POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

A Study on Practices and Application of Internal Controls of Selected Non-

Government Organizations (NGOs) in the National Capital Region (NCR)

Submitted by:

KARREN CASSANDRA R. PALILEO

MBA-Financial Management

Submitted to:

Dr. Ven Ballano

1RSH631 – RESEARCH SEMINAR 2

1st Semester, 2019-2020
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CHAPTER I

BACKGROUND OF THE STUDY

Abstract

Non-governmental Organizations (NGOs) perform an important role in the

economic development of developing countries by providing services to society

through welfare works for community development, assistance in national disasters,

sustainable system development, and popular movements. In recent years, funding

constraints, calls for accountability, media exposure and the development of a

contract culture have brought demands for increased performance measurement

and control within the development sector.

Therefore, NGOs are currently under pressure to undertake increased

monitoring and evaluation and present measurable indicators of output, impact and

capacity. Many NGOs command significant economic resources yet the accounting

literature has largely ignored this sector. Consequently, knowledge of the

effectiveness and efficiency of these organizations is poor. There is a need to study

their control and accountability especially as there are widespread beliefs that

conventional wisdom in accounting and control textbooks is not widely used. This

study attempts to fill this gap by studying accountability and control systems in a

large local indigenous NGO.

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It examines how internal control systems relate to accountability and

transparency of NGOs of developing countries like Philippines, and the efficiency

and effectiveness of these types of organizations in delivering services.

Introduction

Non-governmental Organizations (NGOs) perform an important role in the

economic development of developing countries. They provide services to society

through welfare works for community development, assistance in national disasters,

sustainable system development, and popular movements. NGOs working in

development have achieved a significant profile during the past fifteen years or so.

Consequently, NGOs are attracting increased attention and recognition

among academics and practitioners of development and development assistance.

Many researchers support NGOs’ activities because of their proximity to remote

communities and to the poor (Lovell, 1992; Haque, 1997; Goez & Gupta, 1994 &

1996), their efficiency and low cost of operations e.g., micro-credit programs (Mask,

1995; Hulme &Moseley, 1996; USAID, 1996), their promotion of sustainable system

development (Korten, 1990; Smillie, 1995), and their potential role for organizing and

representative bodies in civil societies (Brown and Korten, 1991; Carroll, 1992). The

rapid growth of NGOs is also seen as a consequence of governments’ failure to

alleviate poverty, growing levels of bureaucracy and corruption and a lack of

accountability of government (Booth, 1994; Fisher, 1998; Nelson, 1995; Clarke,

1998, Lewis, 2001).

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NGOs’ activities do not meet acclaim from all corners of academia. Many

academics criticize the activities and ‘mushroom growth’ of NGOs. Turner and

Hulme (1997) call NGOs a ‘Janus-like’ organization; Temple (1997) sees NGOs as a

continuation of the missionary tradition and as handmaidens of capitalist change;

Vivian and Maseko (1994) point out that evidence on NGO performance is scanty.

Other critics note the role of NGOs as resource brokers rather than change agents

(McGregor 1989; Hashemi 1989); as palliatives to real structural change (Arellano-

Lopez and Petras, 1994); as producing too much overlapping of vested interests

among donors, NGOs and states to allow sound analysis of issues (Sanyal 1991;

Hanlon 1991); not producing long term effectiveness of projects (Abdel Ati, 1993; de

Waal and Omaar, 1993); financial corruption and drifting from NGOs’ original mission

(Hellinger et al.1988). Riddell and Robinson (1995) also express concerns about the

lack of independent information on how NGOs work in practice and the reasons for

their rapid growth. This underlies a concern that the management and/or promoters

of NGOs are using this organizational form to use donated resources for furtherance

of their own interest1.

