life so far.
I would lik...
TABLE OF CONTENTS
DECLARATION ...............................................................................................
2.3

Effective Procurement policies .........................................................................................
4.1.3

Level of Education of the respondents ............................................................................3...
4.6.1

Proper financial accountability has led to better services delivery ....................................58

4.6.2

...
LIST OFACRONYMS AND ABBREVIATIONS
AIDS

Acquired Immune Deficiency Syndrome

CUU

Cavendish University Uganda

COMU

Count...
LIST OF FIGURES
Figure 1: Conceptual Frame Work …………………………………………………………. 8
Figure 2: Pie chart showing the distribution age...
LIST OF TABLES
Table 1:

Sample size of the respondents…………………………………………………… 26

Table 2:

Showing distribution of age of t...
Table 20:

Shows responses on whether staff authorized purchases or expenditures do
not issued the payment ………………………………………...
ABSTRACT
The purpose of this study was to assess the impact of internal controls on performance of NonGovernmental Organis...
CHAPTER ONE

INTRODUCTION
1.0

Introduction

This chapter dealt with the background of the study, statement of the problem...
Basoln (2002) notes that an internal control is a set of instructions, guidelines and procedures
that a company's senior l...
According to Krishnan (2005), Proper application of internal control procedures and policies
improves on the performance o...
The above objective therefore implies that the organisation should set up proper books of
account and financial management...
operational policies; financial records being subject to internal or external audit. Procurement
policies documented and a...
1.3.1

Specific objectives of the Study

The study was guided by the following specific objectives:
i.

To examine how MSH...
1.5.2

Geographical scope

The study focused on MSH headquarters in Juba Central Equatorial State, South Sudan; MSH is
loc...
The study will help Private organizations/ institutions to know how to be accountable and
manage resources more carefully....
services and product provision change in growth, transparency, proper record keeping, compliance with
rules and regulation...
CHAPTER TWO
LITERATURE REVIEW
2.0

Introduction

This chapter comprises of the related literature of the study research wh...
they were affected by civil war and therefore they may not understand the repercussion of
neglecting some of these control...
responsibility working hand in hand with the accountant or financial controller of the
organization. For the case MSH Sout...
put in place as per the internal control policy manuals some that may lead to the concealing of
some of the funding by the...
governance, risk management and control processes that management has put in place; and to
provide advice to management on...
Groonhil (1999) suggest that the Internal Audit activity should assess and make appropriate
recommendations for improving ...
auditors. Internal auditors review segment processes and issue reports to senior management.
The internal audit department...
2.3

EffectiveProcurement policies

According to Minahan, (2006) as the need to satisfy stakeholders’ demands increases,
N...
each and every dollar of the tax payers’ money. In a bid to stream line procurement process in contracts
involving interna...
held at hotels (Motherland and Naivasha) were there was no record of previous stays by other
staff members or available da...
According Tackett and Gregory (2006) in India the past corruption cases showed that
procurement processes are prone to man...
The second one is controlling, budgetary controls help responsible officers/ accounting officers
to be focused on only cer...
these reports is to enable Heads of Departments and/or Stations to avoid deviation from the
approved budgets. These report...
The organization may set out spending limits for the officers on major purchases. Expenditures
over a predetermined dollar...
compliance. Some of the peak performance indicators are: reports issued on time, staff training
and certifications, intern...
to lack of qualified manner power to work in some areas and the rigidity of the rigidity of the law
that may require only ...
CHAPTER THREE
RESEARCH METHODOLOGY
3.0

Introduction

This chapter presented a detailed description of the research method...
representative enough. This was in conformity with Roscoe (2003) who contends that the sample
size larger than 30 and less...
because the sample selected comprised of informed persons who could provide data that was
comprehensive enough to gain bet...
3.6

Data collection instruments

The researcher used the following instruments in this study, questionnaire and interview...
data quality management, the questionnaires were tested on 10 respondents. This was done to test
consistency and to ensure...
According to Mpaata (2004:8) the questionnaire method has got some disadvantages which
include small sample size than expe...
CHAPTER FOUR
PRESENTATION, DATA ANALYSIS AND INTERPRETATION OF FINDINGS
4.0 Introduction
In this Chapter the presentation,...
Fig 2: Pie chart showing distribution age of the respondents

4
10

6

20-25 years
25-30 years

11

30-35 years
35-40 year...
Table 3: Gender of the Respondents
Sex

Frequency

Percentage (%)

Female

22

36.7

Male

38

63.3

Total

60

100.0

Sou...
child education in South Sudan because of long civil war. Hence there were no many qualified
and educated females to compe...
Figure 4: Bar graph for the Level of Education
Level of education
60
50
40
30

Frequency

20
10
0
Primary

Secondary

Tert...
Table 5: Showing Time spent on the current job by the respondents
Period

Frequency

Percentage (%)

Less than 2years

8

...
Table 6: Shows responses on the position held by the respondents
Position held

Frequency

Percentage (%)

Accountant & Fi...
4.2 Payments procedure
In an attempt to ascertain the different major payment procedures about the internal control and
pe...
followed, this is in conformity with the Auditors report 2012 which indicated that some of the
controls were not used when...
4.2.3

Payments supported by the vouchers in a prescribed form

Respondents were asked if all payments were supported by t...
by procurement committee members, it also shows evidenced that certain collusive arrangement
with vendors benefited employ...
Table 11: shows responses on whether payments procedures undertaken by MSH affect its
performance
Responses

Frequency

Pe...
4.3.1

MSH has an internal audit function which perform review

The researcher asked the respondents whether MSH has an in...
Table 13: showing findings on proper review over receipts performed
Responses

Frequency

Percentage (%)

44

73

D

10

1...
Table 14: shows responses on whether there are enough audit staff to perform reviews
Responses

Frequency

Percentage (%)
...
Table 15: shows responses on whether audit staffs are easily compromised
Responses

Frequency

Percentage (%)

5

8

D

11...
Table 16: shows responses on whether internal auditing reduced fraud in MSH
Responses

Frequency

Percentage (%)

SA

7

1...
Table 17: shows responses on procurement policies and guidelines that can be followed
Responses

Frequency

Percentage (%)...
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
Abraham approved final research internal control and performance of non governmental organization
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Abraham approved final research internal control and performance of non governmental organization

