The relationship between governance and quality of financial reports in NGOs

Abstract

This study investigated the relationship between governance and quality of financial reports in the Non-Government Organization (NGO) sector. The study utilized a cross section survey research design and a total of 107 respondents from 37 local and 9 national NGOs were interviewed in the districts of Bushenyi, Rukungiri and Ntungamo. These included board of directors/management committee members of the NGOs, management of the NGOs, district officials in the three respective districts and donor representatives. The interviews were conducted using two research questionnaires, one administered to district officials where the NGOs operate and donor representatives. The second questionnaire was administered to NGO board of directors/management committee members and staff. These instruments were administered physically to the selected respondents from the three selected districts presented above. Existing literature on study variables was studied to generate more information.

The findings of this study indicate that governance is highly related to the quality of financial reports in NGOs. It is therefore recommended that NGOs should strengthen their leadership through training, couching and mentoring both the Board of Directors/Management Committees and the NGO management. The leadership of the NGOs should also ensure that internal controls for management of the organizational resources are put in place and implemented. In addition, the leadership should ensure that the NGOs have appropriate accounting systems that will ensure timely, accurate and transparent financial accountability. The donors should help the NGOs to strengthen their leadership and to put in place systems that will assure them that the NGOs are transparent in the utilization and accountability of the NGO’s resources.