EFFECTIVENESS OF INTERNAL CONTROL SYSTEMS IN SAFEGUARDING INVENTORY

Abstract

Internal control systems play a very critical role in the attainment of organizations goals and objectives. Introduction and implementation of such internal controls in all areas of an organization may only be beneficial if it attains the required level of performance or effectiveness. Inventories still remain the biggest cost element in most organizations and especially in learning institutions where they influence the success of their programs. This study sought to assess the extent to which the internal procurement control processes are effective; establish the effectiveness of internal stores control processes; determine the effectiveness of the internal stock distribution processes and then determine the level to which the managerial internal control policies influence the effectiveness of safeguarding inventories at Rift Valley Institute of Science and Technology (RVIST). A total of 351 employees from all the nine departments in the institute who are involved in the procurement, storage, distribution and usage of inventory were taken for the study’s target population. The sample size of 187 employees was selected using stratified sampling method as study’s respondents. Structured questionnaires were used as tools for collecting data and were distributed to the respondents with the approval of the relevant authorities. All questionnaires were administered personally by the researcher and the respondents were given one week to fill them. Spearman rank order correlation and regression analysis were used to establish the relationship between the different components of the internal control systems and the effectiveness in safeguarding inventories. From the findings, internal procurement control, stores controls, stock distribution control and management control policies were effective in safeguarding inventories at the institute. The study recommends for due consideration of internal control systems as an integral part of safeguarding and securing inventories