4.8 Relationship Between Audit Practices and Financial Performance of SACCOsTo generate a linear regression model showing the relationship between internal auditingpractices and financial performance of SACCOs, data was collected on number of times auditplanning is carried out, number of audit committee members, frequency of stakeholders’involvement and number of annual reports as shown in Table 14:
54Table 14: Results of Indicators of Financial Performance and Internal AuditingPracticesFinancial PerformanceInternal Audit PracticesAVOSILISAPNAFSINAR500,000200,00045,00032,0001323800,000400,00055,00029,00025541000000470,00050,00039,00036961,500,000670,00050,00044,000410119Key: AV-Asset Value; OS-Operational Surplus;IL-Interest on Loans; IS-Interests onSavings; AP-Audit Planning; NA-Number of Auditors; FSI-Frequency of Stakeholders’Involvement; NAR-Number of Audit ReportsFrom Table 14, financial performance was measured in terms of asset values (AV),operational costs (OC), interests on loans (IL) and interests on savings (IS). The dataindicates that financial performance mostly depend on the audit planning, number of trainedauditors a SACCO has and number of audit stakeholders involved. It does not depend on thenumber of reports which are provided. This is evidenced by the fact that interests on loansand savings are almost the same despite the higher number of audit reports.These findingsthus affirm the fact that the kinds of internal auditing practices are potentially powerful toolsfor meeting the management objectives of enhancing total financial performance of SACCOs.On average, financial performance of any SACCO is directly related to the internal auditplanningTable 15: Results of Average Financial Performance and Internal Auditing PracticesAverage Financial PerformanceInternal Audit Practices in SACCOsAPNAFSINAR259,0001323428,0002554519,6673696754,667410119
55The results on Table 15 indicate that average financial performance of SACCOs aredetermined largely by the internal auditing practices. These results were subjected to MultipleLinear Regression which results are indicated in Table 16:Table 16: Model SummarycModelRR SquareAdjusted RSquareStd. Error of theEstimateChange StatisticsDurbin-WatsonR SquareChangeFChangedf1df2Sig. FChange1.999a.998.99514777.667.998292.87321.04121.000b1.000.000.000.002.00010.0001.800a. Predictors: (Constant), AP, NA, FSI, NARc. Dependent Variable: FPFrom Table 16, the first column highlighted, "R Square Change", shows the increase invariation explained by the addition of the interaction term, that is, the change inR2. Thechange inR2is reported as 0.002, that is, 0.2%, which is the percentage increase in financialperformance of SACCOs. These results are statistically significant given that p-value,0.000<0.05. This means that financial performance of most SACCOs is directly related tointernal auditing practices adopted by the SACCOs. At the same time, Multiple LinearRegression Model was generated as shown in Table 17:Table 17: Linear Multiple Regression ModelModelUnstandardizedCoefficientsStandardizedCoefficientstSig.