Assessment of Internal Control Practices on Financial Performance of State Corporations in Kenya (original) (raw)
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International Journal of Current Aspects, 2019
Internal control practices have been established to influence financial performance of County Government, though County Government have been facing a myriad of challenges in terms of financial performance. The drive of this study was to establish internal control practices that influence county governments to streamline their operations and perform efficiently and effectively for the benefit of the general interest. Therefore the general objective of the study was to determine the internal control practices and financial performance of county governments in the coastal region of Kenya. Specifically, the study endeavored to establish the effect of audit function, risk management, financial reporting and cash management on financial performance of county governments in the coastal region. The study was based on the following theories: The Agency theory, Attribution theory and procedural justice theory. The researcher adopted a descriptive research design. The target population of the study were 30 employees drawn from 5 departments in the Ministry of Finance, Budget and planning in the county governments of the Coastal region. The study targeted 4 Counties in the coastal region of Kenya, that is Mombasa, Kilifi, Kwale and Taita and the respondents were 40 finance managers obtained from Finance Planning Ministry of the listed County governments. A census of 40 respondents was carried out. Primary data was collected using questionnaires. Data was analysed using descriptive statistics and inferential statistics. The study found a positive and significant effect between risk assessment, monitoring, control environment, information and communication on financial performance. The study concluded that the risk identification and mitigation play the most significant role in influencing financial performance of the County governments. Hence, risk identification can essentially be said to be the key starting point of any risk management program as the Counties cannot manage what is unknown. Monitoring the financial performance of the County creates more certainty and confidence in making both short and long term decisions. This in turn leads to a healthier business and faster growth rate. The control environment provides the basis for carrying out internal control across the organization. Effective adoption of information and communication systems is of vital importance in making sure that the County governments improves their financial performance. The study recommends that the management of the Counties should put in place cost-effective measures for timely risk identification and effective risk mitigation so as to ensure that their financial performance is not impacted negatively. The County governments should have appropriate tools for monitoring their financial performance so as to effectively monitor their goals, the progress they make and all the key performance metrics throughout their financial operations. The County governments should demonstrate a commitment to integrity and ethical values. Specific standards of conduct should be understood throughout all levels of the County, and processes should be in place to evaluate performance and quickly address deviations from expectations. The County governments should communicate successfully with their investors to form stronger relationships with them. Information and communication should be between the County and financial stakeholders about the County's economic events and their effects within and outside the
Effect of internal control systems on financial management in Baringo county government, Kenya
Pressacademia, 2016
The study aims at determining the effect of internal control systems on the financial performance of Kassena Nankana East Municipal Assembly, in the Upper East Region of Ghana. The study was cross sectional and adopted a case study approach. The data for the study was completely primary and was gathered through face-to -face interaction with respondents (the staff of the Kassena Nankana East Municipal Assembly). A purposive sampling technique was use to select sixty (60) respondents for the study, finally the data was analysed using central tendency, frequencies and percentages and the information represented with tables, charts and graphs. The findings of the study showed that, there is a strong relationship between internal control system and organizational financial performance of the Kassena Nankana East Municipal Assembly. It was concluded that organizations that had invested on effective internal control systems had more improved Ayamga and Regina; AJEBA, 10(1): 1-13, 2019; Article no.AJEBA.47232 2 financial performance as compared to those organizations that had a weak internal control system. Base on the findings the study recommends that, the governing body, possibly supported by the audit committee, should ensure that the internal control system is periodically monitored and evaluated.
The International Journal of Business & Management, 2021
As a result of partial definition of strategies and operating plan, many organizations do not manage their strategies. This is due to the lack of a strong framework to coordinate employees, the operational process and the organizational objectives. The purpose of the study was to determine the effect of financial controls on organizational performance in selected county governments in Western Kenya. The study was anchored on the following three theories: Control Theory, Resource Based Theory and Levers of Control Theory. Across-sectional survey design was used. Stratified sampling was applied to segment the population into various strata of workers, and thereafter, a simple random sampling method was used to pick a sample size of 390 employees from the target population of 6049, 6549 and 3611 employees in Bungoma County, Kakamega County and Busia County respectively. Data was collected using structured questionnaires that was thereafter analysed with an aid of Statistical Package for Social Science (SPSS) software. Based on the analysis, the findings were: there was positive, strong and significant associations between financial controls, on the organizational performance of selected County Governments (R=0.890, p≤0.05). It was concluded that R-square value of 0.792 implied that 79.2% of the corresponding change in the dependent variable (performance) could be predicted by financial controls, the recommendations of the study were: the government organizations should adopt financial evaluation strategies that could help cut down on the unnecessary wastage of funds. The findings of this study would be of significance to the organizational management, as these could help them in making informed decisions for the management and thereby improving the overall performance of the county government that ensure sustainability in the face of global competition.
