Factors Influencing Quality Of Financial Reporting Of Deposit Taking Saccos In Kenya

Abstract

Financial reporting is crucial to any organization because it enables it to allocate capital in the most effective and efficient way besides assisting it to mitigate information asymmetry among capital market participants. Financial reporting quality is essential to any organization because it assures a reliable report which can be used in decision making. Financial reporting facilitates capital allocation, increases investment efficiency, facilitates external investor monitoring and increases in financial reporting. It reduces information asymmetry. The main objective of the study was to establish the factors influencing quality of financial reporting of deposit taking SACCOs in Kenya. The specific objectives of the study were to assess the influence of staff capacity on quality of financial reporting of deposit taking SACCOs in Kenya, to examine the influence of top management expertise on quality of financial reporting of deposit taking SACCOs in Kenya, to determine the influence of enterprise resource planning on quality of financial reporting of deposit taking SACCOs in Kenya and to establish the influence of quality of internal audit on quality of financial reporting of deposit taking SACCOs in Kenya. The study was guided by three theories, namely; Upper Echelons Theory, Resource Based View Theory and Agency Theory. This study adopted a descriptive research design. The target population for this study was be 126 respondents from all the 42 deposit taking SACCOs in Nairobi County which were licensed by SASRA as at 31st December 2021. The study used census to get the relevant information. The researcher used primary data gathered using a structured questionnaire. Descriptive statistics and inferential statistics were the main tools of analysis to be used in this study. After that, the findings were presented in form of figures, charts and tables. The study found out that staff capacity has a weak positive significant influence on quality of financial reporting. It was also found out that top management expertise had a strong positive insignificant influence on the quality of financial reporting, and that ERP had a strong significant influence on the quality of financial reporting. Lastly, it was also found out that quality of internal audit had a strong positive significant influence on quality of financial reporting.