Internal Control Practices and Financial Performance in Level Four and Five Hospitals in Kericho County, Kenya
Loading...
Date
2024-11
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Public sector organizations have challenges in accountability and transparency that has led to financial mismanagement and losses. Some of the public hospitals in Kenya have reported ineffective internal practices leading to loss, fraud, corruption and wastage of resources leading to inability to run operations and deliver quality health services to patients. This study envisioned that internal control practices are linked to financial performance and thus aimed at establishing the effect of internal control practices on financial performance of level four and five hospitals in Kericho County, Kenya. The specific objective was assessing the effect of monitoring practices, control activities practices, risk assessment practices and control environment practices on financial performance of level four and five hospitals. The study was grounded on stewardship theory, and supported by the agency theory and positive accounting theory and it employed the correlation, cross-sectional research design. The target population included the 6 level four hospitals and 1 level five hospital in Kericho County. The study respondents included 78 financial officers from the hospitals. Stratified sampling technique and simple random sampling techniques were adopted in the study and all the 78 financial officers formed the study’s sample size. Out of the 78 respondents, 66 filled and returned the questionnaires making a response rate of 84.6% for this study. Primary data was collected using structured questionnaires that produced quantitative data. The researcher checked for validity and reliability using 8 respondents who are finance officers in level three hospitals in Kericho County. The test was confirmed using Cronbach alpha test results at an aggregate of 0.75 implying the idealness of the instrument. The data collection entailed giving the questionnaire to the respondents at their place of work and waiting for them to fill it. The quantitative data was entered into Statistical Package for the Social Sciences where descriptive, correlation and regression analysis were conducted. Three diagnostic tests were done including normality, auto-correlation and multicollinearity and the results validated the assumptions made in the regression model. The findings presented in tables and charts showed that monitoring practices at (β =0.668, t =3.976, p < 0.05), control activities at (β =0.423, t =1.414, p < 0.05), risk assessment at (β =0.904, t =1.187, p< 0.05), and control activities at (β =0.245, t =0.809, p < 0.05) positively and significantly affected financial performance in the hospitals. The findings showed that 58.3% improved in financial performance was influenced by the four internal control practices. Therefore, the study concluded that the reported improvement in financial performance of the level four and five hospitals in Kericho County was influenced by adoption and implementation of internal control practices. The study recommended for a clear formatted, outlined and communicated monitoring practices in county’s hospitals, and the need for verification of staff before authorization to handle funds. There was also the need to identify, categorize and set measures for handling risks, and recommendations were made to finance and human resource departments to allocate funds and conduct trainings to improve financial performance. The study also recommended the need for standards, procedures and practices to maintain high ethical conduct that creates a good work environment that ensures prudent use of financial resources and measures to avoid fraud, embezzlement and loss of funds. These efforts are set to deliver quality healthcare services to patients and alleviating pain and suffering in the hospitals.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment for the Award of the Degree of Master of Business Administration (Finance Option) of Kenyatta University, November, 2024
Supervisor:
1.Grace Kariuki