Internal controls is part of internal auditing which is an integral part of the corporate governance mosaic in both the public and the private sectors. The purpose of this study was to establish the effect of internal control on corporate governance in Sacco’s in Nairobi County. The study was guided by the Agency and Stewardship theories. This study adopted descriptive research design. The study targeted 45 licensed SACCOS in Nairobi County with a population of 180 respondents who worked for 45 licensed SACCOS by SASRA in Nairobi County. The sample size for the study was 124 respondents. Purposive technique and simple random sampling was used to select a sample size that represented all employees in filling questionnaires. In order to establish the validity and reliability of the instruments, a pilot study was carried out in Eldoret town. Data was analysed using descriptive and inferential statistics. The study findings indicated that there was a statistical significant effect between internal controls and corporate governance in Sacco’s in Nairobi (t=2.412, P<0.05). The study recommended that the SACCOs should improve on the use of internal controls in monitoring their operations in order control consciousness of its employees, they should contact accounting assessment by identifying and analyzing the relevant risks to the achievement of objectives, forming a basis for how the risks should be managed, the policy makers and stakeholders should ensure that the Sacco should comply with rules and regulation of the ministry and taxes payment.
Budgetary Control as a Measure of Financial Performance of State Corporations in Kenya
The importance of financial stability in enabling an organization to function efficiently and maximize the potential for service delivery cannot be underestimated. The quest for better service delivery under new public management in public organizations in Kenya necessitates the need for public organizations to have proper financial standing in order to run operations and motivate workers through better remuneration as well as improved working conditions. Critique of literature on factors affecting financial performance reveal that gaps remain on the influence of budgetary control on financial performance of public institutions. This study sought to investigate the relationship between budgetary controls and financial performance of state corporations in Kenya. The study sought to determine the salient features of budgetary controls in state corporations, establish the human factors within budgetary controls, establish the process of budgetary control in public organizations, and determine the challenges affecting budgetary control. A descriptive survey design was used to gather data from the state corporation's managers of the sampled state corporations. 14 corporations were selected from the 138 to participate in the study. Purposive sampling was used to select 42 corporate services manager, finance manager and budget officer from each corporation to participate in the study. A questionnaire, whose content validity was checked through an expertise opinion and reliability through test pre-test methods, was used to gather information. Findings indicate that a positive significant relationship exists between budgetary control and financial performance of state corporations. Budgetary features reflect ability to predict financial milestones of organizations. Human factors within budgetary controls thus managerial commitment, employees' motivation, employee training, competence as well as the attitude affect the budget control process. Budgetary control process exhibited a positive significant influence on financial performance of state corporations through influence on financial objectives, the allocation of funds as well as investment ventures that organization undertakes. The study recommends sensitization of management and employees of state corporations on the importance of budgetary controls in enhancing financial performance, avoidance of political interference in the budgetary process and use of budgets as tools for management efficiency.
Financial controls are critical in an organization in eradicating opportunities for fraud, safeguarding the resources of the organization, and ensuring the truthfulness of financial reports. The study sought to determine the effects of financial controls on the financial performance of devolved governments in Kenya, with a focus on Mombasa County Government (CGM). To strengthen the conceptual framework, the researcher used theories such as the lending credibility theory, systems theory, new public management theory and the agency theory. This research adopted a descriptive research design. The study population was 64 employees in the county revenue offices, internal audit offices, county procurement offices and the county finance and accounts offices in Mombasa County Government (CGM). The study was a census of all the 64 employees. A questionnaire was used in the study as the data collection tool. Data collection used the drop-and-pick-later procedure of questionnaire administration. A pilot test was conducted, and the questionnaire was tested for validity and reliability. Statistical Package for Social Sciences (SPSS) software was utilized for data analysis where inferential (regression) and descriptive statistics (means, standard deviations and percentages) were generated to assist in testing the study hypotheses. Study findings indicated that audit (β = 0.456; p = 0.000), periodic reconciliations (β = 0.663; p = 0.000) and payables control (β = 0.417; p = 0.014) had a positive and statistically significant influence on financial performance of CGM. However, monitoring did not have a significant effect on financial performance of county governments in Kenya (β = 0.092; p = 0.556). Based on the study conclusions, the study recommends that audit should not only track expenditure and budgets but should also be a value adding activity which establishes whether expenditures provide value for money. Further, though CGM observed best practices in periodic reconciliations, it should ensure that the reconciliation processes are performed immediately after the end of any accounting cycle. Additionally, payables to suppliers should be fast-tracked so as the CGM have a good relationship with suppliers and contactors. Lastly, CGM should ensure that monitoring process is continuous so that existing deficiencies are identified on time and corrective action taken.
