INTERNAL CONTROL SYSTEMS ON FINANCIAL ACCOUNTABILITY IN NATIONAL PUBLIC SECONDARY SCHOOLS IN KENYA

Omondi Margaret Atieno, Evans Kiganda

Abstract


The main objective of this study was to evaluate the effect of internal control systems on financial accountability in national public secondary school in Kenya. The specific objectives were; to evaluate the effect of control environment on financial accountability, to determine the effect of control activities on financial accountability, to ascertain the effect of risk assessment on financial accountability to examine the effect of information and communication on financial accountability and to assess the effect of monitoring on financial accountability in national public secondary schools in Kenya. However, accountability is still wanting in some public secondary schools. The study was carried out in 103 national public secondary schools in Kenya. Survey research design was used on a population of 309 consisting of; 103 principals, 103 bursars, 103 BOM chairs. Purposive and simple random sampling were used to select principals, bursars and BOM chair. Primary data was collected by use of questionnaires, while secondary data was collected through audited financial statements. Reliability of the research instruments was tested through Cronbach’s Alpha. Descriptive statistics comprised of frequencies; means, standard deviation and variance. Inferential statistics comprised of; Correlation analysis, ANOVA, regression analysis, testing for normality, autocorrelation and multicollinearity. The dimensions of internal control systems were found to have a significant joint effect on financial accountability. It was therefore recommended that the government should ensure that BOM have accounting knowledge and should be appointed based on integrity and ethical values. Segregation of duties should be strengthened with clear roles of the principal, bursar, other BOM members, storekeeper and other employees. Authorization of activities should be mandatory. Impromptu checks of ongoing projects and approved expenditure should be frequently done. The government should employ all principals and bursars on contract basis renewable only based on financial accountability. The government should interlink the schools bank accounts to a central accounting information system. The government should ensure through independent checks that the budgets and other financial statements are complete, reliable and correct. There should be frequent external audits by county auditors.

JEL: H52; H75; I10

Article visualizations:

Hit counter


Keywords


internal control systems, financial accountability, secondary schools

Full Text:

PDF

References


Abdooulaye G. S., Rohaida B. & Mohammed J. (2018). Fraud prevention in Malaysian Small and Medium Enterprises (SMEs). Journal of financial Crime, 25(2), 499-517.

Andrew C. & Sayag G. (2010). The effectiveness of internal auditing in organizations. Australian Accounting Review, 54(20), 297-307.

Asher H. B. (2013). Theory building and data analysis in social sciences. Stockholm: Copenhagen Business School Press.

Auditor General. (2016/2017). Financial statements for Ministries, departments, Commissions, funds and other accounts of the National government. Nairobi: Government of Kenya Printer.

Babbie, E. (1990). Survey Research Methods. Belmont Calif :Wadsworth Publishing Company.

Bailey, K. D. (1987). Methods of Social Research (3rd. ed.). New York: Free Press.

Carslaw C., Richard M. & Mills J. R. (2007). Audit timeliness of school district audits. Journal of Public Budgeting, Accounting and Financial Management, 19(3), 290-316.

Center for popular democracy and action now. (2015). Risking Public Money. Illinois Charter School Fraud Best Practices to protect public Dollars and prevent financial Mismanagement. Chicago: Center for popular democracy and action now.

Cohen J., Cohen P., West S. & Aiken L. (2003). Applied multiple regression/correlation analysis for the behavioral sciences (3rd ed.). Erlbaum: Mahwah N.J.

Committee of Sponsoring Organization of the Treadway Commission(COSO). (2010). Integrated Internal Control Framework. New York: AICPA.

Committee of Sponsoring Organizations of the Trade way Commission(COSO). (2013). Internal control Integrated Framework: Internal control and fraud deterrence. New York: AICPA.

Cooper D. & Schindler P. (2011). Business Research Methods. New Delhi-India: McGraw-Hill Publishing, Co. Ltd.

Cressey, D. R. (1953). Other People’s Money. Montclair: NJpp: Patterson Smith.

Creswell, W. J. (2003). Research Design: Qualitative, Quantitative and Mixed Methods Approaches (2nd ed.). London: Sage Publications.

Crossman, A. (2013). Convergence theory. About.com Sociology.