  1. 1. INTERNAL CONTROLS AND PERFORMANCE IN NON-GOVERNMENTAL ORGANIZATIONS: A CASE STUDY OF MANAGEMENT SCIENCES FOR HEALTH SOUTH SUDAN BY ABRAHAM AYOM AYOM 002/0315/12352 A RESEARCH REPORT SUBMITTED TO THE FACULTY OF BUSINESS MANAGEMENT IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF BACHELOR’S DEGREE IN BUSINESS ADMINISTRATION OF CAVENDISH UNIVERSITY UGANDA OCTOBER, 2013
  2. 2. DECLARATION I Abraham Ayom Ayom hereby declare that this is my original work and has never been presented by any academic award in any University. Signed………………………………………………. Abraham Ayom Ayom 002/0315/12352 i Date…………………………
  3. 3. APPROVAL This to certify that this Research Reportentitled “Internal Controls and Performance of Non-Governmental Organizations” has been written under my supervision and is hereby approved for submission for a Bachelor’s Degree of Business Administration of Cavendish University Uganda. Approved by…………………………………. Date………………………… Bamuswankwire Charles Supervisor ii
  4. 4. DEDICATION I dedicate this book to my children; Ayom Junior and Achai Abraham, my wife Susan and my younger brothers& Sisters; Santino Adhieu Ayom, William Wol Ayom, Mary Aluel Mawien Abuk Mayom and Peter Ayom Makoldit. iii
  5. 5. ACKNOWLEDEMENT I take this opportunity to thank all people who made a contribution in my academic life so far. I would like to express heartfelt gratitude to my supervisor, Bamuswankwire Charles whose tireless efforts have made this dream a reality. Charles you restored hope in me when I felt hopeless, you invoked the hitherto hidden abilities in me; a reason I will always walk with my head high. No amount of words can express my sincere gratitude for your unending support during the research period. May the Lord reward your efforts. I am greatly indebted to my colleagues and workmate; the lecturers in the faculty of Business Administration and Management, and the entire staff of Cavendish University Uganda and to my many student colleagues (BBA 2012) for your unending support in this journey. I am grateful to the staff for Management Sciences for Health (MSH) Organization who participated in the research. Special thanks go to the Country Project Director. Dr. Stephen Macharia and Philips Kenyi that spared their precious time in answering my Questionnaire and responding to the Interview guide. Without your contribution, this research would not have been possible. I take this opportunity to thank my entire extended family and all friends for their love, care and encouragement to me. Special thanks and tributes go to my younger brother Adhieu Satino Ayom, my friend James Ajoung whose time was greatly, compromised during my BBA studies. Lastly, my warm regards and blessing go to all of those who have made a positive contribution in my life, May the Almighty God bless you all. iv
  6. 6. TABLE OF CONTENTS DECLARATION ........................................................................................................................... i APPROVAL ................................................................................................................................. ii DEDICATION ............................................................................................................................. iii ACKNOWLEDEMENT .............................................................................................................. iv TABLE OF CONTENTS .............................................................................................................. v LIST OFACRONYMS AND ABBREVIATIONS ....................................................................... ix LIST OF FIGURES ...................................................................................................................... x LIST OF TABLES ....................................................................................................................... xi CHAPTER ONE .....................................................................................................................1 INTRODUCTION..................................................................................................................1 1.0 Introduction ....................................................................................................................... 1 1.1 Background to the Study.................................................................................................... 1 1.2 Problem Statement............................................................................................................. 5 1.3 General Objective of the study........................................................................................... 5 1.3.1 Specific objectives of the Study ......................................................................................... 6 1.4 Research Questions ........................................................................................................... 6 1.5 Scope of the Study ............................................................................................................. 6 1.5.1 Subject scope ..................................................................................................................... 6 1.5.2 Geographical scope ........................................................................................................... 7 1.5.3 Time Scope ....................................................................................................................... 7 1.6 Significance of the Study ................................................................................................... 7 CHAPTER TWO ................................................................................................................. 10 LITERATURE REVIEW .................................................................................................... 10 2.0 Introduction ......................................................................................................................10 2.1 Effective Payment ...........................................................................................................10 2.2 Financial records .............................................................................................................13 v
  7. 7. 2.3 Effective Procurement policies .......................................................................................17 2.4 Exercising budgetary control on the expenditure ..............................................................20 2.5 Performance ....................................................................................................................23 CHAPTER THREE ............................................................................................................. 26 RESEARCH METHODOLOGY ......................................................................................... 26 3.0 Introduction .....................................................................................................................26 3.1 Research Design...............................................................................................................26 3.2 Study population and sample size ....................................................................................26 3.3 Sample size ......................................................................................................................26 3.4 Sampling methods ...........................................................................................................27 3.4.1 Purposive sampling .........................................................................................................27 3.4.2 Random sampling ............................................................................................................28 3.4.3 Stratified random sampling ..............................................................................................28 3.5 Data Sources ....................................................................................................................28 3.6 Data collection instruments ...............................................................................................29 3.6.1 The self-administered questionnaire ..................................................................................29 3.6.2 Interviews .......................................................................................................................29 3.7 Data Processing................................................................................................................29 3.8 Data Analysis ...................................................................................................................30 3.9 Ethical Consideration ......................................................................................................30 3.10 Limitations and problems encountered .............................................................................30 CHAPTER FOUR ................................................................................................................ 32 PRESENTATION, DATA ANALYSIS AND INTERPRETATION OF FINDINGS .............. 32 4.0 Introduction .....................................................................................................................32 4.1 Demographic characteristics of respondents.....................................................................32 4.1.1 Age of the respondents ....................................................................................................32 4.1.2 Gender of the Respondents ..............................................................................................33 vi
  8. 8. 4.1.3 Level of Education of the respondents ............................................................................35 4.1.4 Time spent on the job by the respondents.........................................................................36 4.1.5 Position held by the respondents ......................................................................................37 4.2 Payments procedure.........................................................................................................39 4.2.1 Payments are properly documented..................................................................................39 4.2.2 Originals of Payment vouchers are certified in fully by the responsible officer ................40 4.2.3 Payments supported by the vouchers in a prescribed form ...............................................41 4.2.4 All payment vouchers are filed in numerical order ...........................................................42 4.2.5 Payment procedures undertaken by MSH affect its performance ......................................42 4.3. Financial records subject to Internal Audit. ......................................................................43 4.3.1 MSH has an internal audit function which perform review...............................................44 4.3.2 Proper review over receipts are performed .......................................................................44 4.3.3 MSH has enough internal audit staff to make reviews ......................................................45 4.3.4 Auditors at MSH can easily be compromised ...................................................................46 4.3.5 Internal auditing has led to the reduction of fraud in MSH ...............................................47 4.4 Procurement policies and procedure.................................................................................48 4.4.1 Procurement policies and guidelines that can be followed ................................................48 4.4.2 Strict adhere to procurement guidelines when undertaking procurement at MSH .............49 4.4.3 The procurement process followed is in accordance with MSH and Donor policies .........50 4.4.4 Staff who authorized purchases or expenditures does not issue the payment ....................51 4.4.5 There is a safeguard for protection against conflicts of interest among the procurement officers ...........................................................................................................................52 4.5 Assessment of how MSH has exercised budgetary control on the expenditures. ...............53 4.5.1 MSH objectives are clearly set in the budget framework ..................................................53 4.5.2 Payment were made in accordance with the current budget ..............................................54 4.5.3 There is a budget desk at MSH ........................................................................................55 4.5.4 Previous year’s budget performance reports are used for future planning .........................56 4.5.5 Budget conference is held every year ...............................................................................57 4.6 Performance ....................................................................................................................58 vii
