An Evaluation of the Internal Controls System for Cash for the Case of Nairobi Small Businesses

AN EVALUATION OF THE INTERNAL CONTROLS SYSTEM FOR CASH FOR
THE CASE OF NAIROBI SMALL BUSINESSES

BY
Nyaga Denis Macharia D33/6646/05
Nzovu Michael Fondo D33/7224/05
Zachary Gategi Maina D33/6216/06
Gitonga Lilian Wanjiku D33/7305/05 Sigei Ellyne Chepngetich D33/7295/05

A Management Research Project Submitted In Partial Fulfillment For The Requirements Of The Award Of Bachelor Of Commerce (BCOM), School Of Business, University Of Nairobi

JULY, 2008 DECLARATION
This research project is our own original work and has not been submitted for academic purposes in any institution of higher leaning.

Name Number Sign
Nyaga Denis Macharia D33/6646/05 …………………………..
Nzovu Michael Fondo D33/7224/05 ………………………….
Zachary Gategi Maina D33/6216/06 ………………………….
Gitonga Lilian Wanjiku D33/7305/05 ………………………….
Kosgei Ellyne Chepngetich D33/7295/05 ………………………….

This research project has been submitted for examination with my approval as the university supervisor

Signed……………………………. Date………………………………………….
Mr. Abdulatif Essajee
Lecturer
University of Nairobi TABLE OF CONTENTS
DECLARATION i
CHAPTER ONE 1
INTRODUCTION 1
1.1 Background of the study 1
1.2 Statement of the problem 5
1.3 Objectives of the study 6
1.4 Research questions 6
1.5 Scope of the study 6
1.6 Justification of the study 7
CHAPTER TWO 9
LITERARURE REVIEW 9
2.1 Evolution of internal controls 9
2.2 Components of Internal Controls 12
2.4 Relationship between a firm’s age and internal control 18
2.6 Internal controls in small businesses 19
CHAPTER THREE 21
RESEARCH METHODOLOGY 21
3.1 Research design 21
3.2 Population 21
3.3 Sample and Sampling Technique 21
3.4 Data collection methods 22
3.5 Data analysis 22
CHAPTER FOUR 23
DATA ANALYSIS AND FINDINGS 23
4.1 Introduction 23
4.2 Segregation of Duties 23
4.3 Procedural Controls 24
4.4 Relationship between Age and

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