A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF SCIENCE IN COMMERCE (FINANCE AND ACCOUNTING) IN THE SCHOOL OF PUBLIC AND GRADUATE STUDIES AT KCA UNIVERSITY OCTOBER, 2016This study intended to examine the relationship between internal auditing practices on financial performance of SACCOS in Kiambu County, Kenya. The objectives of the study included; internal audit planning, setting up audit committees, stakeholders; involvement and audit reporting practices in relation to financial performance. The study was guided by The Positive Auditing and Financial Agency and Stakeholders’ Theories. The study adopted a mixed method approach. Descriptive survey research design was employed since it enabled the researcher to explore different aspects of a research study where the researcher does no manipulate variables. The target population for this study comprised of 112 SACCO Managers and 448 Internal SACCO Auditors all totaling to 560. Using The Central Limit Theorem, a sample of 30 SACCOS and 147 respondents were selected. The researcher then applied stratified random sampling to create 12 strata based on the number of sub-counties. From each sub-county, 3 SACCO Managers and 10 Internal SACCO Auditors were selected using purposive sampling. This sampling procedure enabled the researcher to realize a sample of 30 SACCO Managers and 117 Internal SACCO Auditors. Questionnaires were used to collect data from SACCO Managers and Internal SACCO Auditors. Piloting was conducted among 15 SACCO Managers and Internal SACCO Auditors to establish validity and reliability. Validity was established through expert judgement. Reliability was obtained through test re-test method and reliability coefficient, r = 0.7, was obtained using Pearson’s Product Moment Correlation Coefficient. Qualitative data was analyzed thematically along the study objectives and presented in narrative forms whereas the quantitative data was analyzed descriptively using frequencies, percentages, means and standard deviation and inferentially using correlation and regression in Statistical Packages for Social Science (SPSS Version 23) to establish the relationship between internal audit practices and financial performance of SACCOs. The quantitative findings of the study were presented using tables. The study established that internal auditing practices influence financial performance of SACCOs. The study concludes that auditing practices such as internal audit planning, setting of audit committees, stakeholders’ involvement and internal reporting practices influence financial performance of SACCOs. Thus, the study recommends that there should be training programs in SACCOs to ensure that all the SACCO staff are trained on new skills and competence increased in order to perform better on financial management. SACCO managers need to adhere to set targets as they may be required to provide reasonable explanations for any variances. Accounting staff should cooperate with the auditors to enable them carry out their work.