Establishing internal control systems in organizations is critical to ensure the

reliability of accounting records, because internal control systems can constraint

management or staff`s reported and possible random errors. This ensures the

authenticity of the content of financial reporting to provide reasonable assurance to

stakeholders and it becomes another important system arrangement to ensure

reliable financial reporting. However, due to the inherent limitations of internal

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controls and pressure, opportunity and excuses by management, the credibility of

controls, self-assessment report of internal management systems discoursing is still

not high enough within organizations. The purpose of the controls was later
[1]
expanded to include the concept of getting things done or achieving goals . Internal

control principles suggest that an internal control system (ICS) is the primary

accountability and governance tool an organization (Non-Governmental

Organization) can establish and use to provide accountability to its stakeholders

(donors) and safeguard its assets. Effective internal control over financial reporting is

intended to provide reasonable assurance about the reliability of a company's

financial statements and the process of preparation of those statements.

Section 404 of the Sarbanes-Oxley Act, as amended by the Dodd-Frank Act,

requires management of all companies to assess and report on the effectiveness of

the company's internal control over its financial reporting. The law also requires that

independent auditors for larger companies attest to management's disclosures about

the effectiveness of that internal control. Under the amendments to SOX by the

Dodd-Frank Act, certain smaller companies, known as "non-accelerated filers," are

exempted from the requirement for an external audit of internal control over financial

reporting.

________________
1
In the Philippines, substantial Western aid was channelled to brutal military rulers of various developing industries, including

NGOs. Recently it has been found that at least 30 percent of the funds cannot be traced (Kenety, 2000).
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Conceptual Framework

The Conceptual framework elaborates the research problems in relation to

relevant literature, and to indicate the best method to complete the study. The study

used the closed-system approach. The structure of frames identifies the context

where the input went to a process and emerged as the output.

The conceptual framework of the study traces its path from the data gathered

with the use of the questionnaire through the analysis of data and its statistical

treatment to the conclusions and recommendations around which was structured to

analyze the significance of the application of internal controls to selected Non-

Government Organizations (NGOs) in the National Capital Region.

Research Questions

The main purpose of the study is to determine the practices and application of

internal controls of Non-Government Organizations (NGOs) in the National Capital

Region (NCR). Moreover, profile of the respondents and any other significant

differences among the variable are also part of the study.

Specifically, the study seeks to answer the following questions:

1. What is the profile of the respondents in terms of the following:

a. Nature of Organization

b. Size of the Organization as to Number of Employed Staff

c. Number of years in Operation

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2. Do NGOs in the National Capital Region implement Internal Controls by virtue of

the nature of the organizations?

3. Does the size of the NGO impact on the institutionalization and implementation of

internal controls?

4. Is there any difference in the way respondents rate the implementation levels of

internal controls considering the position they occupied in the NGO?

5. Is there a significant difference in the implementation of internal controls among

participating NGOs?

CHAPTER II

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter focuses on the related literature and studies done here and

abroad that are relevant to the analysis of the practices on internal controls of

selected Non-Government Organizations (NGOs). These were derived from

materials that the researcher has gathered from books, theses and related websites

to arrive at an informative and reliable study. The review is divided into foreign

literature, foreign studies, local literature, local studies and the synthesis. Moreover,
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the information presented in this chapter has been reviewed by the researcher and

was found to provide a better understanding on the practices on internal controls of

selected Non-Government Organizations (NGOs).

Foreign Literature

Internal controls are simply processes, policies and procedures, effected by

people that ensure our internal processes, designed to modify risk, work the way we

want them to so that we achieve what we want. An organisation will have hundreds if

not thousands of internal controls in place. Examples of internal controls include

separation of duties, authority delegations, policies, procedure manuals, work

practices, passwords, account reconciliations, arithmetical accuracy checks,

[1]
restricted physical access, stock counts, asset counts, budgets, plans etc.

