Effect of internal control systems on financial performance of selected commercial banks in selected counties in Kenya

Abstract

Internal control systems in every organization are paramount., both profit and not-for-profit organizations. The trend of many banks in Kenya collapsing puts into question the ability of the internal control systems to steer the commercial banks stability and performance. The recent failures have put pressure on the industry regulators and players to rethink how best the institutions can align their internal control systems and compliance as tools of ensuring stability and positive performance. This study assesses the effect of internal control systems on financial performance of selected commercial banks in selected counties in Kenya. The researcher adopted correlation research design. Using questionnaires, the study collected primary data from the fifteen selected commercial banks Bomet and Kericho Counties; distributing the questionnaires to 19 branch managers, 13 assistant managers, 09 credit managers and 45 tellers making a total of 86 target respondents for this study. The findings of the study are beneficial to commercial banks from where the data was collected, as various important recommendations touching on internal control systems are made.