ASSESSMENT OF INTERNAL CONTROL EFFECTIVENESS IN SELECTED INTERNATIONAL NGO's OPERATING IN ADDIS ABABA

Abstract

Effective internal control system plays a vital role in every organization to achieve their objectives and it is the priority to operations and adherence to rules and regulation. The purpose of this research is to assess the effectiveness of internal control practice of international NGOs operating in Addis Ababa. The study used quantitative and qualitative research approach and cross sectional survey using questionnaires to a sample of 50 employees from ten international NGOs and interview with 9 government desk officials. These included project managers, project coordinators, project finance and admin officers, compliance officer /internal auditors, procurement officers, NGO support officers, and section heads. The quantitative result indicates that internal control in the selected NGO’s is not effective (i.e. mean of 3.59) on five point Likert-scale and similarly, the qualitative result informed that internal control system in the NGOs is not well designed and practiced. Mainly the risk assessment (with mean of 3.17) and monitoring (with mean of 3.46) component of internal control are not practiced very well in the NGOs. Whereas control environment (with mean of 4.0), control activities (with mean 3.79), and information and communication (with mean 3.54) relatively seem to be better practiced in those international NGOs. Hence, it needs commitment from NGO’s senior management, the responsible government authorities and the Donors to improve those specific areas of weakness in internal control.