FINANCIAL MANAGEMENT PRACTICES AND COUNTY GOVERNMENTS’ FINANCIAL PERFORMANCE OF MAKUENI COUNTY, KENYA

Faith Matheka - Master of Business Administration (Finance Option), School of Business, Economics and Tourism, Kenyatta University, Kenya

Dr. Margaret Kosgei - Lecturer, School of Business, Economics and Tourism, Kenyatta University, Kenya

ABSTRACT

There continue to exist challenges in the Kenyan County Governments’ financial performance despite the efforts put in place by the Ministry of National Treasury and Economic Planning to improve the County Governments’ financial performance. This is evidenced by the late submission of financial reports to the Controller of Budget by the County Treasuries, underperformance in own source revenue, presence of high pending bills at the end of each Financial Year, Low absorption of development budget and the failure to submit financial and non-financial reports for the established County Public funds. These aspects undermine the efficient financial performance of the County Governments. The study targeted to ascertain how Financial Management Practices impact on the County Governments’ financial performance with the objectives being to ascertain how financial management practices, financial reporting, financial planning, and control activities affect the County Government's financial performance. The theories employed in the research were the positive accounting theory, agency theory, stewardship theory and the fraud triangle theory. Descriptive research design was applied on all One hundred Makueni County Treasury staff members. First hand data was gathered through administering an online questionnaire using Google Forms. Data analysis was done using SPSS version 25 and MS Excel 2016. Data was presented using charts and tables. The adjusted R-squared 45.7% of financial performance is explained by financial reporting, financial planning and control activities. The p-values are less than 0.05 implying that financial reporting, financial planning and control activities are significant in explaining financial performance in Makueni county. The study concluded that financial planning, financial reporting and control activities influence financial performance of County governments. The government should ensure that all the employees adhere to the financial management practices to enable the government function effectively and improve on the financial performance. This will ensure that the resources are used prudently and that objectives of government are achieved.

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EFFECT OF INTERNAL CONTROL SYSTEM ON THE OPERATIONAL PERFORMANCE OF ORGANIZATION: A CASE STUDY OF KENYA REVENUE AUTHORITY (KRA) HEADQUARTER, KENYA

Lorna Chepkorir Chepkonga - Student, Master of Public Policy and Administration, Kenyatta University, Kenya

Daniel Mange Mbirithi - Lecturer, Department of Educational Management, Policy and Curriculum Studies, Kenyatta University, Kenya

ABSTRACT

The issue of financial crisis has persisted despite the fact that internal control systems have been in place for many years in the majority of organizations. However, the current research aims to determine the effect of the internal control system on operational performance of Kenya Revenue Authority. The survey objectives were; to explore the effect of control environment, risk assessment, control activities and automation on the performance of Kenya Revenue Authority. The survey was anchored by New Public Management theory and Contingency Theory. A descriptive research design was utilized. The research targets 640 employees working at finance, administration and internal audit departments. The study sampled 128 respondents. Questionnaires were utilized to gather primary data. Both quantitative and qualitative data were collected. Secondary data were gathered from annual financial reports. Quantitative data were analyzed descriptively and inferentially. Qualitative data were analyzed through themes and presented in verbatim forms. Only frequency, percentage, means, and standard deviations were utilized in descriptive statistics. Regression modeling and product moment correlation were used for inferential statistics. Graphs and tables were used to display the findings. The findings show that coefficient of correlation was 0.865, an indication that the study variables significantly influenced operational performance of KRA. Coefficient of adjusted determination was 0.724 which translates to 72.4%. This indicates that variations in dependents variable was explained by the independent variables (risk assessment, control environments, control activities and automation). Also, the findings from regression coefficients revealed that risk assessment, control environments, control activities and automation significantly affect the operational performance of KRA since the P-value is less than 0.05. The study concludes that internal control systems have statistically significant relationship with operational performance of Kenya Revenue Authority. The study concludes that KRA should establish strong internal control policies that will help the firm achieve its goal of optimizing revenue collection. The study recommends that management needs to be dedicated to the system's operations, set policies and processes for authorizations at a high enough level, and make sure that clear lines of authority and responsibility have been established to guarantee policy and procedure compliance. Additionally, managers need to make sure that roles in the department responsible for collecting revenue are clearly defined, train personnel on how to use the accounting and financial management system, and finally make sure that management promptly explains any differences between actual and budgeted income.

