Effect Of Forensic Accounting Practices On Financial Sustainability Of Non Profit Making Organizations In Nairobi County, Kenya

Abstract

non profit organizations play an indispensable role in tackling the multifaceted challenges faced by communities, spanning social, economic, and environmental domains. However, non profit organizations in Nairobi County, like elsewhere, face numerous finan cial complexities stemming from diverse funding sources, donor expectations, and stringent regulatory frameworks. The intricacies of managing finances in this sector necessitate a closer examination of the role forensic accounting practices play in ensurin g transparency, accountability, and overall financial health. The research aimed at investigating the effect of forensic accounting practices on financial sustainability of NGOs in Nairobi County, Kenya. The specific objectives were to; evaluate the effect of asset tracing on financial sustainability among non profit making organizations in Nairobi County; establish the effect of fraud investigation on financial sustainability among non profit making organizations in Nairobi County; evaluate the role of lit igation support on financial sustainability among non profit making organizations in Nairobi County, and to determine the effect of due diligence on financial sustainability among non profit making organizations in Nairobi County. This study was anchored o n the Routine Activities Theory, Fraud triangle Theory, Deterrence Theory and Agency Theory. The study used the descriptive research and cross sectional survey designs to gather data for the research questions. The target population of the study was the 13 88 NGOs operating in Nairobi County from which 93 were selected using simple random sampling technique. Primary data was collected using closed ended questionnaires which were issued through drop and pick. Data collected was analyzed using both descriptive and inferential statistics; and presented inform of tables. Ordinary Least Square method was used for estimation and Statistical Package for Social Sciences (SPSS) Version 24 was used to aid the analysis. Results show; asset tracing has a negative insigni ficant effect on financial sustainability (β = 0.042; p = 0.121), fraud investigation has a significant positive effect on financial sustainability (β = 0.340; p = 0.029; litigation support has a significant positive effect on financial sustainability, (β = 0.235; p = 0.017) and due diligence has a significant positive factor affecting financial sustainability (β = 0.305; p = 0.001). It is recommended policymakers leverage these insights to develop targeted interventions supporting NGOs in enhancing their financial resilience.