Organization: Every employee should be fully aware of his or her

responsibilities and lines of authority, lines of reporting and levels of responsibility

should be clear. Errors and fraud are much more likely where it is uncertain who is
[2]
responsible for what and who should be reporting to whom . The UK Charity

Commission Act, (2001) section three (3) states that “trustees (board members) are

accountable for solvency and continuing effectiveness of the charity (NGO) and the

preservation of its endowments. They must exercise overall control over its financial

affairs. They should ensure that the way in which the charity (NGO) is administered,

is not open to abuse by unscrupulous associates, management or employees; and

that their systems of control are rigorous and constantly maintained”. It includes the

procedural controls operating with the NGO and the structure of responsibilities
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(reporting structures). The Statement of Recommended Practice in UK (SORP)

October, 2000 requires that the trustees or board to state that they have identified all
[3]
major risks facing the charity and that systems are in place to mitigate them . This

statement emphasizes the need for a tone for high regard to ICS to come from the

board and then cascades down to management and the employees in an NGO.
[4]
NGOs tend to be staffed by hardworking and dedicated employees . However,

many NGOs fail to capitalize in these qualities because of their inadequate

organizational structures. It follows, then that if structures/roles are not clearly

defined, for example between the CEO and the Trustee Chairman, this may cause

misunderstanding administratively. The following studies focus on governance

issues rather than dollars lost [5]. Their 2001 paper concentrated on a limited number

of international and U.S. non-profit organizations involved in the financing or delivery

of health care or human services. Their 2002 paper, which examined public

allegations of both financial and non-financial misconduct in faith-based

organizations, found that these organizations were as vulnerable to such

wrongdoing as were secular organizations.

Arithmetic and accounting Controls: These are procedures which are carried out

in an accounts office to check the accuracy of the records and the numbers. They

include the use of control totals and reconciliations. Usually these are arithmetical

and recording functions e.g. checking the trial balance and the bank reconciliation

statements. The regular counting assets and comparing quantities with those

recorded [6].
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Authorizations and approvals: The obligation to safeguard the assets of an

organization requires that transactions are entered into only once they have been

authorization by the appropriate individual, and that each transaction conforms to the
[7]
terms of its authority . It ensures that approval of transactions is undertaken by

responsible officials within regulatory limits, that is all financial transactions should

require the authorization or approval of an appropriate responsible person, and there

should be an authorization limit to how much spending each responsible person can

approve [8]. For example, management can be allowed to release cheques valued up

to $2,000 without seeking permission from the board and any amount over that

figure a board member has to counter-sign the cheque(s).

Local Literature

The Republic of the Philippines is in Southeast Asia, east of Viet Nam. The

Philippine archipelago is made up of more than 7,000 islands located between the

Philippine Sea and the South China Sea. The Philippines was a Spanish colony

between 1521 and 1898, and an American colony for nearly half a century. After

being occupied by Japan during World War II, the Philippines attained independence

on 4 July 1946. The Philippines’ political system is modeled after that of the United

States. The Constitution provides for a single 6-year presidential term. The president

is chief executive, head of state, and commander-in-chief. The legislature is

bicameral with a Senate and a House of Representatives. The current President,

Gloria Macapagal-Arroyo, assumed her position in 2001 and was popularly elected
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in May 2004. The Philippines has two official languages, Filipino (based on the

dialect Tagalog) and English, as well as eight other dialects. There are many

different ethnic groups—Tagalog is the most prominent, comprising almost one-third

of the population. Eighty percent of Filipinos are Roman Catholic. Muslims comprise

5% of the population. The Philippines, a country of medium human development,

ranks 90th in the world on the United Nations 2007 Human Development Index (just

above Tunisia, and immediately below Ecuador). The population is nearly 90 million,

and adult literacy rate stands at 92.6%. About 43% of the population lives on less

than $1 per day. Life expectancy at birth is 70 years.

This brief provides an overview of civil society organizations (CSOs), with a

focus on non-government organizations (NGOs). Labor unions, for the most part, are

not addressed in this document.