  9. 9. 4.6.1 Proper financial accountability has led to better services delivery ....................................58 4.6.2 Proper procurement controls have led to financial transparency .......................................59 4.6.3 Budgetary control on the expenditure has led to proper utilization of funds .....................60 4.6.4 Internal auditing has led to compliance with rules and regulations in MSH ......................61 CHAPTER FIVE ................................................................................................................. 63 SUMMARY AND DISCUSSION OF FINDINGS ................................................................ 63 5.0 Introduction .....................................................................................................................63 5.1 Summary of Findings ......................................................................................................63 5.1.2 Payment Procedures ........................................................................................................63 5.1.3 Financial Records ............................................................................................................63 5.1.4 Procurement Policies .......................................................................................................64 5.1.5 Budgetary control ............................................................................................................64 5.1.6 Performance ....................................................................................................................64 CHAPTER SIX .................................................................................................................... 65 CONCLUSION AND RECOMMENDATIONS................................................................... 65 6.0 Introduction ........................................................................................................................65 6.1 Conclusion .........................................................................................................................65 6.2 Policy Recommendations ...................................................................................................65 6.3 Areas for Further Research .................................................................................................66 REFERENCES ...........................................................................................................................67 APPENDICES ............................................................................................................................71 APPENDIX A: QUESTIONNAIRE ..........................................................................................71 APPENDIX B: ESTIMATED BUDGET...................................................................................76 APPENDIX C: RESEARCH WORK PLAN .............................................................................77 APPEXDIX D: Interviews Guides …..........................................................................................78 viii
  10. 10. LIST OFACRONYMS AND ABBREVIATIONS AIDS Acquired Immune Deficiency Syndrome CUU Cavendish University Uganda COMU Country Operation Management Unit CPD Corruption Prevention Department E-Payment Electronic Payment GPA Government Procurement Act HIV Human Immune Virus ICS Internal Controls System JCC Juba City Council MOH Ministry of Health MSH Management Sciences for Health MTN Mobile Telephone Network NPA Norwegian Peoples Aid PO Purchase Order SAQ Self-Administered Questionnaire SPSS Statistic Package for Social Scientists USA United States of America ix
  11. 11. LIST OF FIGURES Figure 1: Conceptual Frame Work …………………………………………………………. 8 Figure 2: Pie chart showing the distribution age of the respondents ………………………. 33 Figure 3:Pie chart showing sample size by gender of the respondents……………………… 34 Figure 4:Bar graphs showing the level of education for the respondents …………………… 36 x
  12. 12. LIST OF TABLES Table 1: Sample size of the respondents…………………………………………………… 26 Table 2: Showing distribution of age of the respondents…………………………….……32 Table 3: Showing distribution gender of the respondents………………………………..... 34 Table 4: Showing level of education of the respondents.......................................................35 Table 5: Showing time spent on job by the respondents …………………………………...37 Table 6: Shows responses on the position held by the respondents ………………………. 38 Table 7: Shows responses whether payment procedures were documented………………. 39 Table 8: Showing the responses on whether payment vouchers certified ……………….. 40 Table 9: Showing the response on whether payments were supported by the voucher.......41 Table 10: Shows responses on whether payments voucher were filed in numerical order …42 Table 11: Shows responses on whether payment procedures undertaken by MSH staff affect its performance ………………………………………………………43 Table 12: Shows responses on whether MSH has an internal audit function which perform review …………………………………………………………………. 44 Table 13: Showing findings on proper review over receipts performed …………………. 45 Table 14: Shows responses on whether there are enough audit staff to perform review......46 Table 15: Shows responses on whether audit staffs are easily compromised …………….. 47 Table 16: Shows responses on whether internal auditing reduced fraud in MSH ………… 48 Table 17: Shows responses on procurement policies and guidelines that can be followed...49 Table 18: Shows responses on whether there has been strict to procurement guidelines..... 50 Table 19: Shows response on whether procurement process followed MSH & donor policies ………………………………………………………………….. 51 xi
  13. 13. Table 20: Shows responses on whether staff authorized purchases or expenditures do not issued the payment ………………………………………………………… …52 Table 21: Shows responses whether there is a safeguard for protection against conflicts of interest among the procurement officers ……………………………………….53 Table 22: Shows responses on the budgetary control exercised over the expenditures……… 54 Table 23: Shows responses on whether payment were made in accordance with the budget…55 Table 24: Shows responses on whether there is a budget desk at MSH……………………… 56 Table 25: Showing findings on whether previous year budget performance report was used for future planning ………………………………………………………….. 57 Table 26: Showing findings on whether budget conference is held every year ……………... 58 Table 27: Showing if financial accountability has led to better services delivery ……………59 Table 28: Showing if financial accountability has led to better services delivery ………… 60 Table 29: Shows responses on whether budgetary control on the expenditure has led to proper utilization of funds………………………………………………………… 61 Table 30: Shows responses on whether internal auditing has led to compliance with rules and regulations in MSH …………………………………………………….. 62 xii
  14. 14. ABSTRACT The purpose of this study was to assess the impact of internal controls on performance of NonGovernmental Organisations (NGO) case study of Management Sciences for Health (MSH) Juba South Sudan. The study was guided by the following objectives: To examine how MSH South Sudan has ensured effective payment to different department in the organization, to establish how MSH South Sudan has ensured financial records are subject to internal audit, to establish how MSH South Sudan has ensured effective Procurement policies, to assess how MSH has exercised budgetary control on the expenditure of all departments in the organization, Selfadministered questionnaire, and interview were used to collect data of 60 respondents, the SAQ were distributed to the respondents within the Finance and accounting department, Human resource department, Procurement department, Administrators and field officers. Data was analyzed using frequency tables, Pie charts computer programs such as SPSS 11, Microsoft excel and word. The study found out that the payment procedures followed by MSH attracted a positive response with majority acknowledging it performed well. The internal audit function attracted a relatively fair response with some agreeing and others not meanwhile majority of respondents gave a negative view about the procurement process indicating it was fraud, likewise they didn’t appreciate the budgeting process. In conclusion therefore internal controls can affect performance of an organization. It is therefore recommended that the implementation of internal control system be reviewed especially in the area of procurement, budgetary control and internal audit. xiii
  15. 15. CHAPTER ONE INTRODUCTION 1.0 Introduction This chapter dealt with the background of the study, statement of the problem, general objectives of the study, Specific objectives of the study, research questions, scope and Significance of the study about the impact of internal controls and performance of Non-Governmental Organizations a case study of management sciences for health Juba South Sudan (MSH). 1.1 Background to the Study This study was about internal controls and performance of Non-Governmental Organisations (NGO). It focused on Management Sciences for Health South Sudan as a case study between the periods of 2010-2012.Management Sciences for Health (MSH) is a nonprofit international health organization founded in 1971 by Dr. Ronald O'Connor, composed of more than 2,000 people from 73 nations. Its mission is to save lives and improve the health of the world’s poorest and most vulnerable people by closing the gap between knowledge and action in public health. Together with partners, it helps managers and leaders in developing countries to create stronger management systems that improve health services for the greatest health impact. MSH South Sudan was established on 18 September 2007 with the country office located in Juba. MSH works collaboratively with health care policymakers such as Ministry of Health (MOH) AID Commission, managers, providers, and the private sector to increase the efficacy, efficiency, and sustainability of health services by improving management systems, promoting access to services, and influencing public policy. MSH is chosen for the study because of its strategic importance to the community and the public as a whole. It deals with Health Systems Strengthening Expertise Leadership, Governance, &Management, Health Service Delivery, Human Resources for Health, Pharmaceutical Management, Health Care Financing and Health Information provision amongst others. MSH workshop Audit report (2012) 1
  16. 16. Basoln (2002) notes that an internal control is a set of instructions, guidelines and procedures that a company's senior leadership establishes to prevent operating losses resulting from theft, error, technological malfunction and employee neglect or carelessness. An internal control also helps an organization/company prevent adverse regulatory initiatives, such as fines or litigation. Accounting principles and internal audit rules require that organizations or companies establish adequate and functional internal controls to improve corporate governance processes. These principles include generally accepted accounting principles and the Institute of Internal Auditors standards. Juheno (1999) further notes that internal controls play an important role in corporate governance systems. Controls help an organization prepare accurate and complete financial statements at the end of each month and quarter. A firm may also hedge, or protect against, operating risks by implementing functional controls. These risks may relate to manufacturing activities and technological processes. Corporate governance consists of all mechanisms, technological processes and physical systems that department heads and segment chiefs put into place to make sure a company operates effectively. Governance tools include human resources policies and guidelines, as well as departmental work specifications. These tools may also include external elements, such as laws and regulations. Freeman (1998) conceptualizes a Non-Governmental organizationas (NGO) as an organization that is not part of a government and is not funded by the state. NGO’s are therefore typically independent of governments. The term is generally restricted to social, cultural, legal and environmental advocacy groups having goals that are primary non-commercial. According to Stevenson (2004) Performance is the outcome of an individual or group contribution of development in any activity leading to results (positive / negative).The financial statements users, regulators, directors and managers view internal control function as a key component of an organization’s corporate governance. 2
  17. 17. According to Krishnan (2005), Proper application of internal control procedures and policies improves on the performance of an organization. The case study chosen is a representative sample because of the numerous service provision it covers which include: Health Service Delivery, Human Resources for Health, Pharmaceutical Management, Health Care Financing Health Information, HIV &AIDS, Tuberculosis, Family Planning & Reproductive Health, Maternal, Newborn, & Child Health, Other Communicable Diseases Chronic Diseases management among others, all of which are important to human survival. It is also important to undertake the case study because of the large resources of USAID donor funds assigned to MSH South Sudan. For instance during the Financial Year 2010/2011 a total of $1,746,2011Million USD was released while in 2011/2012 it was $1,705,000 Million USD for both TB Care I Project and SIAPS Project It is on this basis that one needs to find how such large amount of funds have been used hence the controls put in place. The study is important because of the role played by MSH South Sudan in ensuring the population is living a health life so as to be able to be active economically which can lead to the development of the nation. According to the MSH Strategic Plan (2005), MSH overriding mission is to save lives and improve the health of the world’s poorest and most vulnerable people by closing the gap between knowledge and action in public health. Together with our partners, they are help managers and leaders in developing countries to create stronger management systems that improve health services for the greatest health impact. One of the objectives to achieve the above mission is through establishment of sound financial management systems for accountability, measurement of the financial performance and provision of timely information and to provide sound governance and oversight of the NGO’s activities. 3
