An Assessment Of The Effects Of Financial Control On Profitability of Savings And Credit Cooperative Societies In Kericho County

Abstract

Kenyan SACCOs sector constitutes a significant proportion of the country’s savings and this has helped improve livelihood of people. Every SACCO has one general objective to achieve that is to maximize profits and minimize loses so as to meet the requirements and needs of their stakeholders. Any drop in the profits is an indication of poor performance in SACCOs and is a major concern for SACCOs. The specific and main objective of this study was to assess the effects of financial controls on profitability of SACCOs in Kericho County case of Kericho Town. The study was supported by the following specific objectives, the study determined the effect of fixed assets control on profitability of SACCOs in Kericho, evaluate the effect of account receivables control on profitability of SACCOs in Kericho, to evaluate the effect of account payable control on profitability of SACCOs in Kericho, and to evaluate the effect of segregation of duties on profitability of SACCOs in Kericho. The theories that were employed in the study are Agency theory, Theory of financial control, Contingency theory and theory of firm. Descriptive survey research design was applied in the study. Yaro Yamane sampling technique was applied .The study used a target population 200 staff of 4 registered SACCOs in Kericho County and a sample size of133 respondents from Kericho Town. The four registered SACCOs that were used in the study were Ndege Chai Sacco, Kenya Highlands Sacco, Imarisha Sacco and Simba Chai Sacco. The Data collection procedure that was employed in the study were questionnaires by use of drop and pick method and structured questionnaire based on 5 Point likertscale. The University Supervisors, other researchers and experts were consulted to examine the validity of the instrument. Pilot study was conducted through administering questionnaires to 13 respondents which is 10% of the sample size in Bomet County. Reliability of the study was determined by using Cronbach's alpha coefficient method. Data was analyzed using percentages mean, standard deviation correlation analysis and multiple regression analysis. SPSS software was used to analyze data. Data was presented using tables and figures. The study found out that the majority of the respondents agreed that with favorable credit period, a working credit department and timely approval of credits made the clients more optimistic and this led to SACCOs consistently increasing their wealth. The study concluded that there was a weak, positive but insignificant relationship between account receivables and profitability of SACCOs in Kericho County. The study recommended that SACCOs in Kericho County should take into consideration the staff welfare seriously. Staff appraisals, proper remunerations, regular job rotations and staff trainings should be done from time to time so as to motivate the staff and be able to meet the set targets.