Ferdinand Marcos, who became President in 1965, envisioned a “new

society” in which there was little space for civil society and no tolerance for advocacy

NGOs. His administration became increasingly associated with the suppression of

civil, human, and political rights. Thus, such organizations either fled underground by

joining the armed struggle of the National Democratic Front or sought shelter from

Marcos’ security forces by affiliating with a university or religious institution, such as

the Catholic Church’s National Secretariat for Social Action (NASSA), the Share and

Care Apostolate for Poor Settlers, the Association of Major Religious Superior of the

Philippines, etc. Other anti-Marcos organizations operated under innocuous names,

such as the Agency for Community Education Services and the Organization for
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Training. The activism of these and other CSOs eventually contributed to the

overthrow of the Marcos regime in the “people power” revolution of 1986, which

marked the beginning of a resurgence in civil society. During the dictatorship, many

NGOs had built up strong relationships with poor communities. This was one of the

reasons why post-Marcos governments partnered with NGOs in service delivery and

public policy. Several pieces of society legislation favorable to civil society’s

development were passed, including the local government code, the Urban

Development and Housing Act, and the Women in Development and Nation Building

Act. Government line agencies opened NGO liaison offices, and NGOs were

permitted to negotiate directly with bilateral funding institutions for financing g.

Many in the Philippine development community began to welcome NGO

management of overseas development assistance, seeing NGOs as useful channels

for funneling support to needy communities. The number of NGOs mushroomed

during the administration of President Corazon Aquino. In addition to those with

noble pursuits and good intentions were NGOs of dubious integrity and engaging in

questionable practices. Some of these were established by politicians,

businesspersons, and bureaucrats to advance personal, rather than public, welfare.

In response, 10 of the largest NGO networks formed the Caucus of Development

NGO Networks (CODE-NGO) in 1991 to promote professionalism, expand reach,

and increase the effectiveness of NGOs.

Legislative framework for NGO activities

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Three articles of the 1987 Constitution institutionalize the role of NGOs and

POs in Philippine development: Constitution Article II, Section 23: “The state shall

encourage non-governmental, community-based, or sectoral organizations that

promote the welfare of the nation.” Constitution Article XIII, Section 15: “The state

shall respect the role of independent people’s organizations to enable the people to

pursue and protect, within the democratic framework, their legitimate and collective

interests and aspirations through peaceful and lawful means.” Constitution Article

XIII, Section 16: “The right of the people and their organizations to effective and

reasonable participation at all levels of social, political and economic decision-

making shall not be abridged. The state shall, by law, facilitate the establishment of

adequate consultation mechanisms.” The Local Governance Code (LGC) of 1991

furthers the Constitution’s aims by establishing a role for “people power” at the local

level. The LGC establishes A process of accreditation of NGOs and POs at the local

level A local governance infrastructure composed of five special bodies, one of which

(the local development council) must be formed at the village level A stipulation that

at least one quarter of the local development council’s membership must come from

civil society or the private sector. The civil society representatives must come from

locally-accredited organizations. The right of the people to amend, revoke, and enact

ordinances through referenda Provisions for the establishment of other local

committees, such as cooperatives The LGC is a formalization of the barangay

(village) system of local governance, which existed in the Philippines before the

arrival of the Spaniards. It mandates the transfer of power, resources (40% of

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internal revenue to local bodies), and responsibilities from national to local

governments through a process of devolution. NGO registration7 Registration is not

mandatory for CSOs in the Philippines, but only registered organizations benefit

from a legal identity that permits them to open a bank account, sue and be sued, etc.

Further, registration is officially required to accept donations or to participate in

government projects. CSOs that choose to register usually do so with the Securities

and Exchange Commission (SEC), Cooperative Development Authority (CDA), or

Department of Labor and Employment (DOLE). The SEC registers nonstock,

nonprofit corporations pursuant to the Corporation Code of the Philippines. Eligible

organizations include those that are established for religious, charitable, scientific,

athletic, cultural, rehabilitation of veterans, and social welfare purposes. The CDA

registers cooperatives as provided for in the Cooperative Law of the Philippines and

the Cooperative Development Authority Act. DOLE registers labor unions, labor

federations, and rural workers’ associations in accordance with the Labor Code of

the Philippines. Additionally, nonprofit corporations and associations intending to

perform social work and to function as mutual benefit associations and trusts for

charitable purposes obtain licenses from the Department of Social Welfare and

Development, and the Insurance Commission, respectively. Nonprofit educational

institutions and health organizations obtain permits to operate from the Department

of Education and the Department of Health, respectively. Philippine NGOs have

been at the cutting edge of NGO self-regulation. CODE-NGO, the largest coalition of