  18. 18. The above objective therefore implies that the organisation should set up proper books of account and financial management and measurement systems including the setting up of an internal control system to ensure proper financial performance. According to MSH internal control manual (2007:2) the following control measures and guidelines are highlighted: Financial responsibilities and authority are defined in employee job descriptions; Written procedures are maintained regarding financial and accounting practices, account coding and activity coding schemes. This includes written policies on travel, personnel and procurement practices; Safeguards and policies are in place to guard against conflict of interest; Cash and expenses are segregated by donor fund or contract, if applicable financial records are subject to internal or external audit routinely, at least once per year. All variances and issues must be documented and reconciled promptly and disciplinary action must be taken when warranted. Cash receipts are deposited promptly; Payments are executed only with the appropriate approval and upon submission of the required documentation: detailed invoices, copies of purchase orders and shipping documents, etc. Procurement policies are documented and applied consistently to insure fair and open competition to the greatest extent possible. Best value is considered, including price, quality, service and warranty or goods or services; Records are maintained of any prior approval required by donor agreement. This may include approval for international travel, purchase of equipment, or salaries; No payment is made without proper authority being obtained and where applicable, quoted on the payment voucher. Promotion of a high level of compliance with the corporation’s financial policies and procedures. Maintenance of proper accounts and records of the financial transactions, exercising budgetary control on the expenditure of all the division. The study focused on the four of the above objectives that isensuring that no payment is made without proper authority,proper control over cash receipts; conformity with financial and 4
  19. 19. operational policies; financial records being subject to internal or external audit. Procurement policies documented and applied consistently to insure fair and open competition to the greatest extent possible and finally exercising budgetary control on the expenditure. 1.2 Problem Statement In spite of the above objectives that are supposed to have been achieved by the Management Sciences for Health (MSH) Organization, a number of challenges have been reported to the contrary. The organization has not been performing well as it was expected. For example, despite receiving the necessary support from, USAID, MSH organization has not met its major obligation of saving people lives and improving on health of the world’s poorest and most vulnerable people. Most of the donated funds lack accountability. According to audit report (2012), it is revealed that about $17,786 of donor funds given has not been of benefit to vulnerable people of South Sudan. The report also indicates that staffs have not been effective. The MSH workshop report 2011-2013, indicated that, there was credible evidence of fraud detected at MSH in form of inflated workshop expenses which in multiple cases were supported by forged receipts; these inflated expenses were submitted by several MSH staff members. Credible evidence was also brought out which highlighted inflated workshop expenses, especially on accommodation of participants and hiring of venue. It was also pointed out that MSH project directors had not carried out effective management oversight which is expected to be one of the control measures Therefore, it’s upon this that the researcher wants to find out why MSH continues facing such problem despite putting in place a number of policies and internal controls. 1.3 General Objective of the study The general objective of the study is to examine and helped to improve the internal controls and performance for Nongovernmental organization, a case study Management Sciences for Health (MSH) 5
  20. 20. 1.3.1 Specific objectives of the Study The study was guided by the following specific objectives: i. To examine how MSH South Sudan has ensured effective payment to different department in the organization ii. To establish how MSH South Sudan has ensured financial records are subject to internal audit. iii. To establish how MSH South Sudan has ensured effective Procurement policies iv. To assess how MSH has exercised budgetary control on the expenditure of all departments in the organization. 1.4 Research Questions The study was guided by the following research questions: i. How has MSH South Sudan ensured effective payment to different department within organization? ii. How has MSH South Sudan ensured financial records are subject to internal or external audit for a better performance? iii. How has MSH South Sudan ensured the effective Procurement policies? iv. How has MSH South Sudan ensured that budgetary control on the expenditure of all departments has been exercised and hence Performance of the organization? 1.5 Scope of the Study 1.5.1 Subject scope The study was about internal controls and the performance of Non-governmental organisations a case study of Management Sciences for Health (MSH) Organization in South Sudan. The study specifically focused on: proper control over cash receipts; financial records being subject to internal or external audit. Procurement policies documented and applied consistently to insure fair and open competition to the greatest extent possible, and exercising budgetary control on the expenditure of all the divisions. 6
  21. 21. 1.5.2 Geographical scope The study focused on MSH headquarters in Juba Central Equatorial State, South Sudan; MSH is located at Ministerial Complex 100 meters away from Ministry of Health. Staff in different departments will be approached to give information about the subject matter, coordinators and staff of the same program in other states will be approach to give a response as well, other partners in Juba dealing with MSH will be approached to give information about internal control. 1.5.3 Time Scope It is designed to cover the period from the year 2010-2013, the period for three years. 1.6 Significance of the Study The study will be of great significance in the assessment of the effectiveness of the internal control function in the performance of MSH South Sudan. The findings and recommendations of the study will help the management of MSH South Sudan to understand the anomalies in their operations. Upon successful completion, this study will be of great importance to the following groups of people: The finding will help the researcher understand why organizations perform the way they do, despite internal controls put in place. The findings will help the policy maker in decision making and enable them put in place policies guiding running of NGO’s in the country The findings will help the government and Ministry of Health in particular to learn a lot about accountability, efficiency and effectiveness of service delivery. The study will help the AIDs Commission and other agencies in the Country as it will act as a guide on how to place resources carefully intended for the poor and disadvantaged. The study will help the Ngo forum and it members to learn about the challenges that are experienced in running NGO’s in the new country. 7
  22. 22. The study will help Private organizations/ institutions to know how to be accountable and manage resources more carefully. Figure 1: Conceptual Frame Work model between internal controls and performance Performance Internal controls -Better service delivery and -No payment is made without product proper authority -Growth -Financial records are subject -Transparency to internal auditor -Proper record keeping - -Compliance with rules and Use of documented procurement policies -budgetary control Regulations on the -Proper utilization of funds expenditure -Quality financial information -Proper financial reporting Moderators -Qualifications -Experience -Ethical Practice -Position -Technology Source: Ekpo’s 1998 The conceptual framework above is adopted from Ekpo’s 1998, it describes a relationship between the two variables the independent in this case internal control and the dependent that is performance in Non-governmental organizations. The independent variable comprises of the objectives of internal controls such as proper payment procedures no payment without authority, Financial records are subjected to internal auditor, use of effective procurement policies and budgetary control on the expenditures which when well-done can lead to better performance measure which include better 8
  23. 23. services and product provision change in growth, transparency, proper record keeping, compliance with rules and regulations, proper utilization of funds, quality financial information and proper financial reporting, never the less moderate factor such as education, political support and ethical conduct may affect, implementation of internal controls, political interference which brings about un expected changes like the sudden changes and government directives for political reasons affect performance of the organization play an important role in the successful implementation internal controls and performance of Non-governmental organizations, because if they are corrupt they may misappropriate the funds means for services provision. 9
  24. 24. CHAPTER TWO LITERATURE REVIEW 2.0 Introduction This chapter comprises of the related literature of the study research which was written by other scholars. This was in respect to the specific objectives of the study of the related area. 2.1 Effective Payment Gazzada (2009) asserts that a valid authorization of any payment includes a full approvable signature; initials or "Okay to Pay" Payments without approvable signature do not represent a proper authorization. Signatures should be legible or include the printed name below the signature. Proper approval for any payment request should be provided using a Payment. If an alternate form such as a note, letter, or memo is attached to a payment request, it must include: Name of Person/Vendor to be paid, account number to be charged, amount of payment being approved, purpose of payment being approved, and signature authorization. Some departments that process a higher volume of regular vendor invoices make use of an approval stamp instead of attaching a Payment Order Form for each invoice. This is a rubber stamp that is stamped directly onto the invoice and filled in by the payment approver. Use of a stamp such as the example below will ensure that all elements of a proper approval are present. A Post-it note stuck onto an invoice with "okay to pay", a signature, account number, and date can inadvertently become attached to the wrong document and does not provide adequate proof for audit purposes that proper authorization for payment was received. This also applies to any note or slip of paper that is clipped or stapled to an invoice that does not contain all the elements of a valid approval of an expense. From the researchers point of view it is correct to follow the above procedure as mentioned by Gazzard except the biggest challenge that the NGOs and other organizations in general are facing in South Sudan is Lack of knowledge and inability to understand the importance of some of these internal control procedures by the people employed some of whom are employed on the basis of technical know who but not because of qualification, many didn’t go to school to study since 10
  25. 25. they were affected by civil war and therefore they may not understand the repercussion of neglecting some of these controls after all event auditing is rarely done in this new country, this has been worsened by the government policy which is promoting employment for only Nationals in these position for both foreign and international NGOs. The idea of employing the National as per say is not bad except for how it is especially when people are given jobs for political and social reasons were they do not qualify. The way forward therefore should be, to have a fair employment policy and through training of these employees by taking them for refresher courses and advice be given on the importance of these controls. These problem of not following the proper payment procedure was noted in MSH South Sudan as indicated in the auditor’s report 2011-2012 earlier and as observed in the report and the Auditor’s management letter recommendation were made and culprits were suspended and new qualified staff were employed to do the work after the organization had lost a lot of money which affected its performance on the ground. Dedei (1999) states that when it comes to matters concerning payment the managing director or deputy director (Director Finance and Administration) should be the one to authorize or approve the payment of funds. All checks are signed by the Senior Accountant and the National Coordinator if any. All payments should be supported by relevant documentations (Invoices, Way Bills, etc.) The deputy Director (Finance and Administration) can certify the payment for procurement by imprest. The process of payment starts by Accountant raising the memo through the Deputy Coordinator (Finance and Administration) to the National Coordinator. Attached to memo should be Invoices, Purchase Orders and other relevant documents. The Deputy Director (Finance & Administration) then minutes on memo (certifies), Approval is given by Director and the Accountant prepares, authorizes and forwards Payment Vouchers to Internal Auditor. Certification by Internal Auditor (Stamping and Signing).The Accountant prepares a cheque, signs and forwards and attaches it to the Director. This, as observed by the researcher will depend on the size of the organization. If it is a small organization then one may not require that long process but a mechanism is developed within the organization were the immediate Bosses are given the Authorization and approvals 11
