The Effect Of Internal Controls On Financial Perfomance Of Public Universities In Kenya

Abstract

Given the effect of internal controls on the financial performance of public universities in Kenya among many other developing countries, it is essential that these proper controls be put in place. The purpose of the study was to establish the effect of internal control on financial performance of public universities in Kenya. The study used descriptive research design. The target population was all public universities in Kenya. A convenient sample was selected from staff working at all public universities with offices in Nairobi. The studies mainly focused on the heads of finance departments of the respective institutions, since they were the ones conversant with the internal control systems and their effects on financial performance of respective institutions. The data collection instrument was a questionnaire. The questionnaires were delivered to the selected respondents by visiting them in their places of work during which observations were done. Quantitative data collected was analyzed by descriptive statistics using SPSS and presented through percentages, means, standard deviations and frequencies. Content analysis was used on data that is qualitative nature or aspect of the data collected from the open ended questions. The study concludes that assignment of authority was commensurate with responsibility to a great extent, assessment of risk associated with company-wide objectives was carried out to a great extent, mandatory authorization and approval of transaction by relevant officers was mandatory, periodic reports were made to top management of the institution to a great extent, presence of an effective internal audit facilitated monitoring of efficiency of operations,the institution faced challenges in its internal control systems. The study recommends that integrity and ethical values be held with high esteem, assessment of risk associated with company-wide objectives be carried out regularly so that the management can know whether or not the company objectives will be met, mandatory authorization and approval of transaction by relevant officers be made mandatory, periodic reports be made to top management of the institution .This is to ensure that errors are corrected in time. The study further recommends the institutions to put in place effective internal audit as it facilitates monitoring of efficiency of operations and the company s process for financial reporting be reviewed annually by the management