NGOs in the country, established the “Code of Conduct for Development NGOs” in
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1991. It was the first Asian NGO coalition to adopt a code of conduct in Asia, and

probably one of the first in the global NGO community. CODE-NGO’s Code of

Conduct has since been signed by more than a thousand NGOs and was recently

updated to provide for clearer enforcement mechanisms. In 1998, the Philippine

Council for NGO Certification (PCNC) was established by six of the largest NGO

coalitions. It represents one of the very few government-recognized NGO

certification systems in the world and has been the subject of discussion and

possible replication by NGOs in different countries. Both initiatives are repeatedly

cited as models of good practice and analyzed extensively.

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Foreign Studies

In a study conducted by Zahir Uddin Ahmed (2017) on, Accountability and Control in

Non-Governmental Organizations (NGOs) – A Case of Bangladesh, he cited that

Bangladesh, a densely populated and least developed country is beset with poverty,

hunger, unemployment, malnutrition, illiteracy, diseases and environmental

degradation. Bangladesh has a per capita income of $380, an adult literacy rate of

59%, a human development index (HDI) rank of 144 (out of a total of 175 countries)

and approximately 36 percent of the population live in absolute poverty (World

Development Report, 2002). About 85 percent of people live in villages.

India was partitioned in 1947 when the British departed, between India and

Pakistan. What is now Bangladesh was known as EastBengal and then as East

Pakistan. As a part of Pakistan, East Pakistan was subject to military non-democratic

rule, centralization of administrative power and non-equitable access to development

resources and investment in modernization. This resulted in the liberation war of

1971 and the establishment of a new independent country, Bangladesh. Since

independence, Bangladesh has been subject to recurrent famines, non-democratic

political rule, and natural disasters. The newly independent country sought

participatory development for growth and prosperity but bureaucrats and politicians

neglected development processes, despite then being the responsibility of

government (Stalker, 1996). The resumption of democratic government since 1991

has helped civil society and NGOs to become better organized and demand the
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establishment of social, economic and political rights for all citizens in a just, tolerant

and democratic state.

The growth of the NGO sector is a product of government failure to handle

the development needs of the country (Bhattacharya and Ahmed, 1995; Holloway,

1998; Rahman and Shafiullah, 2001). Scholars have argued that the activities of

NGOs are superior and they concentrate more on the poor and the landless than

governments. NGOs were attractive as an alternative sector for delivering services

to disadvantaged people, not least to frustrated donors. Over the past quarter

century, Bangladesh has a unique record of innovative NGO achievement (World

Bank, 1998). Significant developments in Bangladesh rural finance is a direct

contribution of NGOs dispensing micro-credit for non-farm activities, building socio-

economic infrastructures, and instilling financial discipline among poor people

(Lovell, 1992; Amin, 1997; Chowdhury, 1996; Ahmad, 1999). Bangladesh currently

has nearly fifty thousand NGOs of different types (Ahmed & Jahan, 2002). They

range from big national NGOs to branches of international NGOs, and numerous

small national and local organizations of which less than 50 percent are registered.