  26. 26. responsibility working hand in hand with the accountant or financial controller of the organization. For the case MSH South Sudan this procedure is well outlined in the Financial and accounting manual given the size and coverage of the organization in South Sudan, For small payment transactions the long procedure is simplified by the use the petty cash/cashier supervised by the accountant. Wedhon (2002) argued that in order to ensure strong control over receipts, when cashier received, it should be acknowledge by means of printed receipt which should have a counterfoil or a carbon receipt. The receipt should be consecutively numbered. The unused receipt should be cancelled and must not be detached from the counterfoil. No blank counterfoils should be accepted. As soon as cash is received, it should be entered in a rough cash book or dairy. Internal audit activities help employees abide by corporate policies and regulatory guidelines. The Audit report (2009) for the Norwegian Peoples Aid (NPA) gives a clear view of want happens in a number of NGOs it shows a number internal control material weaknesses observed and the countries affected: The report highlights Noncompliance with established sub-recipient monitoring policies (Sudan), in regard to cash management, bank reconciliation had not been properly completed, reviewed or approved and petty cash counts had not been properly conducted or accurate (Sudan). The following significant deficiencies were also noted, Noncompliance with established procurement policies (Sudan), significant journal entries which were not properly supported (Sudan), Timesheets were incomplete, not signed, not approved and there were instances where time charged to the awards did not correspond to hours indicated on timesheets (Sudan, Angola), Inventory was not properly controlled (Sudan), Personnel files were incomplete (Sudan), financial records were not properly filed and difficult to locate (Sudan), numerous instances of payment vouchers not properly signed and dated (Sudan). This scenario can be compared to what was happening with MSH south Sudan as stated in its Audit report and it clearly shows that a number of NGOs are not embracing the internal controls 12
  27. 27. put in place as per the internal control policy manuals some that may lead to the concealing of some of the funding by the Donors. According to the Oxfam Audit report (2006-2007) internal control measures were found to have been violated in Cambodiain the following ways Internal payment vouchers were not signed and dated indicating approval. It was, again noted that and dates were missing in addition to inconsistent use of internal payment vouchers. This observation is similar with what was observed with NPA. According to Mpabanga, (2005) The NGO sector in India is largely in the form of what can be termed as an ‘unorganized sector’, with a preponderance of small outfits that have been floated by either individuals or small groups of people. The NGOs are generally founded by people passionate about a ‘cause’, which often results in an organizational infrastructure that is focused on operations rather than efficiencies and management processes. One result of this is the wastage of resources especially where unnecessary payments are paid to individuals. Limited statistics that are available indicate that on an average 70 percent of the funds are utilized for the administrative purposes of the NGOs. In addition, the disproportionate focus on the operations versus management efficiencies and planning results in people with inadequate management competencies to hold senior positions. This exposes the sector to higher degree of risk from corruption and frauds, both intentional and consequential. 2.2 Financial records Shandia (2004) states that internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organizations operations. It helps an organization to accomplish its objectives by bringing a systematic disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. The definition recognizes two roles for Internal auditing, namely: to provide an independent assurance service to the board, audit committee and management, focusing on reviewing the effectiveness of the 13
  28. 28. governance, risk management and control processes that management has put in place; and to provide advice to management on governance risks and controls. Reinford (2004) states that one of the main characters of the Internal Control System is Internal Auditing activity. Its mission states that it has to provide independent, objective assurance and consulting services designed to add value and improve the operations of the organization. It must also help the organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. The objectives of internal auditing as a measure of internal control are very clear except that sometimes the internal auditor may be compromised especially were he/she sits in the same organisation with management the aspect of independence diminishes with time and therefore he may not play the oversight role well and hence you may find the NGO not following the policies well and putting in place the recommendation, this can be sighted with the observation from the MSH South Sudan internal audit report were a number of cases were highlighted in the 2010-2011 audit report and recommendations given but the same issues kept on appearing in the next financial years. For any impact to be felt the internal audit function should be supplemented by the external audit function and stringent measures put in place for those who undermine the recommendations. Owenrich (2001) emphasise that the scope of Internal Auditing is to determine whether the organization’s network of risk management, control and governance processes, as designed and represented by Management, is adequate and functioning in a manner which ensures that risks are appropriately identified and managed; interaction with the various governance groups occurs as needed; significant financial, managerial and operating information is accurate, reliable and timely; employees’ actions are in compliance with policies, standards, procedures and applicable laws and regulations; resources are acquired economically, used efficiently and adequately protected; programs, plans and objectives are achieved; quality and continuous improvement are fostered in the organization’s control processes; significant legislative or regulatory issues impacting the organization are recognized and addressed properly. 14
  29. 29. Groonhil (1999) suggest that the Internal Audit activity should assess and make appropriate recommendations for improving the governance process in its accomplishment of the following objectives: promoting appropriate ethics and values within the organization; ensuring effective organizational performance management and accountability; effectively communicating risk and control information to appropriate areas of the organization; and effectively coordinating the activities of and communicating information among the board, external and Internal Auditors and management. The Internal Audit activity should evaluate the design, implementation, and effectiveness of the organization's ethics-related objectives, programs and activities. A Ciokey (2005) note that it is the role of management is to ensure performance and compliance standards prescribed in a control plan are adhered to. Internal Auditing assesses the internal control environments by developing an internal control test plan to evaluate whether control planning and its implementation are effective in terms of both compliance and performance across the organization. Shandly, (2004) states that separation of duties is a measure of good accountability and internal control. This will ensure that one individual cannot perpetuate and conceal errors and irregularities in the normal course of duties. Segregation of duties is not always possible due to limited staff. Strong internal controls require the segregation of responsibilities for authorizing transactions, physical custody of assets and the related record keeping. For example, one individual could order, receive, approve for payment and verify charges to the monthly accounting report. One individual should not have the ability to receive payments through the mail, prepare the deposits, reconcile the bank statements, and post payments to the receivable system. Hegson (1999) noted that the internal audit function helps an organization improve operations, detect key problems in important mechanisms or processes and correct major problems. An internal evaluation also aids top management in ensuring that employees comply with corporate policies, such as human resources procedures. An audit director plans testing activities at the beginning of the year, allocates resources to specific areas and assigns tasks to staff and junior 15
  30. 30. auditors. Internal auditors review segment processes and issue reports to senior management. The internal audit department evaluates specific areas throughout the year; those are "areas under review." An audit manager allocates more resources to a segment or an area based on potential operating or financial risks. For example, an audit specialist might focus on "high-risk" areas within the treasury department because risks of losses exceed $10 million. An internal auditor also may perform tests on an insurance company's premium calculation department to ensure that calculation methodologies adhere to corporate policies. Guenji (1998) states that internal audits play a significant role within an organization's governance systems. A periodic (and systematic) review of an area's processes ensures that employees comply with management instructions. Area managers receive additional help in checking performance indicators within their departments. A company's top management learns major risks facing a corporation by reading periodic reports. Finally, frequent audits allow managers to use audit information as employee performance evaluation tools. Deloitte (1998) gives the following as key to an effective internal audit function: it operates from a clear, updated charter; it adapts its activities to the needs of the organization; it uses a riskbased approach; it reports directly to the audit committee; it enjoys full support of management and the audit committee; it maintains open communication with management and the audit committee; it has clout within the executive ranks; it engenders respect and integrity throughout the organization and it teams with other internal and external resources as appropriate; it provides leadership on issues of internal control, fraud, financial reporting, risk management and corporate governance and it leverages technology; and it must provide support to the company’s anti-fraud programs. Malbok (2003) noted that one of the key roles of internal audit is to assist the board and/or its audit committee in discharging its governance responsibilities by delivering reviews of operational and financial performance and make recommendations for more effective and efficient use of resources. 16
  31. 31. 2.3 EffectiveProcurement policies According to Minahan, (2006) as the need to satisfy stakeholders’ demands increases, NGOleaders today acknowledge the frontline played by the procurement department. Procurement not only provides organizations with a competitive edge for funding, but also makes a very big contribution to the organization’s goals achievement and success. According to Lysons (2000), the term procurement is defined as the acquisition by purchase, franchise, rental, lease, hire purchase, tenancy or any other contractual means of goods, services, works or any combination of the two, which are required by an organization for use in the production, service provision or resale. Procurement is a very important function within an organization that accounts for the biggest share of the expenditure in many firms. Today, it would be difficult to find an organization, large or small that does not understand the importance of procurement and how successful implementation of this function would have positive impact on their overall success. Therefore for effective decision making and attainment of value for money, every procurement executive should follow certain essentials which are regarded as the traditional rights of procurement, which are; Right Quality, Right Quantity, Right Time, Right price, Right source. This is normally inscribed in the organization procurement policy/ process. Every organization requires this policy describing the procurement processes cycle. The procurement process cycle describes the typical stages that characterize the procurement process. In most countries, government entities are by law meant to adhere given standard when procuring goods, services or works. In South Sudan for instance, Public procurement is governed by the Interim Public Procurement and Disposal Regulations (2006) under the ministry of Finance. This is because governments strive at streamlining the procurement process in an attempt to reduce corruption and attain value for money in 17