Curwin J. & Slater R. (2008). Quantitative Methods for Decisions. South Western: South Western Cengage, Learning.

David G. (2012). Testing statistical assumptions. North Carolina University. North Carolina: School of public international affairs.

Davies, A. (2004). Moving base into high-value integrated solutions: A value stream approach. Industrial and Corporate Change, 13(5), 727-756.

Davis J. H., Allen, M. R. & Hayes H. D. (2014). Is blood thicker than Water? A study of stewardship perceptions in family business. Entrepreneurship Theory and Practice, 1093–1116.

Deis D.R. & Giroux G. A. (2009). Determinants of audit quality in the public sector. The Accounting Review, 67(3), 462-479.

Edwards P., Roberts I, Clarke M., DiGuiseppi C., Pratap S., Wentz R. & Kwan I. (2002). Increasing Response Rates to Postal Questionnaires: Systematic Review. British Medicla Journal, 324, 1183.

Einstnhardt K. (1989). Agency theory assessment and review. The academy of management review, 4(1), 57-74.

Ember C. R. & Ember M. (2001). Cross-Cultural Research Methods (2ND ED. ed.). Lanham: AltaMira.

Ethics and Anti- Corruption Commission. (2015/2016). Reports of activities and financial statements. Nairobi: EACC.

Fornell C. & Larcker D. F. (1981). Evaluating Structural Models with Unobservable Variables and Measurement Error. Journal of marketing research, 30-50.

Fraenkel J. R. & Norman E. W. (2014). How to design and evaluate research in education (4 ed.). San Francisco: McGraw-Hill.

Fraenkel R. J. & Wallen E. N. (2000). How to design and evaluate research in education (Fourth ed.). San Francisco: McGraw-Hill.

Fraenkel R. J. and Wallen E. N. (2000). How to design and evaluate research in education (Fourth ed.). San Francisco: McGraw-Hill.

Friedberg A. & Lutrin C. (2010). The internal audit in U.S. local governments in the 1990s: A status report and challenges. Journal of Public Budgeting, Accounting and Financial Management, 13(3), 326-344.

Garcia, M. (2004). Audit reports on financial statements of Accounting. International Accounting Standards Board.

Garson, G. D. (2012). Testing Statistical Assumptions. Asheboro: Statistical Associates Publishing Blue Book Series.

Gbegi D. O., Adebisi J. F. & Makurdi J. (2015). Fraud and the Nigerian Public Sector Performance: The Need for Forensic Accounting. International Journal of Business, Humanities and Technology, 5(5), 53.

Glennerster R., Kremer M., Mbiti I. & Takavarasha K. (2011). Access and Quality in the Kenyan Education System: A Review of the Progress, Challenges and Potential Solutions. . Nairobi: The Abdul Latif Poverty Action Lab and Innovations for Poverty.

Goodwin, J. (2014). A comparison of internal audit in the private and public sectors. Managerial Auditing Journal, 19(5), 640-650.

Gujarati, D. N. (2003). Basic Econometrics. New York: McGraw-Hill Higher Education.

Hallak J. & Poisson M. (2015). Ethics and corruption in education. Results from the expert. IIEP Observation Programme Policy. 1. Paris: UNESCO.

Institute of Internal Auditors. (2009). The role of auditing in public sector governance. Altamonte Springs: Institute of Internal Auditors.

Institute of Policy Analysis and Research (2014). The sociology of Private Tuition. Nairobi: The Kenya Government Printer.

Jabreen, Y. (2008). A new conceptual framework for sustainable development. Environment, Development and Sustainability, 10(2), 197-202.

Jensen M. C. & Meckling H. (1976). Theory of the firm: Managerial Behaviour, agency costs and ownership Structure. Journal of Financial Economics, 8(23), 167.

Kaguri, M. (2014). Financial management challenges facing implementation of freeday Secondary Education in Imenti North District, Kenya. Journal of Business and Management, 16(1), 55-78.

Kahavizakiriza R., Kisiangani B. W. & Wanyonyi D. K. (2015). Financial management in public secondary schools in Kenya: A Case Study of Lurambi Sub-County Kakamega County. International Journal of Scientific and Technology research, 4(9), 167.