About 16,000 NGOs are registered as “voluntary societies” with the Ministry of

Social Welfare. Another 1400 or so, with some duplication with Ministry of Social

Welfare registrations, are registered with the NGO Affairs Bureau (NGOAB). NGOs

seeking foreign funding must register with NGOAB. A third category that overlap with

the previous groups of registered NGOs, register with other competent authorities,

including the Ministry of Health and Family Planning, Ministry of Women Affairs,
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Ministry of Education, Ministry of Cooperatives, Ministry of Commerce and Register

of Trust (Ahmed & Jahan, 2002, p.21). The dominant position of NGOs in

Bangladesh’s development effort is confirmed by grass-roots surveys that reveal that

NGOs’ activities cover at least 85 percent of the villages (ESCAP, 1998).

Furthermore, the world’s most renowned NGOs like, BRAC, Proshika, Association

for Social Advancement (ASA) and Grameen Bank4have their origin in Bangladesh.

Other researches on NGOs control systems is in its infancy. Several studies have

been undertaken in developed countries, mainly in USA and EU. These explore the

complex nature of Nongovernmental/Non-profit organizational processes and their

interaction with wider socio-political and socio-economic issues (Hofstede,

1981;Abdug & Webb, 1999; Lewis, 2001, 2002; Sawhill & Williamson, 2001; Young,

2001; Bruce, 1995; Thayer & Fine, 2001; Najam, 1999, 2000; Alexander & Weiner,

1998; Kaplan, 2001; Lindenberg, 2001; Baraldi, 1998). But few studies have

considered developing countries. Exceptions are Smillie & Hailey’s work on nine

South Asian NGOs, Devine’s (1999) work on Bangladesh, and Najam’s (1999) work

on Pakistan. None of these examine control issues to anyd epth. However, controls

used by Western organizations are not easily transferable to developing countries,

because the socio-political contexts can be very different. Indeed, social, cultural

and political factors may vary considerably between developing countries (see

Hoque, 1993; Wickramasinghe & Hopper, 2000; Uddin, 1997). Bangladesh has been

prominent in many discussions since it now contains some of the largest indigenous

development NGOs anywhere in the world. Furthermore, many of the world’s most
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renowned NGOs have their origin in Bangladesh. Around 85 percent of its villages

have dealings with NGOs.

Studies examining why such ‘NGOs’ (mainly NPOs rather than NGOs) need

control systems have identified both internal and external pressures to do so.

NPOs/NGOs need control mechanisms in order to improve decision making and

service provision (Talbot and Sharp, 1994; Paton and Foot, 1996; Stone and

Cutcher-Gershenfeld, 2001), to promote organizational learning (Paton and Payne,

1997; Buckmaster, 1999b, Hailey, 2000; Lewis, 2001), to acquit accountability in

general (AAA, 1989; Talbot and Sharp, 1994; Paton and Payne, 1997; Stone and

Cutcher-Gershenfeld, 2001; Parker, 2003), to acquit particular accountabilities to

funders (Brace et al., 1980), to meet requirements of regulators (Brace et al., 1980;

AAA, 1989), to enhance legitimacy (Paton and Payne, 1997), to allow comparisons

between NGOs (Paton and Payne, 1997), and in response to the influence of

professional bodies (Brace et al., 1980).

However, management controls in NGOs and for-profit organizations do not

automatically follow similar paths, as the objectives of NGOs are more diverse.

Common problems faced by NGOs are: the tendency for vague organizational

objectives, difficulties of monitoring performance effectively, the need to balance

multiple accountabilities of a range of stakeholders inside and outside the

organization, the evolution of intricate management structures designed to do this,

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the centrality of the difficult concept of ‘voluntarism’, and the need to maintain

organizational ‘values’ over time whilst demonstrating effective actions

Local Studies

In a study conducted by Fernando T. Aldaba entitled: Philippine NGOs and

Multistakeholder Partnerships: Three Case Studies. He cited there that Philippine

