Factors Affecting the Effectiveness of Financial Regulations in Kenya’s Public Sector: a Case of Government Ministries and State Owned Enterprises

Abstract

Governments are fundamentally different from business enterprises because they have different purposes, processes of generating revenues, stakeholders, budgetary obligations and propensity for longevity. These differences require separate accounting and financial reporting standards in order to meet the needs of the stakeholders who assess the government’s ability for accountability and socioeconomic development. The study sought to determine the factors for effective implementation of financial regulations in government ministries in Kenya. This study was conducted through the use of a descriptive design. The target population of the study were the heads in the finance and accounting departments in the 18 ministries and the 47 state owned enterprises in Kenya that are non-commercial. The study used questionnaires for primary data collection. The questionnaires were administered through drop and pick-later method to the sampled population. Data collected was purely quantitative and it was analyzed by descriptive analysis. The descriptive statistical tools such as SPSS V 21.0 and MS Excel helped the researcher to describe the data and determine the extent used. Tables and charts were used to summarize responses for further analysis and facilitate comparison. In addition, the researcher conducted a multiple regression analysis so as to determine the effects of each of the independent variables. The study revealed that commitment by the relevant Ministry to creating a strong, efficient capable regulatory agency affect effectiveness of financial regulations in Kenya’s public sector. The study also revealed that availability of finances for the regulator, sufficiency of capacity to deal with the regulated entities, poor remuneration of employees and employees being biased towards the regulated with interests of future employment affect financial regulations in Kenya’s public sector. The study concluded that political interference, poor relations between the regulating agencies and the regulated entities, state infringing on regulatory jurisdiction and appointment of non-autonomous individuals affect the effectiveness of financial regulations in Kenya’s public sector. The study recommends that the government should ensure the establishment of strong regulatory agencies that are independent. The study further recommends that all the employees in the regulatory agencies should be remunerated well. This study focused on the factors for effective implementation of financial regulations in government ministries in Kenya. Another study could be done to establish the challenges faced in the implementation of financial regulations