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An Evaluation Of The Internal Control System Of Cash In Management And Growth Of Small Businesses In Kenya: A Case Of Nairobi Small Businesses

An Evaluation Of The Internal Control System Of Cash In Management And Growth Of Small Businesses In Kenya: A Case Of Nairobi Small Businesses

Published June 3, 2016

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This study was conducted to evaluate the internal controls system of cash in the management and growth of the small businesses in Nairobi. Th  specific objectives of study were: To examine whether small businesses have effective and efficient internal control system for cash and to examine whether there is relationship between the age of an enterprise and the effectiveness of its system of the internal control of cash. The study used stratified random sampling method to select the sample size. The businesses were selected depending on their location such as Nairobi North, Nairobi South and the Central Business District. The study found that only 12.5% of the businesses have responsibilities for collection and deposit preparation functions adequately segregated from
those for recording cash receipts and general ledger entries. The remaining 87.5% did not segregate the duties (table 4.1). This was the same case for responsibilities for cash receipts functions adequately segregated from those for cash disbursements as well as for responsibilities for disbursement preparation and disbursement approval functions adequately segregated from those for recording or entering cash disbursements information on the general ledger. The study found that the age of a business has a positive influence on internal control on cash. About 77% of the variation in internal controls on cash is as a
result of age of the business. Thus, the older the business, the stronger it’s internal control on cash and vice versa. This analysis is shown in Table 1. The lower p-values show that the relationship is significant.


Effective and Efficient internal control system.


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