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FINANCIAL CONTROLS AND FINANCIAL DISTRESS OF HIV-AIDS NON - GOVERNMENTAL ORGANIZATIONS IN KENYA

David Mwaura Ndungu - Student, Kenyatta University, Kenya

Dr. Lucy Wamugo Mwangi (PhD) - Lecture, Kenyatta University, Kenya

ABSTRACT

Non-Governmental Organizations (NGOs) that provide support to individuals living with HIV/AIDS have encountered various challenges resulting into financial distress. Amongst these challenges, some scholars specializing in HIV/AIDS NGOs suggest that financial controls are the contributing factors to financial distress. The purpose of this study was to examine the effect of financial controls on the financial distress experienced by HIV/AIDS NGOs in Kenya. The specific objectives of the study were to assess the effects of donor financial reporting compliance and financial reconciliations on the financial distress of these HIV/AIDS NGOs. The study was anchored on the theory of inspired confidence, agency theory to explain the relationship between financial controls and financial distress. An explanatory research methodology was employed for the study. The target population consisted of 219 HIV/AIDS-related NGOs listed in the NGO Coordination Board register in 2021. A sample size of 142 NGOs was randomly selected using simple random sampling. Structured questionnaires were used to collect primary data which was analyzed using descriptive statistics and logistic regression analysis in the Statistical Package for the Social Sciences (SPSS). The research findings were presented using tables, pie charts, and bar graphs. The study revealed that donor financial reporting compliance, financial reconciliations had statistically significant positive influence on the financial distress of HIV-AIDS NGOs. The study recommends that donors want to increase compliance rates, need to create dialogue platforms with funded HIV/AIDS NGOs’ employees and management for mutual understanding of the rules and regulations of a particular donor.

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FUND CHARACTERISTICS AND FINANCIAL PERFORMANCE OF COLLECTIVE INVESTMENT SCHEMES IN KENYA

Kalekye S. Ndanu - Master of Business Administration (Finance) Kenyatta University, Kenya

James M. Gatauwa (PhD) - Department of Accounting and Finance, Kenyatta University, Kenya

ABSTRACT

A collective investment scheme is a plan where many investors who share the same financial goal pool together funds and appoint a professional manager of these funds to do the investment on their behalf at a fee. This makes investment in collective investment schemes more cost effective in accessing a several shares/ equity, bonds, fixed deposits and treasury bills. Managing performance of collective investment schemes involves use financial ratios such as profitability ratios and leverage ratios. The general objective of this research project was to determine the effect fund characteristics on the financial performance of collective investment schemes in Kenya. The specific goals of the study were; to investigate the impact of that institutional factors, investment strategy, the regulatory framework and lastly to the scheme products on the performance of collective investment schemes in Kenya financially. The study was grounded on theories such as: the Capital Asset Pricing Model (CAPM), the Keynesian Theory, the Arbitrage Pricing Theory (APT) and the Theory of Financial Deepening. The researcher used secondary data in the study and the 21 Nairobi based CISs constituted the target population. Because of the small CIS population, Census was used in the study. The stata method was also used by the researcher in the analysis of data. Diagnostic tests and panel data modeling was carried out simultaneously. The study took ethical considerations into account. Study findings will bridge the knowledge gap and also make an improvement on the academic reference material on performance of Kenyan CIS. This study also expanded the available empirical evidence by using return on investment (ROI) metric as measure of the CIS performance. It concluded that institutional factors have a significant effect on return on investment (ROI), the findings further showed that scheme products had an effect on the CIS performance. The study concentrated on Collective investment schemes in Kenya which operated between 2018 and 2022, a period during which possibly some CISs that either had not existed or were just starting up leading to unbalanced panels being generated. Secondary data that was used could also have resulted into undetected errors. The research suggested that further studies can be done focusing on examining the effect of funds characteristics on other institutions within the capital markets in Kenya. This will help in improving the available knowledge on the elements that promote returns on investments of new players in the country’s finance industry.

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