  32. 32. each and every dollar of the tax payers’ money. In a bid to stream line procurement process in contracts involving international boundaries, many countries are required to be members of the government procurement Act (GPA), a body which consists of over 127 countries in the world. The World Bank also provides the procurement laws and regulations that its entire donor funded projects are meant to adhere too. In Uganda, there exist the Public Procurement and Disposal of Public Assets Authority a body that was established to stream line the procurement systems of public firms. It has therefore formulated a standard procurement process/cycle to be used by public firms in daily purchasing and it begins with planning and budgeting and Concludes with evaluation of the performance of contract. According to MSH South Sudan Audit workshop report (2012), MSH has put in place Procurement policies in line with those set by the World Bank for NGOs well documented and expected to be applied consistently to ensure fair and open competition to the greatest extent possible. Best value is considered, including price, quality, service and warranty or goods or services. Despite these procurement policies well outlined Organizations continue to record cases of procurements guidelines being faulted. For example the Internal Audit report for MSH South Sudan reported a number of cases of irregularities. For example according to the Internal audit report, the procurement of workshop venues / hotels after January 2012 was not in accordance with MSH and donor policies, The validation of hotels was the first step in the pre-qualification process. However, the COMU did not go a step further by making use of this data. As of November 2012 staff were still not yet cross-checking rates on receipts submitted by staff against the list, and had not yet initiated a formal pre-qualification process to short-list venues / hotels for negotiating fixed rate contract agreements and direct payments. Staffs were not given proper guidance on the acceptable hotels to use. Without appropriate guidance staff continued the practice of discretionary selection of venues. The use of hotels which are difficult to verify actually increased as a result. For example, workshops were being 18
  33. 33. held at hotels (Motherland and Naivasha) were there was no record of previous stays by other staff members or available data from the survey. According to the Project Director, the Ministry of health (MoH) had more influence on the regions/states and decided where TB CARE I Project training activities was more beneficial to the target audience. While the MoH rightfully has influence over activity locations, MSH retains responsibility for safeguarding and controlling resources and should make decisions on the specific hotels where workshops are to be held. Staff who deviated from frequently used hotels on the basis that they were unable to obtain cheaper rates at ’preferred’ hotels more often submitted inflated cost receipts. In Japan according to Parker (2007), the majority of Non-Governmental Organizations (NGOs) receive recurrent subventions from the Government and other sponsoring organizations like the Hong Kong Jockey Club for the provision of a wide range of social, medical and healthcare services in the community. While NGOs, large or small, enjoy a high degree of autonomy in their day-to-day operations, they have to meet Government/Donor funding requirements when setting performance targets and service quality standards, and when drawing up internal controls for major functions, such as procurement and auditing, etc. In Japan the Corruption Prevention Department (CPD) of the Independent Commission against Corruption has recently conducted a research into the operation of NGOs. The research shows that most well run NGOs, no matter what types of service they provide have in place a sound governance structure and effective internal control mechanisms. As poor management is a breeding ground for corrupt practices; the CPD sees the need of consolidating these NGOs’ good systems and practices into a checklist for use by all NGOs. This Best Practice Checklist provides a user friendly directory of measures which could help NGOs foster good governance in the organization and best practices in respect of integrity management, internal control, financial management, procurement, staff administration, and management of maintenance works. Without losing sight of the funding requirements, NGOs are advised to adapt and adopt the governance structure and good practices recommended in this Checklist to suit their operational needs and resource capabilities. 19
  34. 34. According Tackett and Gregory (2006) in India the past corruption cases showed that procurement processes are prone to manipulation and malpractice, such as favoritism in the sourcing and selection of suppliers or service providers, leakage of information and connivance at sub-standard goods or services. However, today a Best Practice Checklist on Procurement is available for reference at the ICAC website: (www.icac.org.hk.) to avert these tendencies. This section provides a step-by-step guide to procurement of goods or services, with the aim of helping NGOs to avert corrupt practices and achieve value for money in procurement; According to the Audit report (2009) for Norwegian People Aid (NPA) Sections II and IV noted the following internal control violations in regard to procurement. There were material instances of non-compliance with established procurement policies (Sudan).NPA-Sudan did not obtain the required seed certificates as required by the special provisions contained within the grant agreement. Accordingly, such costs are not considered an allowable expense under the U.S. Government award. In addition, by not adhering to established procurement guidelines with respect to the procurement process, certain goods and services may have been purchased at above prevailing market prices. This was not only unique to NPA Sudan but is gives a reflection of what has happening all over especially in Africa and Asia were corruption and illiteracy. 2.4 Exercising budgetary control on the expenditure According to Anderson (2008) NGO accounting is dominated by budgeting. A budget is plan expressed in quantitative or monetary terms aimed at pursuing specific objectives during a defined period of time. He further states that budgeting has three main objectives: The first one being planning, Budgets provide a detailed plan of action for a given period of time, the plan relates to all aspects of the organization-production, labor, sales, and expenses among others. 20
  35. 35. The second one is controlling, budgetary controls help responsible officers/ accounting officers to be focused on only certain activities. This makes a comparison between the actual achieved results and the expected results possible. The third one is coordination; Budgeting helps manager (accounting officers) to coordinate their activities so as to be able to achieve the overall objectives of the organization. Alridge and Colbert (2004) assert that budgeting is very important for NGO’s because it acts as a control measure, they go ahead to mention that the benefits of budgeting almost always clearly outweigh the costs and efforts required by the process. Perhaps the foremost advantage of budgeting for the NGO’s is that it forces project managers to think ahead. A look in to the future invariably compels top management to set goals and objectives. Budgeting therefore tends to move an organization from a reactionary mode in which management simply reacts to problems, to a controlled mode in which problems are anticipated and positive action is taken. Budgeting is useful to NGO’s because it coordinates and integrates the organizations resources. The budgeting process requires that managers open up lines of communication within the organization: Up and down organizational lines from subordinates to supervisors, and across organizational lines between managers of different departments. Coordination across organizational lines is necessary due to interdependence of activities. For example, purchasing managers integrate their plans with production requirements; production managers use the sales budgets to help them anticipate and plan for materials, employees and productive facilities, and personnel must know the needs of all the departments before it can plan for new employee needs training requirements. In the case of MSHSouth Sudan, the powers are given to different managers to participate in the budgeting processes as stipulated out in this could imply the centre’s capacity to resources and the databank to make some money as stipulated in Finance &Accounting Manual. The departmental managers expected to play their part in ensuring that this is achieved. They produce performance reports and reports on the Master budget of the Centre are produced. The aim of 21
  36. 36. these reports is to enable Heads of Departments and/or Stations to avoid deviation from the approved budgets. These reports are prepared by the Accountant and the Finance Department from audited accounts. Alridge, et-al goes further to state that budgeting can be useful in identifying bottlenecks for example one service department may slow down the preceding departments either due to absenteeism or any other reason, whatever the bottleneck budgeting helps identify it and provides management an opportunity for planning how to solve it before it is too later to affect the organizational performance. Hinks, G (2005) indicates that budgeting in organizations services as a benchmark against which actual results are measured and performance of individual managers evaluated. Significant variations from planned results may require explanations and in some cases, corrective action by the individuals responsible for the results. One benefit of benchmark is that managers will know what is expected of them. According to Pandey (2008) as a basis for judging performance, budgeted activity is generally regarded as more appropriate than historical or industry data. The major drawback of using historical data is that inefficiencies in the past performance may be concealed and allowed to continue. Also, changes in economic conditions technology, competition, and personnel make comparisons of present with past performance invalid. Budgeted data are more realistic for performance evaluation because the benchmark minimizes the carry-over of past inefficiencies and reflect changes pertaining to the current period. According to Haller (1992) in the bid to control spending, the Spending authority for the signing officers is normally provided in the annual budget of the organization. In most organizations, the board of directors delegates authority to the signing officers for day to day purchases outlined in the budget. This means that the treasurer does not have to wait for approval at a board meeting every time a new pencil needs to be purchased (provided that pencils/office supplies are included in the budget). Expenditures not included in the budget should be approved by motion at a meeting of the board. 22
  37. 37. The organization may set out spending limits for the officers on major purchases. Expenditures over a predetermined dollar level may require board approval. A sample board policy could state that "any purchases over $500 require approval by motion at a board meeting". For larger expenditures or for capital expenditures, the organization may have a policy that requires a competitive bidding process. Written quotes from 2 or 3 vendors would be obtained and presented to the board before a purchase was approved. According to Mostashari (2005), one of the biggest problem NGO’s in Iran are facing is Lack of managerial and leadership skills, this deprives NGOs from strategic planning. A number of NGOs visited during the research study indicated that they did not have a strategic plan and even annual operational plans for their routine tasks. They said they were interested in long-term planning, but strategic planning was an ad-hoc subject who needed special knowledge and skill and so they did not have such knowledge “stated in the focus group discussion (FGD)”. There was a clear indication that budgeting was not being done and yet this was a very important internal control tool an which one would expect to measure performance. This may not be unique to the Iranian NGOs since back home in South Sudan only a few people may perform a similar task because of lack of the necessary knowledge and skills. 2.5 Performance Goodwin (2003) goes ahead to state that performance comprises of the actual output or results of an organization as measured against its intended outputs or objectives. Shapiro (2007) states that, financial performance is the measurement of the results of a firm’s policies and operations in monetary terms. These results are reflected in the firm’s returns and value-added. This is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues. This term is also used as a general measure of a firm’s overall financial health over a given period of time. Touche (2004) notes that the traditional role of internal control is to keep the organization focused to the desired goal, bring value, and improve operations. In this current era of the Sarbanes-Oxley Act of 2002 (USA), it has the objective of assurance on financial control and 23
  38. 38. compliance. Some of the peak performance indicators are: reports issued on time, staff training and certifications, internal audit turnover, internal audit transfers, internal audit employees survey measuring professional staff satisfaction, internal audit staff utilization, and hours of training. They conclude that adaptability and flexibility will stand out as key characteristics of successful internal control functions. An optimised internal control function will tailor its activities to areas of greatest risk and opportunities for greatest value. Such firms can then attain the benefits of sustainable compliance and enhanced competitiveness. According to Clark, (1991) like every other sector, one of the major drivers of efficiency is the manner of utilization of the capital and the funds that the NGO sector accumulates through various sources for carrying out its work. If statistics are to be taken into consideration, out of more than 1.2 million NGOs operating in India, only 3% are being able to carry out constructive grass-root level work (ICONGO, 2002 survey). Furthermore, NGO establishments typically tend to have high administrative costs of nearly 60% and above. Indicatively (based on limited statistics that are available for India), only 10-20% of the funds are utilized for effective developmental work. More stringent management norms through internal controls and regulatory oversight will contribute to more effective spending by NGOs. According to Lekorwe (2007), there are numerous NGOs working in remote and challenging regions of India. Many of the well-funded organizations have large geographically spread-out set-ups with regional branches in such areas. Consequently, such set-ups in the remote regions have inadequate means for internal control, further exposing to the risk of inadequate functional and financial monitoring. Internal control mechanisms form an integral part of any organization since it is essential that the ‘child’ outfits work in tandem with the parent organizations. It will be less beneficial if the parent organization (often, set up in a large city) adheres to regulations and internal policies/controls but the branches do not. The scenario is not different from what happens in South Sudan, You find that controls are exercised at the head office in Juba but if one moves to other states where the NGO is operating it may not be the case sometimes this is also attributed 24