oircjournals, 2018
Internal controls is part of internal auditing which is an integral part of the corporate governance mosaic in both the public and the private sectors. The purpose of this study was to establish the effect of internal control on corporate governance in Sacco’s in Nairobi County. The study was guided by the Agency and Stewardship theories. This study adopted descriptive research design. The study targeted 45 licensed SACCOS in Nairobi County with a population of 180 respondents who worked for 45 licensed SACCOS by SASRA in Nairobi County. The sample size for the study was 124 respondents. Purposive technique and simple random sampling was used to select a sample size that represented all employees in filling questionnaires. In order to establish the validity and reliability of the instruments, a pilot study was carried out in Eldoret town. Data was analysed using descriptive and inferential statistics. The study findings indicated that there was a statistical significant effect between internal controls and corporate governance in Sacco’s in Nairobi (t=2.412, P<0.05). The study recommended that the SACCOs should improve on the use of internal controls in monitoring their operations in order control consciousness of its employees, they should contact accounting assessment by identifying and analyzing the relevant risks to the achievement of objectives, forming a basis for how the risks should be managed, the policy makers and stakeholders should ensure that the Sacco should comply with rules and regulation of the ministry and taxes payment. Keywords: Internal Controls, Corporate governance, Monitoring, Savings and Credit Corporate Societies, Kenya
Abstract: This study sought to establish the effect of control activity on financial management in Mirangine Sub County of Nyandarua County. The study adopted a descriptive design and targeted 30 accounting, finance and administrative staff in the government departments in Mirangine Sub County. The study employed a census survey where all members of the target population constituted the study sample. A structured questionnaire was used to collect data. Both descriptive and inferential statistics were used in data analysis. The study findings were presented in the form of tables and figures that captured both descriptive and inferential results. The study concludes that the public sector in Mirangine Sub County has an effective internal control system characterized by clear separation of roles, supervision and commitment of management. However, there are weaknesses in the implementation of financial controls since internal audit function is not well extended to all the departments. On financial management, the study concludes that the prudential use of financial resources in Mirangine Sub County is not appropriate although there is improved asset use and classification of revenues and expenditures. The final conclusion of this study is that there is a significant positive relationship between control activities and financial management. The study recommends competence staff profiling, establishment of information system within the departments and improving the generation of more finances for the operations of the government departments. Key Words: Audit Arrangements, Financial Controls, Financial Control Systems, Financial Management, Internal controls, Activity Controls
Effects of Internal control on Financial performance of public water companies. A case study of Embu Water and Sanitation Company , 2020
ABSTRACT The subject matter for this research was to examine the effects of the internal control system on the financial performance of public water companies in Central Kenya with Embu Water and Sanitation Company being the area of study. By looking at different aspects to such as segregation of duties, inventory audit, cost management and cash reconciliation, the effects of internal control to the financial performance was able to be measured. The general objective of this study was to determine the effect of internal controls on the financial performance of the public water companies in central Kenya. The specific objectives of this study were to evaluate the influence of inventory audits on the financial performance of the public water companies in central Kenya, to examine the influence of cost management on the financial performance of the public water companies in central Kenya, to establish the influence of segregation of duties on the financial performance of the public water companies in central Kenya and to determine the influence of cash reconciliation on the financial performance of the public water companies in central Kenya. The study had a target population of 278 Employees working in EWASCO out of which a sample of 85 employees will be used for the study. A pilot study was conducted in KIRIWASCO in the accounting department which used both quantitative and qualitative approach. The primary data was collected by the use of Likert scale designed questionnaire. The secondary data for the study was obtained from published books, internet sources, individual’s articles including journals and reports. Descriptive statistics was thereafter used in analysing and validating the data. Presentation of the findings of the qualitative data was thereafter done by the use of simple descriptive statistics which specifically was by the use of some tables and bar charts.In this study, it is clearly indicated and shown that out of 85 questionnaires distributed, 75 of them were completely filled hence giving a complete response which gave this study a response rate of 88.23%. despite the 4 which were not returned and the 4 which were unfilled, 75 respondents in this study work is a clear indication that most of the respondents took this study serious and of benefit to them and the organisation that they work for. The study concluded that the organization did not use budget reviews ,the organisation also never did attribution of the costs incurred.This study therefore recommends that, the organisation should put more efforts in stock taking exercise which should be frequently carried out. The organisation should also lay more emphasis on the cost management aspect and ensure that in manages all its costs