The Factors Affecting the Implementation of International Public Sector Accounting Standards in Kenya

Abstract

Reforms in Government’s financial management systems and processes are becoming critical in response to increasing demands for greater transparency and accountability in the management of the public’s finances. In Kenya as is widely acknowledged, there are fundamental problems that currently inhibit the efficiency and effectiveness of the GOK’s finance and accounting functions. This is due to poor performance of basic financial functions, poor supervision, inadequate financial information and decision support, poor staff motivation and attitudes to accounting and accountability. These inherent problems have suggested as contributing to the slow progress by the Government of Kenya in implementing its Public sector reforms in Particular the IPSAS compared to other Countries of the World. The study sought to established factors affecting the implementation of IPSAS in Kenya hence the level of implementation. This study therefore was a descriptive study. It was designed to describe the extent of IPSAS implementation at the Ministry Finance. The target population was 38 Heads of accounting units and their deputies in 14 key ministries headquarters’. The sampling procedure used the stratified sampling method. This study gathered both primary and secondary data. Primary data was collected at the source by the researcher. Secondary data was data previously collected by other researchers which was also used in this study. This study used descriptive statistics to describe a phenomena or an object. Infereretial statistics regression and correlations were done to establish the extent to which the factors affected implementation of international public sector accounting standards in Kenya. From the findings, the study established that failure to tackle specific accounting issues, lack of adoption of information technology, lack of international financial support significantly affected implementation of international public sector accounting standards in the public sector in Kenya. The study concluded there are fundamental problems that currently inhibit the efficiency and effectiveness of the IPSAS implementation. Low level of technology adoption, poor NPFM reforms and adoption of IFMIS by the Kenya Government, lack of political and weak legal framework, failure by parliament to enact new Financial management Act 2004 to recognize IPSAS, lack of trained and competent staff on the adoption of IPSAS systems of financial reporting were the factors that affected implementation on IPSAS in the government sectors. The study recommends that a legal framework to be crafted in order to prescribe IPSAS, all stakeholders and partners in the government embrace IPSAS reporting system in order to enhance financial management in the public sector, goverment upgrade Information technology and enhance adoption of ICT in order to cope with the financial data requirements of the IPSAS standards.