Kamau P. M. & Rotich G. (2015). Effect of internal Control system on procurement procedures in constituency development funded projects a case of; Nyandarua County Kenya. International Journal of Economics, Commerce and Management, 3(6), 1173-1180.

Kaplan, D. (2009). Structural Equation Modelling: Foundations and Extensions (2nd ed.). Thousand Oaks: CA: SAGE.

Kenya Educational Management Institute (KEMI). (2013). Conference on education management capacity building of educational managers. Nairobi: Kenyan Government Printer.

Kenyon W. & Tilton P. D. (2006). Potential red flags and fraud detection techniques: A Guide to Forensic accounting Investigation (First ed.). New Jersey: John Wiley & Sons.

Kiragu D. N., Wanjau K. L., Gekara M. & Kanali C. (2013). Effects of bank growth on occupational fraud risks in commercial banks in Kenya. International Journal of Social Sciences and Entrepreneurship, 1(3), 469-480.

Kline, R. (2011). Principles and practice of structural Equation modelling. New York: The Guiford Press.

Kombo D. K. & Tromp D. L. A. (2009). Proposal and Thesis Writing: An Introduction. Nairobi Kenya: Don Bosco Printing Press.

Kothari C. R. & Gaurav G. (2014). Research methodology (Third ed.). New Delhi: New Age International Publishers.

Laaria, M. (2013). Leadership challenges in the implementation of ICT in public secondary schools in Kenya. Journal of Educational learning, 2(1), 52-69.

Laura J. Burton & Stephanie M. Mazerolle. (2011). Principles of survey instrument in athletic training education research. Athletic Education Training Journal, 6(1), 27-35.

Leitch C., Hill F. M. & Harison H. (2010). The Philosophy and practice of interpretivist research in Entrepreneurship: Quality, Validation and trust (Vol. 13). Organizational Research Methods.

Levi, M. (2008). Organized frauds and organizing frauds: unpacking the research on networks and organization. Journal of Criminology and Criminal Justice, 389-419.

Lister, L. M. (2007). A Practical Approach to Fraud Risk: Internal Auditors. International Journal of Social Sciences and Entrepreneurship, 6(8), 48-60.

Makewa L. N., Meremo J., Elizabeth R. & Jesse R. (2013). ICT in secondary school administration in rural southern Kenya: An Educator’s eye on its importance. International Journal of Education and Development using Information and Communication Technol, 9(2), 48-63.

Mangoensetono, L. (2012). An empirical analysis on the impact of the control environment in preventing fraud. Netherlands.

Manurung D. T. H. & Hadian N. (2013). Detection Fraud of Financial Statement with Fraud Triangle. Proceedings of the 23rd International Business Research Conference Marriott Hotel (pp. 18-20). Melbourne Australia: International Business Research Conference.

Maronga E., Weda C. W. & Kengere D. O. (2013). An Investigation on the influence of government financial management on Kenyan Public Secondary Schools: A Case of Sameta Division. International Journal of Scientific and Technology Research, 2(9), 34-50.

Marus E., Murezi C., Mwosi F. & Ogwel B. (2018, July). Internal control systems and financial accountability in Uganda: A case of selected districts in western Uganda. International Journal of Commerce and Management Research, 4(4), 106-111.

Mawanda, S. P. (2008). Effects of Internal Control Systems in an Institution of Higher Learning in Uganda: A Case of Uganda Marytrs University. Uganda Marytrs University.

Ministry of Education Science and Technology . (2010). The Kenya education sector support programme. Nairobi: The Kenyan Government Printer.

Ministry of Education Science and Technology. (2012 ). The development of Education in Kenya. Nairobi: The Kenyan Government Printer.

Mohajan, H. (2017). Two criteria for good measurements in Research: Validity and Reliability. Chittagong: Premier University.

Moraa, E. O. (2015). Factors affecting financial management of Public Secondary Schools in Marani Sub-County, Kenya. Baraton: University of Eastern Africa.

Mugenda N. G., Momanyi G. & Naibei K. I. (2012). Implications of Risk Management Practices on Financial Performance of Sugar Manufacturing Firms in Kenya. International Journal of Arts and Humanities, 14-29.

Munene, J. (2013). Effects of internal controls on financial performance of Technical training institutions in Kenya. Nairobi: Nairobi University.

