The effect of adoption of management accounting practices on financial performance of commercial parastatals in Kenya
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Date
2020
Authors
Apunda, Mary Auma
Ndede, Fredrick W. S.
Journal Title
Journal ISSN
Volume Title
Publisher
International Academic Journals
Abstract
Purpose: The main purpose of this study was
to investigate the effect of adopting
management accounting practices on
financial performance of commercial
parastatals in Kenya. Methodology: The
study employed a descriptive survey research
design and targeted all the 119 commercial
parastatals in Kenya. The study used simple
random sampling technique to select 69
respondents from the commercial parastatals
in Kenya. Qualitative and quantitative data
was analysed descriptively. Inferential
statistics was applied where multiple linear
regression analysis was done through
Statistical Package for Social Sciences
(SPSS) to establish the relationship between
the selected management accounting
practices and the financial performance. The
analysed data was presented graphically
visually by use of figures and tables. Results:
The results from the study concluded that
management accounting practices including
budget process, variance analysis, and breakeven analysis affected the financial
performance of commercial parastatals in
Kenya. From the findings, it was realized that
budgeting process is critical in supporting
financial performance of commercial
organizations under the government
parastatals. It was established that variance
analysis determines the difference between
tangible financial performance and the
deliberate financial decisions emanating
from the various personnel, which thereafter
culminate to improved levels of financial
performance of the organization. Break-even
analysis affects financial performance of
commercial parastatals. Unique
contribution to Theory, Practice and
Policy: The study recommended that the
management of the parastatals should adopt
budgeting in all financial activities of the firm
as it is a central parameter that influences the
overall financial performance and dictates
how the commercial parastatals utilize assets
to generate revenues. Commercial parastatals
must have policies in place to help develop
financial applications to be used in budgeting
and invoicing for monitoring predictions that
indicate whether the parastatals are in the
right financial trajectories or otherwise.
Description
A research article published in International Academic Journal of Economics and Finance
Keywords
management accounting, financial performance, accounting practices, commercial parastatals
Citation
Apunda, M. A. & Ndede, F. W. S. (2020). The effect of adoption of management accounting practices on financial performance of commercial parastatals in Kenya. International Academic Journal of Economics and Finance, 3(6), 119-130