Internal Controls and Financial Performance of County Government of Lamu, Kenya
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Date
2023-11
Authors
Ahmed, Salma Omar
Margaret, Kosgei
Journal Title
Journal ISSN
Volume Title
Publisher
IAJEF
Abstract
Satisfactory performance of Kenyan county
governments financially is of great essence
for accelerated economic development
particularly in the grassroot level. A major
concern several years after transition in to
devolution has been the increasingly dismal
financial performance of several county
governments especially when assessed in
terms of their own source revenues, pending
bills and also the capacity to fund county
services among other performance measures.
The County Government of Lamu is among
the county governments that have witnessed
financial performance challenges and a key
contributor to such concerns is weak internal
control systems within the county
government. Yet, research on how internal
controls effect on county government’s
performance is not exhaustive. It is on this
basis that the study sought to assess the effect
of internal controls on the financial
performance of the County Government of
Lamu. Specifically the study sought to
ascertain the effect of control environment on
the financial performance of the County
Government of Lamu. The study was
underpinned by the agency theory and the
stewardship theory. The study used an
explanatory research design. The study
targeted 6 executive committee members, 13
chief officers, 20 county directors and
departmental/unit heads as well as 726 middle
management level employees. To select the
sample, stratified sampling method was used.
The sample consisted of 2 executive
committee members, 4 chief officers, 7
county directors and departmental/unit heads
and 249 middle level staff, all totaling to 262.
The study employed primary data and this
was gathered through a questionnaire.
Secondary data on own source revenue was
collected using a secondary data collection
template. Informed consent and voluntary
participation, confidentiality and anonymity,
and seeking approval and authorization to
carry out the study are ethical issues that were
considered. To analyze the data, both
descriptive and inferential analysis were
undertaken. Diagnostic tests consisted of
normality, multicollinearity and
heteroscedaciticity tests were conducted.
Multiple linear regression analysis was
conducted to compute regression estimates to
be used in testing the outlined hypotheses.
The results obtained was presented using
tables. The study showed that control
environment had the significance threshold of
p< 0.05 hence had statistically significant
effect on financial performance of County
Government of Lamu. The study concluded
that population of the respondents established
to abundant magnitude with the fact that
control environment indeed affected the
financial performance of County Government
of Lamu. The study recommended that
County Government of Lamu should ensure
that all staff show their commitment and
competence on their responsibilities and
should perform their duties as per laid out
standards. It also recommends that all
activities and operations in this county should
be guided by high level of integrity and ethical
values among the county employees.
Furthermore, specific lines of authority and
responsibilities should be checked to confirm
adherence to the set policies and procedures.
Description
Article
Keywords
Control Environment, Internal Control, Risk Assessment, Control Activities, Financial Performance
Citation
Ahmed, S. O., Kosgei, M. (2023). Internal controls and financial performance of county government of Lamu, Kenya. International Academic Journal of Economics and Finance, 4(1), 21- 36.