AN ASSESSMENT OF INTERNAL CONTROL ON THE ETHIOPIA RESIDENT CHARITY ORGANIZATION IN ADDIS ABABA

Abstract

Non-governmental Organizations (NGOs) perform an important role in the economic development of developing countries by providing services to society through welfare works for community development, assistance in national disasters and sustainable system development. Resident charity organizations are types of Non-governmental organizations which geared toward the provision of some sort of benefits to the society and are citizen-based associations. These organizations are mobilizing financial resources from various national and international voluntary agencies to work in a coordinated manner consistent with the requirements of the society. This research focused on the Effect of internal control over organizational performance of the resident charity organization in Addis Ababa. Descriptive survey method of assessment has been conducted. Both primary and secondary data were collected using questioner, interview and document analysis. The key informants were used; hence, all the Finance managers, heads of finance and senior accountants of 22 organizations selected to take part in the study. Sample was selected from the total population by applying simple random sampling and purposive sampling technique. Primary data were collected from 54 Department heads, managers, and senior accountants of the sample ERC organizations in Addis Ababa using questionnaires plus an interview with 10 individual with work experience of more than 20 years. Secondary data was extracted from audit report, financial statements, internet and different books. The data collection instruments of the study have been properly administered by the researcher. The data has been analyzed by utilizing statistical package for social scientists (SPSS) version 20 using simple descriptive methods such as percentages and frequencies. The result of data analysis indicates that internal control is not effective and is affecting the performance of the organizations. Particularly the risk assessment component of internal control is not practiced properly. Though monitoring is better, there is still inadequacy in control environment, control activities and inadequate flow of information and communication in those organizations. Hence, it needs commitment from both the management and responsible government authorities to improve those specific areas of deficiencies’ to get better performance on the organization.