Financial Monitoring Practices and Public Financial Management Compliance of Nairobi City County Government, Kenya
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Date
2025-12
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Publisher
Kenyatta University
Abstract
The adherence to Public Financial Management regulations is vital for guaranteeing accountability, transparency and public resources efficient use. However, Nairobi City County faces persistent challenges in implementing effective PFM practices, as evidenced by low budget utilization rates, discrepancies in financial reporting, misappropriation of funds, and non-compliance with procurement regulations outlined in Auditor General’s disclosures. The study aimed to assess how these monitoring practices impact the overall compliance with PFM regulations, particularly in terms of improving accountability, transparency, and the effective allocation of resources. The study explored three key financial monitoring practices; budget implementation, financial reporting and audits and their impacts on PFM compliance. Theories anchoring the research included agency, institutional and public choice theories. Descriptive research design was adopted, where 76 employees in finance and accounting departments of Nairobi City County formed the target populace. Through stratified sampling, 52 sample size was arrived at. Primary data was amassed by a questionnaire subjected to content validity and Cronbach-Alpha for reliability testing and subjected to diagnostic tests of normality, multi-collinearity and homoscedasticity test. Data collected was subjected to descriptive techniques (mean, median & standard deviation) and inferential statistics (multiple regression). Findings were organized and depicted clearly, using tables and charts. Ethical considerations were prioritized and observed at every step starting with the obtainment of permits from both NACOSTI and Kenyatta University. The research findings were expected to offer crucial perspectives into the current state of PFM compliance in Nairobi City County and offer recommendations for enhancing financial monitoring practices to enhance PFM in the county. The study found that budget implementation, financial reporting and audit significantly positively affected public financial management compliance of the Nairobi City County government. A significant advantage is concluded when the County invests in better budgetary practices such offering training to financial staff, improvement on reporting systems and making the procurement process transparent. The manner in which the County gives its financial information to the citizens is critical in complying with PFM practices. Audit also strongly correlates with compliance of financial management of the County which ensures that public finances are managed with greater accountability and transparency. The review recommends investment in training the county’s finance staff to enable them acquire the required skills and knowledge. The County should leverage technology through digital platforms to simplify the collection of data and the process of reporting its financial information with accuracy and efficiency. The County is also recommended to strengthen the process of documenting its financial transactions through improvement on IFMIS implementation to ensure recording of each transaction in real time and easy access during audit.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of the Requirements for the Award of the Degree of Master of Business Administration (Finance) of Kenyatta University, December 2025.
Supervisor
1. Salome Musau