Mwachiro, B. D. (2013). Effects of Internal Controls on Revenue Collection: A Case of Kenya Revenue Authority. Nairobi: University of Nairobi.

Mwakimasinde M., Odhiambo A. & Byaruhanga J. (2014). Effects of Internal Control Systems on Financial Performance of Sugarcane out grower companies in Kenya. Journal of Business and Management, 6(12), 62-73.

Natemeyer R.G. , Bearden W. O. & Sharma S. . (2003). Scaling procedures: Issues and Applications. Thousand Oaks: Sage.

Ndembu, Z. N. (2015). THE Effect of Internal Controls on the Financial Performance of Manufacturing Firms in Kenya. University of Nairobi.

Ndungu, H. (2013). The effect of internal controls on revenue generation: a case study of the University of Nairobi enterprise and Services Limited. Nairobi: University of Nairobi).

Ngigi S. & Kawira M. (2015). Internal Control System as Means of Fraud Control in Deposit Taking Financial Institutions in Imenti North Sub-County. Research Journal of Finance and Accounting, 6(16), 118.

Njeri, K. C. (2014). Effect of Internal Controls on the Financial Performance of Manufacturing Firms in Kenya. Nairobi: University of Nairobi.

Nyakarimi S. N. & Karwirwa M. (2015). Internal Control System as Means of Fraud Control in Deposit Taking Financial Institutions in Imenti North Sub-County. Research Journal of Finance and Accounting, 6(16), 118-128.

Nyakundi N., Okioga C., Ojera P. & Nyamao R. (2015). An assessment of the effect of accounting practices on the management of funds in public secondary schools: a study of Kisii central district Kenya. Nairobi University Printing Press.

Ochieng, M. E. (2013). Challenges facing head teachers in financial management in public Secondary schools: a case of Kisumu east district Kenya. Nairobi: University of Nairobi.

Oduol, T. (2011). Ethical issues: a cases study of secondary school leaders in Kenya. The 34th AFSAAP Conference. University of Wellington.

Ondieki, E. M. (2015). Factors affecting financial management of public secondary schools in Marani sub-county. 2(1), 67-78.

Osiri, M. F. (2012). An assessment of the effect of accounting practices on the management of funds in public secondary schools: A study of Kisii central district, Kenya. Asian Journal of Business and Management Sciences, 2(8), 34-50.

Osiri, M. F. (2015). Perceptions of Educational Stakeholders Regarding the Effects of Financial Mismanagement on Physical Facilities in Secondary Schools in Gucha District, Kenya. International Journal of Social Science and Economics Invention, 1(3), 80-85.

Otieno O. H., Atieno K. B. & Yambo Onyango J. (2014). Effects of financial budgeting in the management of public Secondary schools in Uriri sub-county, Migori County, Kenya. Rongo University.

Otieno S. & Nyagechi E. O. (2013). (Effectiveness of Internal Control Procedures on Management Efficiency of Free Primary Education Funds: a case of Public Primary schools in Kisii central District, Kenya. ,. Journal of Sociology and Social Work, 1(1), 22-41.

Polit D. & Beck L. (2003). Nursing Research: Principles and Methods, Lippincott, Williams and Wilkins.

Public Procurement Oversight Authority (PPOA). (2012). Public Procurement Manual for Schools and colleges. Nairobi: The Kenyan government Printer.

Ribstein, L. E. (2002, September). Market vs Regulatory responses to corporate fraud : A critique of Sarbanes-Oxley act 2002. Journal of Corporation Law, 28(1).

Roberts J., Terry M. & Styles P. (2005). British Journal of Management. Beyond agency conceptions of the work of the non-executive director: Creating accountability in the boardroom, 16(1), 25-26.

Sabana, M. (2014). Entrepreneur financial literacy, financial access, Transaction costs and performance of micro Enterprises in Nairobi city county; Kenya. Nairobi: University of Nairobi.

Saunders M., Lewis P. & Adrian T. (2009). Research Methods for Business Studies (5 ed.). New York: Pearson Education.

Sekaran U. & Bougie R. (2011). Research Methods for Business: A Skill Building Approach. ( 5th ed. ed.). Delhi: New Delhi: Aggarwal printing press.

