Public Sector Accounting Standards and Financial Reporting in Central Region County Governments, Kenya
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Date
2018
Authors
Nderitu, Anthony George
Koori, Jeremiah
Journal Title
Journal ISSN
Volume Title
Publisher
International Academic Journals
Abstract
Over the years, through the Institute of
Certified Public Accountants of Kenya,
practitioners have championed the adoption
of Public sector accounting standard
(IPSAS) in Kenya. However, much of this
took place in boardrooms, conferences and
seminars. It was not until 2014 when
treasury, the auditor general and Ernest
and Young teamed up to steer the IPSAS
adoption in the central government, that the
implementation actually commenced. This
research assessed the impact of
implementation of International Public
Sector Accounting Standards on financial
reporting in the public sector in Kenya and
more specifically the status of
implementation of IPSAS on the basis of
accountability, comparability and reliability
of financial reporting in county governments
in the central region of Kenya. This study
was premised on a theoretical foundation
based on the organizational theory of the
firm, stakeholder’s theory and positive
accounting theory. The general objective of
this study was to establish the effect of
public sector accounting standards on
financial reporting of county governments in
the central region of Kenya. The specific
objectives were: to establish how
preparation of public sector financial
information affected financial reporting in
the central region county governments in
Kenya, to examine how the disclosure of
public sector financial information affected
financial reporting in the central region
county governments in Kenya, to determine
the upshot of presentation of budget
information in financial statements on
financial reporting in the central region
county governments in Kenya and further to
explore the relevance of service concession
agreements on financial reporting in the
central region county governments in
Kenya. The study targeted lower, middle
and top level managers in the central region
county governments in Kenya. The study
employed a descriptive research design and
the researcher relied on both primary and
secondary sources of data. The researcher
sought permission from the public relations
officers of county governments, before
embarking on collection of primary data
from respondents and secondary data from
the records of the accounting departments. A
questionnaire designed with both open and
closed structured questions being employed
to collect data from 266 respondents
selected using the stratified random
sampling method. The data collected was
analyzed using Statistical Package of Social
Sciences (SPSS). Descriptive and inferential
methods of data analysis were used to
interpret the data. The analyzed data was
presented using charts, tables, graphs,
frequencies and percentages. It was
discovered that the counties have limited
access to financial information sources
which can enlighten the stakeholders and the
general public on how their funds are being
utilized. The information contained in
financial reports of the county governments
of Kenya is very useful in terms of
investment decision making and monitoring.
The study realized that the financial
reporting standardization has enhanced
budget information reporting in the public
sector in Kenya. IPSASB’s standardization
of presentation of financial statements was
found to have a significant contribution to accountability and transparency
enhancement, reducing complexity of
current financial reporting and improving
decision usefulness of financial information
to the stakeholders. The study concluded
that IPSASB’s standardization of service
concession agreements has improved
financial reporting among the devolved units
in Kenya. Further it was realized that the
PFM Act has greatly improved financial
reporting in the public sector and it is crucial
in management of public funds and
transparency. The study recommends public
participation in financial management,
disclosure and proper presentation of
financial information that is easily
understood by the consumers of the
information.
Description
A research article published in International Academic Journal of Economics and Finance
Keywords
public sector, accounting standards, financial reporting, central region, County governments, Kenya
Citation
Nderitu, A. G. & Koori, J. (2018). Public sector accounting standards and financial reporting in central region County governments, Kenya. International Academic Journal of Economics and Finance, 3(1), 44-63