  39. 39. to lack of qualified manner power to work in some areas and the rigidity of the rigidity of the law that may require only local people of that area to be employed there In order to better understand internal control; Dan Sampson asserts that one must be able to understand the five interrelated components of an organization. The components are; organization’s operation environment, the goals and objectives and related risk management, controls and related policies and procedures, information systems and communication methods and finally the activities to monitor performance (Dan Sampson, 2005) A report from on DANIDA South Africa has a useful chapter on internal controls. It reveals how changes in the performances of overall work will automatically introduce effective transformation of the internal control to the latter’s advantage (DANIDA Audit Report, 2005) An interesting dimension is introduced by a journal article which analyses effectiveness and performance from the perspective of quality (Krishnan,2000) This author compares quality of management in an NGO concern against the quality of corporate internal control in order to establish a relationship between the two concepts. Can performance in the NGO sector change to the credit of the Donor, simply because all parties concerned are willing to put in optimal funds in the internal control system and the audit effort? The article also projects the likely outcome of internal control following the introduction of a new regulatory environment by the International Financial Management Standards. There is a relationship between social issues management and Corporate Social Performance. The articles have suggested a theory that social issues in management contribute to the success or failure of internal control systems within an NGO. The theory states that a link exists between the two and that slack resource availability and corporate social performance are positively related (Waddock, 1997) 25
  40. 40. CHAPTER THREE RESEARCH METHODOLOGY 3.0 Introduction This chapter presented a detailed description of the research methods that are used to collect relevant data to the study. It contains the research design, study population, sample size, data collection methods, data processing, data presentation, and data analysis. It includes the anticipated limitations and anticipated solutions. 3.1 Research Design The study followed a descriptive research design. The qualitative and quantitative approaches were employed based on the MSH South Sudan organization staff drawn from different departments in Juba. The quantitative technique was used to collect and analyze data on the role of internal controls on the performance of MSH. The qualitative approach was used to examine the part played by internal control in nongovernmental organizations sector. This design was used because it brought out clearly the relationship between internal control and performance. The study was be specifically non experimental because the researcher intended to describe and make observations of what the real results were for purposes of making decisions based on the facts to improve the situation. 3.2 Study population and sample size The populations of 70 respondents were selected and it comprised of MSH staff drawn from different departments of accounting and finance (13), internal audit (06), Human resource (04), procurement and logistic (07) and Field officers (25). The rational was that all the above respondents were stake holders. 3.3 Sample size A sample size of 70 respondents were expected as stated above but this was not because the number of respondents were not able to fill the questionnaires due to a number of reasons and only 60 respondents were able to do so. This was above the 40 mark which is said to be 26
  41. 41. representative enough. This was in conformity with Roscoe (2003) who contends that the sample size larger than 30 and less than 500 respondents is appropriate for most studies. The researcher selected respondents according to their willingness to provide information and fill in the questionnaire as it was shown in table: 1below: Table 1: Sample Size of the Respondents Department Population Sample Size Accounting and Finance 17 13 Internal Auditing 08 06 Human Resource 06 04 Field officers 25 25 Procurement and logistics 08 07 Directors 06 05 Total 70 60 Source: Primary Data 3.4 Sampling methods The research used varieties of sampling which include: Purposive, random and stratified sampling. 3.4.1 Purposive sampling Purposive sampling involved selecting a certain number of respondents based on the nature of their work in relation to internal controls MSH organization. This method was appropriate 27
  42. 42. because the sample selected comprised of informed persons who could provide data that was comprehensive enough to gain better insight into the problem. 3.4.2 Random sampling Random sampling involved selecting respondents from the population listing by chance. In this way, every member had an equal chance to be selected. The main disadvantage of this method was with the bias which it could diminish the integrity of random selection but this was overcome since the population listing involved only members with relevant information. 3.4.3 Stratified random sampling Stratified random sampling was applied in consideration of the categorization of accountants, administrators, auditors, cashiers, and support staff to compose an appropriate representative sample. This method involved organizing the units in the population into strata using common characteristic of activities performed. 3.5 Data Sources Both primary and secondary data collection methods were used to collect relevant data to the study. Data collection methods that were considered in such a way that relevant information were to be collected as much as possible with little inconvenience to respondents. Primary data means to first hand data. It was collected from the respondents through interviews, and selfadministered questionnaire. Primary data was important in answering questions about internal controls, and their effects on organizational performance in non-governmental organizations. Secondary data means to second-hand data. This was obtained from recorded documents, earlier studies and some publications on internal controls. Other information will be obtained from the internet. 28
  43. 43. 3.6 Data collection instruments The researcher used the following instruments in this study, questionnaire and interview 3.6.1 The self-administered questionnaire The questionnaires were the main primary source of data collection. The identified sample was served with the questionnaire directly by the researcher. To obtain quantitative data, one set of questionnaires was used for all respondents. The questionnaire was be filled in by accountants, auditors, cashiers, administrators, procurement staffs, the human resource staff and field officers and support staff. The questions involved the feelings of respondent groups regarding the contribution of internal controls and performance in nongovernmental organizations. The questionnaire also aimed at getting responses from the respondents about their views on internal controls and how it can be improved. 3.6.2 Interviews Interview means face to face interaction between the interviewee and the interviewer. The interviews were held with those respondents identified purposely crucial to the provision of explanations to the topic under study. The questions for the interview were both open-ended and closed. The open-ended questions gave chance to more discussions, while the closed questions asked for particular responses. The interview method helped to collect additional views from respondents on the theme of the study. The questions were filled on spot and the respondents were interviewed from their offices to save time. This method allowed further probing and clarification of questions that tended to be difficult and not clear to the respondents. It also enhanced responses for questions which were regarded as sensitive. 3.7 Data Processing The data obtained from the questionnaire was double checked to make sure that the information provided was complete, consistent, reliable, and accurate. Data processing involved scrutiny of the responses given on the questionnaires by different respondents. Data was sorted, edited, and interpreted. The coding and tabulation of the data obtained from the study then followed. To achieve 29
  44. 44. data quality management, the questionnaires were tested on 10 respondents. This was done to test consistency and to ensure that instruments remain consistent over time. 3.8 Data Analysis After data processing, it was summarized and analyzed so as to make sense of the data to ensure completeness and consistence. To facilitate reporting and inferring meaningful conclusion, data was edited and condensed. Frequency tables, micro soft excel and Statistic Package for Social Scientists (SPSS 11), word and among others were used for analysis; these were used to test the relationship between the independent variable and the dependent variable, that is, internal control and performance of non-governmental organizations. Quantitative data was edited first and coded before analysis. Data validation was done. Thereafter, the data was summarized in form of tables and other statistical forms found suitable for presentation of the findings. 3.9 Ethical Consideration The researcher got an introductory letter from Cavendish University Uganda, faculty of Business and Management to Management Sciences for Health Non-governmental organization which show that he is a student from Cavendish University Uganda. 3.10 Limitations and problems encountered The study had the following limitations: The researcher encountered the problem of language barrier in some instances respondents speak Arabic and local languages, this was solved by getting a volunteer interpreter The researcher encountered problems of financial difficulties, especially in areas of printing, transportation, Library fees, internet costs and feeding among others, this constraint was averted by seeking financial sponsorship from friends and well wishers Some respondents were too busy with their daily schedule and were failing to spare time for the questionnaire. In such circumstances the researcher gave ample time to those respondents. This was made possible by serving them the questionnaires in time. 30
  45. 45. According to Mpaata (2004:8) the questionnaire method has got some disadvantages which include small sample size than expected. Since in this study questionnaire method was used, it was inevitable that small sample sizes than expected were encountered. However failure to get the stated sample size of 70did not hinder the study to take place, as only a representative sample of 60 respondents, which is non-redundant, was adequate. 31
  46. 46. CHAPTER FOUR PRESENTATION, DATA ANALYSIS AND INTERPRETATION OF FINDINGS 4.0 Introduction In this Chapter the presentation, data analysis, tables and figures were presented and interpretation made in accordance with the research objectives of the study. The chapter is divided into sub-chapter namely: Demographic characteristics of respondents, payment procedures undertaken, financial records subject to internal audit, effective Procurement policies, budgetary control on expenditure and performance. 4.1 Demographic characteristics of respondents The respondents demographic characteristics include; Age, Gender, Level of education, Time spent on the job and Position held. 4.1.1 Age of the respondents The distribution of the respondents by age was presented in the study as shown in table 2and figure 2 Pie-charts below. Table 2: showing distribution of age of the respondents Age Frequency Percentage (%) 20-25 years 6 10.0 25-30 years 11 18.3 30-35 years 29 48.3 35-40 years 10 16.7 above 40 years 4 6.7 Total 60 100.0 Source: Primary data 32
  47. 47. Fig 2: Pie chart showing distribution age of the respondents 4 10 6 20-25 years 25-30 years 11 30-35 years 35-40 years above 40 years 29 Source: Primary data From Table 2 and Figure 2 above, the respondents were required to indicate their ages and the study revealed that the largest numbers of respondents were in the age group of 30-35years 48.3%, these were followed by those in the range of 25-30years 18.3% who were closely followed by those in the range of 35-40 years 16.7%, those who were in the range of 20-25 years were 10% and the smallest number was those who were in the range of 40 years. This age trend in the organization is an indication that the majority of the respondents working in the organization are youthful; this reflects what was reported in the National census of South Sudan 2008 which indicated that the majority of the people were youth. 4.1.2 Gender of the Respondents The study captured gender of the respondents in order to establish the most dominant working group of the employees with MSH Organization in the environment of South Sudan which has just come out of civil war and some areas are still insecure. The respondents were asked to state their sex and the distributions shown in table 3 and figure 3 pie-charts below. 33