NGOs have created a significant impact in various areas of the political and

socioeconomic spheres. National policies relating to agrarian reform, environment,

housing and urban land reform, decentralization and local governance, cooperatives,

health reform (i.e., generics law, HIV/AIDS), gender and women’s rights, indigenous

people’s concerns are just some of the more important issues where NGOs have

successfully made their mark. Philippine NGOs have also been recognized in their

networking activities at the local, national and international levels. His three case

studies showed that Philippine NGOs play important intermediary and bridging

functions crucial for the success of multistakeholder partnerships. NGOs are well

equipped for this because of their middle-class and professional nature and because

of various characteristics like autonomy, flexibility and the ability to mobilize

resources.
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CHAPTER III

METHODOLOGY

This chapter discussed the design and procedures that were used during the

conduct of study. This chapter presented the research method used, population and

sampling technique, respondents of the study, instruments used, validation of the

instruments, test of validity and reliability, data gathering procedures and statistical

treatment of data.

Research Method Used

The descriptive type of research method was employed by the researcher to

gather the information about the significance of the internal control practices of

selected Non-Government Organizations (NGOs) in the National Capital Region.

The purpose of using this method was to identify, describe, evaluate and analyze the

significant difference that exist between the internal control practices of selected

Non-Government Organizations (NGOs) in the National Capital Region.

Descriptive research is used to obtain information concerning the current

status of the phenomena to describe “what exists” with respect to variables or

conditions in a situation. The methods involved range from the survey which

describes the status quo, the correlation study which investigates the

relationship between variables to developmental studies which seek to

determine changes over time.

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(http://www,okstate.edu/ag/agedcm4h/academic/aged5980a/5980/newpage1

10.htm. Retrieved September 19, 2010)

Descriptive research deals with both quantitative and qualitative

information. Qualitative descriptions are often based on quantitative data.

Descriptive research comprehends all the information gathered about the

present situation of the phenomenon to help the researchers to depict what

currently exist. Survey study was used to describe and measure the given

event without asking why it exists. In this study, this method involved

determined information about variables rather than individuals.

As used in the research, gathered and treated, are data on selected Non-

Government Organizations’’ profile such as the nature of business, size of the firm

as to nature of the organization, size of the organization as to number of employed

staff and number of years in operation. Gathered data also includes the

organizations’ internal control practices being implemented and its significance to the

day to day operations of each organization.

Population, Sample Size and Sampling Technique

The researcher would like to determine the internal control practices of the

selected Non-Government Organizations (NGOs) in the National Capital Region

which were currently registered and operating in the National Capital Region.

The researcher obtained a list of all registered Non-Government

Organizations (NGOs) in the National Capital Region through the website of

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Philippine Council for NGO Certification (PNPC). The researcher then examined the

list of Non-Government Organizations (NGOs) to identify the purpose for which the

Non-Government Organization was organized.

The researcher decided to use non-probability sampling to determine the

adequate number of sample to be able to represent the population under the study.

It is a type of sampling technique wherein the sample is not proportion of the

population and there is no system in selecting the sample. The selection of the

sample depends upon the situation. From the two broad types of non-probability

sampling, the researcher employed purposive sampling which involves the

determination of the target population which is based on the list provided and get the

sample with a purpose of knowing the significance of the internal control practices of

Non-Government Organizations (NGOs) in the National Capital Region.

Description of Respondents

The researcher was successfully able to collect data from 15 Non-

Government Organizations (NGOs) located at the National Capital Region. Some of

the organizations visited by the researcher are not all operating anymore, some of

them have closed down and some were not cooperative to answer the survey

questionnaire for they were busy and cannot consider anything beyond their

business concern. Each organization that took part was asked to have one (1)

accounting or finance personnel or up to top-level management to represent the

organization. The respondent that will answer the questionnaire is knowledgeable

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with the firm’s background, its employment profile, its internal control practices and

as well as its different activities.

Research Instrument

The researcher used descriptive method to gather data from the respondents.

The survey questionnaires were developed based on the validity and reliability of

each question, through consultations from the persons who the researcher believe

have the knowledge in the study and examining other related studies.

Close-ended and Open-ended type of questionnaires had been used as

survey forms. The questionnaire was divided into two main parts. The first part

contains the organization profile as to organization name, organization address,

nature of the organization, size of the firm as to number of staff and number of years

in operation. The second part of the questionnaire was composed of the internal

control practices observed by the Non-Government Organizations.

