ASSESMENT OF INTERNAL CONTROL SYSTEM IN MICROFINANCE INSTITUTIONS IN ADDIS ABABA

Abstract

The main objective of this study focused on assessment of the internal control system in the microfinance institutions in Addis Ababa. This study was conducted in Addis Ababa. The study used primary data obtained through closed ended questionnaires provided to different level of employees of those MFIs. The researcher employed random sampling procedure; systematic random sampling was used to identify the 225 respondents of the study. Quantitative data collected by use of closed ended questions in the questionnaire were edited and checked for completeness and comprehensibility, summarized, coded and tabulated. The data gathered from the respondent was analyzed and interpreted by the help of SPSS software program with the help frequency table minimum, maximum value, mean and standard deviation. The study established that credit management provides discipline and structure as well as the climate which influences the quality of internal control, risk management enable the identification and analysis of relevant risks associated with achieving the objectives and ensured right personnel for the job are on board, monitoring helps the microfinance institutions to assess the quality of performance of the microfinance over time and finally control activities ensures that qualified and continuous supervision is provided to ensure that internal control objectives are achieved and that completeness and accuracy of information processing.