  48. 48. Table 3: Gender of the Respondents Sex Frequency Percentage (%) Female 22 36.7 Male 38 63.3 Total 60 100.0 Source: primary data Figure 3: Pie chart Showing sample size by gender of the Respondents Frequency Female 22 Male 38 Source: Primary data According to the results for gender of the respondents on table 3 and figure 3 above. The total numbers of the respondents were 60 out of 70 that the researcher had targeted. The majority of the respondents were male with the percentage of 67.3%, while the female were 37%. This therefore implies that the most dominant working group of employees with MSH Organization were males. The imbalance in the organization attributed to various factors existed in South Sudan, there is a traditional culture that the women are responsible for home keeping rather than going to school or work, some religions also encourage early marriage of girls which hinders them from furthering their education and due to the fact that there is high illiteracy rate of girl 34
  49. 49. child education in South Sudan because of long civil war. Hence there were no many qualified and educated females to compete with few males that got their education. 4.1.3 Level of Education of the respondents The researcher asked the respondents to state their level of education to find out whether the respondents could be able to interpret the questionnaires given to them by the researcher. The findings indicated some of the respondents in the targeted group have relevant knowledge to read, interpret and answer the questionnaires given to them by the research as presented in table 4 and figure 4 below. Table 4: Showing level of education of the respondents Level of Education Frequency Percentage (%) Primary 4 6.7 Secondary 7 11.7 Tertiary 49 81.7 Total 60 100.0 Source: primary data 35
  50. 50. Figure 4: Bar graph for the Level of Education Level of education 60 50 40 30 Frequency 20 10 0 Primary Secondary Tertiary The study highlighted that the majority of the respondents were found to have attained tertiary institution level of education, with 81.7%, Secondary level of education were 11.7% and primary level of education were only 6.7% of the respondents. This implied that the highest percentage was picked from Tertiary education level because they were equipped with the information concerning internal control and performance of Non-governmental Organization and they were able to interpreted and responded accurately on the questionnaire given to them by the researcher. 4.1.4 Time spent on the job by the respondents The researcher asked the respondents the period they had spent on their jobs to find out their experience about the internal control and performance of Non-governmental Organization and the findings resulted to a high level of experience on the jobs by the respondents as captured in table 5 below 36
  51. 51. Table 5: Showing Time spent on the current job by the respondents Period Frequency Percentage (%) Less than 2years 8 13.3 2-3 years 19 31.7 3-4 years 27 45.0 4 years and above 6 10.0 Total 60 100.0 Source: Primary data The findings on table 5 above indicated that out of the 60 respondents who answered the questionnaires, majority had spent 3-4 years on their current job 45.0%, they were followed by those who had spent 2-3 years on their current job 31.7%, those who had spent less than 2 years were 13.3% and the least number of respondents who had spent 4 years and above on their job were only 10% 4.1.5 Position held by the respondents The position held by the respondents in MSH Organization, was also considered by the researcher and the findings were shown in the table 6 below. 37
  52. 52. Table 6: Shows responses on the position held by the respondents Position held Frequency Percentage (%) Accountant & Finance Staff 20 33.33 Internal Auditors 3 5 Human Resources Staff 13 22 Field Officers 17 28.33 Procurement and Logistics 5 8.33 Directors 2 3.33 Total 60 100 Staff Source Primary data From table 6 above, 5% Internal Auditors, 22% human resources staff, 8.33% Procurement and Logistics Staff, 3.33% Project Directors, 28.33 Field officers and 33.33% Finance and accountant staffs. This indicated that the study captured different respondents in all field, though the majority of the information was obtained from finance and accounting staffs who were directly involved on internal control and performance of non-governmental Organization. They were having a better and clear understanding of internal control system and that gave a researcher an upper hand to obtained required relevant information for the study. 38
  53. 53. 4.2 Payments procedure In an attempt to ascertain the different major payment procedures about the internal control and performance of Non-governmental organization, findings were based on the first objective, relevant questions were asked and responses noted. 4.2.1 Payments are properly documented A question was asked as to whether payments procedures in MSH Organization were properly followed and documented? The findings in table 7 below showed that there was no proper payment procedures followed. Table 7: Shows responses on whether payment procedures were properly documented Responses Frequency Percentage (%) SA 7 12 A 14 23 D 25 42 SD 14 23 Total 60 100 N Sources: Primary data From table 7 above, 12% strongly agreed that payments were properly documented, 23% agreed, 42% of the respondents disagreed meanwhile 23% strongly disagreed. In summary, the majority of the respondents 42% disagreed with the statement that proper payment procedures were 39
  54. 54. followed, this is in conformity with the Auditors report 2012 which indicated that some of the controls were not used when transacting accounting business. 4.2.2 Originals of Payment vouchers are certified in fully by the responsible officer The researcher asked the respondents whether original payment vouchers certified by the responsible by the authorized officers in MSH Organization. The findings revealed that there was a better improvement in certifying payment vouchers. Table 8: showing the responses on whether payment vouchers were certified Responses Frequency Percentage (%) SA 9 15 A 42 70 N 4 7 SD 5 8 Total 60 100 D Source: Primary data From the table above, concerning whether originals of payment vouchers were certified; the majority of the respondents 70% agreed that the payment voucher were certified, these were followed by 15% strongly agreed, 8% strongly disagreed and 7% were neutral and not sure whether original payment vouchers were certified by the responsible officer. This implies that original payment vouchers were properly certified. 40
  55. 55. 4.2.3 Payments supported by the vouchers in a prescribed form Respondents were asked if all payments were supported by the vouchers in a prescribed form. The findings revealed that payments were not supported by the vouchers and other supporting documentations require for completing the payment process. This is in conformity with the MSH Auditor reports 2012 which indicated that some of the controls are not used when transacting accounting business. Table 9: showing the responses on whether payments were supported by the vouchers Responses Frequency Percentage (%) SA 6 10 A 5 8 N 11 19 D 5 8 SD 33 55 Total 60 100 Source: Primary data From table 9 above, 55% strongly disagreed with the statement, 8% disagreed, 10% strongly agreed meanwhile 8% agreed and 19% were neutral. It was found that the majority of the respondents 55% strongly disagreed that all payment vouchers were supported by vouchers in a prescribed form. This was noticed in audit report for 2011-2012 indicated that a lot of fraud was going on in the organization which included forging a number of documents including payment vouchers and receipts, for example the report illustrates examples of fictitious receipts produced 41
  56. 56. by procurement committee members, it also shows evidenced that certain collusive arrangement with vendors benefited employees directly. 4.2.4 All payment vouchers are filed in numerical order Respondents were asked if all payments vouchers were filed in number order. The findings are shown in the table below. Table 10: shows responses on whether payments vouchers were filed in numerical order Responses Frequency Percentage (%) SA 44 73 A 5 9 N 11 18 60 100 D SD Total Source: Primary data According to table 10 above, 73% strongly agreed that payment vouchers were filed in numerical order and 9% agreed meanwhile 18% were neutral. 4.2.5 Payment procedures undertaken by MSH affect its performance The researcher asked the respondents whether payments procedures undertaken by MSH affect its performance. The findings are shown in the table below. 42
  57. 57. Table 11: shows responses on whether payments procedures undertaken by MSH affect its performance Responses Frequency Percentage (%) SA 6 10 A 33 55 D 20 33 SD 1 2 Total 60 100 N Source: Primary data From the above table, 10% of the respondents strongly agreed, 55% agreed, 33% disagreed meanwhile 2% strongly disagreed with the statement. This therefore implies that the majority of the respondents agreed that procedures undertaken by MSH staff affect its performance to some extend that proper financial payments procedures were being followed especially after the intervention by the external and internal function, were the recommendations were given to suck all those who were found to have participated in any wrong full activities. 4.3. Financial records subject to Internal Audit. Findings on financial records subjected to internal audit, were based on the second objective, relevant questions were asked and responses were captured. 43
  58. 58. 4.3.1 MSH has an internal audit function which perform review The researcher asked the respondents whether MSH has an internal audit function which perform review and the findings are in the table below Table 12: shows responses on whether MSH has an internal audit function which perform review Responses Frequency Percentage (%) SA 5 8 A 55 92 60 100 N D SD Total Source: Primary data From table 12: above, 92% strongly agreed and 8% agreed. There was 100% agreement with the statement. This is in line with MSH policy that requires an internal audit function in all MSH organizations all over the countries where MSH operate. 4.3.2 Proper review over receipts are performed The researcher asked the respondents whether there is an existing proper review on receipts in MSH and the findings are in the table below 44
  59. 59. Table 13: showing findings on proper review over receipts performed Responses Frequency Percentage (%) 44 73 D 10 17 SD 6 10 Total 60 100 SA A N Source: Primary data From the findings above, 73% of the respondents agreed that proper reviews on receipts are performed this was followed by 17% who disagree and 10% strongly disagreed. 4.3.3 MSH has enough internal audit staff to make reviews The researcher further asked the respondents whether MSH has got enough internal audit staff to perform reviews. The results obtained are shown in the table below 45
  60. 60. Table 14: shows responses on whether there are enough audit staff to perform reviews Responses Frequency Percentage (%) D 55 92 SD 5 8 Total 60 100 SA A N Source: Primary data From the finding in table 14 above, 92% disagreed and 8% strongly disagreed. This means that That MSH did not have enough audit staff to make reviews and to carried out spot check on financial records 4.3.4 Auditors at MSH can easily be compromised The researcher wants to establish, if audit staff at MSH can easily be compromise to make a dealt and with a conflict of interests and the finding was in the table below 46
  61. 61. Table 15: shows responses on whether audit staffs are easily compromised Responses Frequency Percentage (%) 5 8 D 11 19 SD 44 73 Total 60 100 SA A N Source: Primary data From the finding above, 8% of the respondents agreed with statement, 19% disagreed and the majority 73% strongly disagreed with the statement. This implies that audit staffs at MSH are professional ethical and they cannot easily be compromised. 4.3.5 Internal auditing has led to the reduction of fraud in MSH The respondents were asked by the researcher whether internal auditing reduced fraud in MSH. 47
  62. 62. Table 16: shows responses on whether internal auditing reduced fraud in MSH Responses Frequency Percentage (%) SA 7 12 A 37 61 N 4 7 D 7 12 SD 5 8 Total 60 100 Source: Primary data The table 16 above shows that, 12% of the respondents strongly agreed, 61% of the respondents agreed, 7% of the respondents were neutral, 12% disagreed and 8% of the respondents strongly disagreed. This means that internal auditing has reduced fraud in MSH organization. 4.4 Procurement policies and procedure. Findings on procurement policies and procedures were based on the third objective, relevant questions were asked and responses were noted. 4.4.1 Procurement policies and guidelines that can be followed The researcher asked the respondents whether MSH has procurement policies and guidelines that can be followed. 48
  63. 63. Table 17: shows responses on procurement policies and guidelines that can be followed Responses Frequency Percentage (%) SA 28 47 A 16 27 N 8 13 D 8 13 60 100 SD Total Source: Primary data The findings on the above table, 47% strongly agreed, these were followed by 27% who agreed, 13% were neutral and 13% disagreed. The study revealed that MSH has procurement policies and guidelines that can be followed. 4.4.2 Strict adhere to procurement guidelines when undertaking procurement at MSH The researcher’s intention was to find out whether there has been strict adhere to procurement guidelines when undertaking procurement process in MSH. Questions were asked and responses were obtained as presented in the table below. 49

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