Transcript
Joy: Welcome to SACCO Management — practical ways to run a healthier SACCO. I'm Joy, and with me is James. Today: audit, both internal and external.
Joy: James, a lot of people hear audit and think trouble. Should they?
James: Not at all. An audit is just an independent check that your money, your records, and your controls are sound. Members trust you with their savings. Audits prove that trust is well placed. And they catch small problems before they become losses.
Joy: You said there are two kinds. Let's take them one at a time.
James: First is internal audit. This is your SACCO's own auditor, but working independently of day-to-day management. The checks happen all year round, not just once. They test whether your controls are actually being followed — are cash counts done, are loans properly approved, are reconciliations real?
Joy: And crucially, who do they report to?
James: The board, or its audit committee. Never to the managers they are checking. That independence is the whole value. An internal auditor who reports to the people he audits is not an auditor.
Joy: Then the second kind.
James: External audit. Once a year, an outside independent firm reviews your financial statements and gives a formal opinion on whether they are accurate. Fresh eyes from outside the SACCO. That is what reassures members, lenders, and regulators that the accounts can be trusted.
Joy: What do auditors actually look at?
James: Three areas. Controls — is dual control working, are duties separated? Balances — does the actual cash, savings, and loan book match the records? And compliance — are your own policies and reporting rules being followed?
Joy: Now here is where I think SACCOs fall down. The findings.
James: This is the most important part. An audit finding is a to-do, not a complaint. Every finding gets an owner and a deadline. You track it until it is closed. The worst sign in any SACCO is the same finding showing up year after year. That tells you nobody acted.
Joy: Give me an example.
James: An auditor finds that loan approvals are missing a second signature. You do not just nod. You assign it to the loans officer, set a date, fix the process, and confirm at the next review that it is closed.
Joy: And reporting?
James: Report audit results and progress to the board regularly — quarterly works well. In CAMS, your transaction records and reports give the auditors a clear trail to test against, which makes the whole thing faster.
Joy: The takeaway: run internal checks all year, get an independent audit yearly, and treat every finding as a task to close. Thanks James, and thank you for listening to SACCO Management.