INFLUENCE OF INTERNAL CONTROL SYSTEM ON FINANCIAL MANAGEMENT IN MINISTRY OF FINANCE, KENYA
Ndegwa Ruth Muthoni - Department of Accounting and Finance, Kenyatta University, Kenya
Dr. Mungai John Njangiru - Department of Accounting and Finance, Kenyatta University, Kenya
ABSTRACT
Before the government introduced Integrated Financial Management Information System, execution of budget as well as process of accounting were done manually or in support of old applications that were not supported adequately. Because of this, the functioning of the management systems dealing with management of the public funds suffered greatly because there was no data on expenditure, planning of budget, control of expenditure, and reporting causing a negative effect on management of budget which resulted to commitment of resources by the government being controlled poorly; leading to building up of arrears; excess borrowing which pushes up rates of interest and crowds private sector investment and misallocation of resources therefore leading to undermined effective and efficiency in management of finances. This study focused on establishing the influence of internal control systems in IFMIS on financial management in Ministry of Finance. Specific objective was to assess the effects of internal control system on financial management in Ministry of Finance Descriptive research design was used in the study. The study was conducted in the National Treasury. The target population of the study was 128 employees. Stratified random sampling was applied to get the respondents. The study sample size was 97 employees. The study used questionnaires as the tool for data collection. Statistical Package for Social Sciences (SPSS) version 23 for windows was used to analyze quantitative data. Graphs, tables and pie charts were used to present frequencies and percentage while tables were prepared using each variable or indicator. The study found that internal control systems had significant positive relationship with financial management in Ministry of Finance and financial reporting systems had significant positive relationship with financial management in Ministry of Finance. The study recommends that the ministry of finance should ensure that they have systems that are reliable; this will ensure that they provide complete, accurate, timely and consistent information. The ministry should also ensure that the infrastructure supporting IFMIS is secure, corrupt free, secure from unauthorized access and breach of confidentiality this will boost efficiency in management of cash. Management in the ministry of finance should ensure that the IFMIS in use have the ability of monitoring future pipeline of payment. This will ensure that there is effective management of government’s flow of cash which will prevent accumulation of debt.