Internal Controls and Financial Sustainability of Public Chartered Universities in Kenya

Abstract

This study aimed at establishing the effect of internal controls on financial sustainability of public chartered universities in Kenya. Descriptive survey design was adopted targeting at 35 public chartered universities in Kenya (appendix I) and census will be adopted. Both primary and secondary data was gathered with the latter being obtained on a period of 2018-2022 from financial statements of respective universities. Processing of the obtained information was aided descriptively and regression ally. It emerged that risk assessment (β=0.526, p<0.05), control activities (β=0.421, P<0.05) and control environment (β=0.342) were significant internal controls that predicted financial sustainability among Public Chartered Universities in Kenya. Similarly, the control role of capital structure (β=0.496, p<0.05) and government capitation (β=0.289, p<0.05) strengthening internal controls to enhance financial sustainability of the said Universities can also not be underscored. It was summed up that internal controls are significant predictors of financial sustainability. It was recommended that the senior management team working with Public Universities in Kenya should comprehensively implement all the internal audit reports done on the weaknesses on the internal controls. Auditor reports from the Auditor General (AG) focusing on these chartered public Universities should be taken serious and practical actionable plans of implementing the same should be in place. There is need for an independent office to monitor the status and progress of implementation of all the internal and external audit reports pointing out the weaknesses in internal controls of the chartered public Universities in Kenya. Best private corporate practices should be incorporated and blended in the senior management and the Senate of all public chartered Universities with major emphasis on financial and accounting expertise so as to prudently utilize debts and capitation from the government to fund investment projects that would generate additional revenues for these institutions.