Sekran U., Bougie & Roger O. (2010). Research Methods for Business (5th ed.). Wiley.

Simiyu, N. A. (2014). Investigation of factors affecting cash management in Public Secondary Schools: a case of Mombasa County. Nairobi: Kenyatta University.

Stout, L. (2003). Investors’ choices: The shareholder as influence: Some empirical evidence on why investors in public corporations tolerate board governance. University of Pennsylvania Law Review, 667-712.

Tabachnick B. G. & Fidell L. S. (2007). Using multivariate Statistics (5th ed.). Boston inc: Pearson Education.

Tanner, J. J. (2006). Financial Analysis and Fiscal Viability of Secondary Schools in Mukono District, Uganda. Provo: Brigham Young University.

Tetlock P. E. & Lenner S. (1999). Accountability: A social check on the fundamental attribution error. Social Psychology Quarterly, 48(3), 227-236.

Transparency International Kenya. (2014). Corruption risk assessment of the education sector in Turkana county. European Journal of Research and Reflection in Educational Sciences, 4(2), 201-210.

Trevor W., Anderson M. & Didier L. (2016). Adjusting the Lens on Economic Crime. Global Economic Crime Survey.

Victoria State Government. (2015). Internal Controls for Victorian Government Schools. East Melbourne: Communications Division for Financial Services Division Department of Education and Training.

Wainaina, W. S. (2011). An Evaluation of the Internal Control Function: The Case of Kenya Polytechnic University College. Nairobi: University of Nairobi Kenya.

Wango G. & Gatere A. (2013). Leadership Professional Development Through Integrity and Financial Accountability: Curbing Fraudulent Practices in Schools. Third Kenya education management institute conference on education management. Nairobi: Kenya Education Management Institute.

Wichenje K. M., Simatwa E. M. W., Okwom H. A. & Kegode E. A. (2012). Challenges facing Head teachers in Public Secondary Schools in Kenya. International Journal of Business and Management Invention, 21 (6), 76-87.

Widyaningsih, A. (2015). The Influence of Internal Control System on the Financial Accountability of Elementary Schools in Bandung, Indonesia. Research Journal of Finance and Accounting, 6(24), 89-96.

Wilfred, C. (2006). Philosophy, Methodology and Action Research. Journal of Philosophy of Education, 40(4), 421-436.

Yamane, T. (1967). Statistics: An introductory Analysis (2nd ed.). New York: Harper and Row.

Zauwiyah A. & Mariati N. (2008). The Control environment employee fraud and counterproductive workplace behaviour: An empirical analysis. Melaka, Malaysia: Multimedia University.

Zikmund G., Babin J., Carr J. & Griffin M. (2010). Business Research Methods (8th ed.). Natorp Boulevard mason: South-Western: Cengage Learning.




DOI: http://dx.doi.org/10.46827/ejefr.v4i3.831

Refbacks

  • There are currently no refbacks.


Copyright (c) 2020 Omondi Margaret Atieno, Evans Kiganda

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

The research works published in this journal are free to be accessed. They can be shared (copied and redistributed in any medium or format) and\or adapted (remixed, transformed, and built upon the material for any purpose, commercially and\or not commercially) under the following terms: attribution (appropriate credit must be given indicating original authors, research work name and publication name mentioning if changes were made) and without adding additional restrictions (without restricting others from doing anything the actual license permits). Authors retain the full copyright of their published research works and cannot revoke these freedoms as long as the license terms are followed.

Copyright © 2015 - 2018. European Journal of Economic and Financial Research (ISSN 2501-9430) is a registered trademark of Open Access Publishing GroupAll rights reserved.

This journal is a serial publication uniquely identified by an International Standard Serial Number (ISSN) serial number certificate issued by Romanian National Library. All the research works are uniquely identified by a CrossRef DOI digital object identifier supplied by indexing and repository platforms. All the research works published on this journal are meeting the Open Access Publishing requirements and standards formulated by Budapest Open Access Initiative (2002), the Bethesda Statement on Open Access Publishing (2003) and  Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities (2003) and can be freely accessed, shared, modified, distributed and used in educational, commercial and non-commercial purposes under a Creative Commons Attribution 4.0 International License. Copyrights of the published research works are retained by authors.