Data Gathering Procedure

The researcher considered the survey questionnaire as the main instrument

to gather data. At first, the researcher had a hard time developing a survey

questionnaire to be distributed to intended respondents. The researcher consult

different experts in the chosen field in order to make quality questions that could

help them evaluate the problems and its results. The researcher gave a letter to the

administrative office of the Philippine Council for NGO Certification (PCNC) for the
 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

permission to conduct a survey as a data gathering process of this study. With the

certification of approval given by the administrative office of the said council, the

survey questionnaire was then administered personally by the researcher to the

Non-Government Organizations (NGOs) in the National Capital Region.

The researcher gave a letter in which the survey questionnaire is already

attached for the respondents to see and evaluate so they can decide whether to

accept or reject the questionnaires. Some organizations refused to answer the

questionnaire for it seemed that the information that we asked are confidential and

beyond the organization’s policy and some are busy and unwilling to cooperate. On

the other hand, organizations who accepted the questionnaire answered it

immediately and some asked that the questionnaire be collected after an hour or

after the following days.

The researcher tallied and tabulated the gathered data consequently. The

profile of the respondents, answer to the Likert scale. After the data are tabulated,

the researcher interpreted the data using suitable statistical method. The result

gathered after applying statistical procedures are then evaluated by the respondents

to some up with reliable conclusion and useful recommendations. Application of

statistical procedures will be entirely discussed in the statistical treatment of data.

 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Statistical Treatment of Data

The data tabulated from firsthand information provided by the respondents,

the statistical procedures that are enumerated below were used to give interpretation

to the data. The statistical methods used are the following:

1. Frequency and Percentage Distributions

The percentage and frequency distributions were used to classify the

respondents according to their organization’s profile as to size based on the

number of staff of the organization, nature of the organization, and number of

years they were in operation. The percentage of each item is computed by

dividing it with the sample total number of respondents who participated in the

survey. The formula used in the application of this statistical treatment is:

% = (f/n) × 100%

Where: % = percentage

f = frequency

n = total number of sample

2. Ranking

In order to establish the acceptance and rejection of the difference or

relationship ordinal rank of the weighted mean and frequency was

used. Ranking is a way by indicating the highest as number one and

second highest as number two and so on and so forth.

 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

3. Weighted Mean

In order for the researcher to verify the average responses of the

different options provided in the various parts of the survey questionnaire

used weighted mean is used. Weighted mean is similar to an arithmetic mean

(the most common type of average); where instead of each of the data points

contributing equally to the final average, some data points contribute more

than others. In this study, the weight given to each data is the corresponding

Likert scale ranging from 1 to 3. The formula for weighted mean:

∑fx
x=
n

where: x = weighted mean

n = total number of respondents

∑fx= the sum of all the products of f and x, f being the frequency

of each weight and x as the weight of each operation.

 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

4. T-test

The researchers also used the T–test for data interpretation. It is used

to test the difference of means from independent samples when the

population variances are unknown and the samples are not more than 30.

The formulas for T-test are:

SX1X2 =
(n1 – 1) S2x1 + (n2-1) S2x2

n1 + n2 -2

where: n1 = sample size

n2 = sample size of an independent sample

X1 = sample mean

X2 = sample mean of an independent sample

SX1 = sample standard deviations

SX2 = sample standard deviation of an independent sample

 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

5. Likert Scale

The researcher’s selected Likert survey questionnaire type as this

enabled the respondents to answer the survey easily. In this type, three

choices were provided for every question or statement. The choices represent

the degree of agreement the total responses of all the respondents for every

survey question by computing the weighted mean:

Arbitrary Values Statistical Limit Descriptive

Value

3 2.50 to 3.49 Always

Observe

2 1.50 to 2.49 Seldom

Observe

1 0.50 to 1.49 Do not

Observe