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INTERNAL CONTROL SYSTEM AND FINANCIAL PERFORMANCE OF GARISSA WATER AND SEWERAGE COMPANY IN GARISSA COUNTY, KENYA

Amina Issa Hussein - Masters of Business Administration in Finance, Kenyatta University, Kenya

Dr. Geoffrey Mbuva - Lecturer, Kenyatta University, Kenya


ABSTRACT

Water companies play a vital role in supplying the clients/citizens with the right quantity and quality of water and related services. However, according to water companies key performance indicators, Kenya's best score fell 20 points from 183 in 2016/17 to 163 in 2017/18. The fact that just 24% of utilities received a 50 percent grade is cause for worry in the water industry, as the legislation demands that all utilities with a license be financially viable. Garissa Utility Company was among the three worst performing utility with 16 points from a possible 200 points. Gawasco reported increase in operations and maintenance costs from 26.7M in FY 2014-2015 to more than 30M and 35M in the FY 2016-2017 and FY 2017-2018 respectively. The trend in the level of risks handling, monitoring procedures and policies is worrying. The goal of this research was to see how the internal control system affected Gawasco Ltd's financial performance. The specific objectives were to identify the impact of the internal control on Gawasco Ltd's financial performance in Garissa County, Kenya; the impact of management control on Gawasco Ltd's financial performance in Garissa County, Kenya; the impact of communication and information on Gawasco Ltd's financial performance in Garissa County, Kenya; and the impact of risk evaluation on Gawasco Ltd's financial performance in Garissa County, Kenya. The study was informed by the theories of agency, stewardship, and institution. The approach employed was descriptive research. Employees of Garissa Water and Sewerage Company Limited were the focus of the investigation. The study used census data since the population was tiny. Questionnaires were used to collect primary data, which was then evaluated using qualitative and quantitative methods. Tables and figures were used to create descriptive and inferential statistics, which were then presented. The results of the study revealed that the control environment has a statistically significant impact on Garissa Water and Sewerage Company's financial performance (= 0.716, P = 0.001). It was also shown that control efforts had a statistically significant impact on Garissa Water and Sewerage Company's financial performance, as evidenced by ( = 0.338, P = 0.007). Furthermore, information and communication were shown to have a statistically significant impact on Garissa Water and Sewerage Company's financial performance ( = 0.411, P = 0.010). The study also discovered that risks assessment has a statistically significant impact on Garissa Water's financial performance. Finally, monitoring activities were found to have statistically significant influence on financial performance of Garissa Water and Sewerage Company as shown by (β = 0.741, P = 0.003). Based on the findings, the study recommends Garissa Water and Sewerage Company to diversify their control measures related to authorization of transactions (control activities) and compliance level (control environment). These could be done through assigning duties to individual employees based on their competence and training. The results could also be improved through successful customer service plans, which will identify both their "at risk" and most valuable clients.


Full Length Research (PDF Format)