Internal Control Systems and Financial Performance of Kenya Power and Lighting Company
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Date
2025-06
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Kenyatta University
Abstract
Kenya Power's recent financial performance, particularly its Return on Assets (ROA) over the past five years, has raised concerns. In 2018, the ROA was 1.01%, but subsequent years saw fluctuations, with a low of -1.71% in 2020. The most recent data for 2022 indicates a decrease of -1.23%, underscoring the need of analyzing the influence of internal control procedures on this pattern. In order to address these issues, the study set out to assess the financial performance and the internal governance mechanisms of Kenya Power and Lighting Company within the Central Rift Region. This research sought to provide a comprehensive analysis of the linkage between control structures and financial outcomes in the energy industry. Accordingly, it aimed to evaluate the influence of these internal control measures on the financial results of Kenya Power in the Central Rift Region. The research specifically aimed to determine the impact of inventory audits, cash reconciliations, cash management, and division of tasks on Kenya Power's financial performance in the Central Rift Region. This investigation was informed by the theories of agency, attribution, and dependability. The research design used in this study was quantitative. A sample of 62 employees was chosen using a proportionate stratified random sampling approach from the target population, which included 155 employees from the finance division of all Kenya Power Central Rift districts. To gather information, the researcher used a standardized questionnaire. Seven workers, or 10% of the sample total, were randomly given questionnaires as part of a pilot research at Kenya Power in the Central Rift. The credibility of the material was verified through an assessment of construct literature. Reliability was measured using Cronbach's alpha coefficient. Data collection followed the drop-and-pick-later approach. SPSS 25 was utilized for data analysis, incorporating both descriptive statistics—such as proportions, percentages, averages, and standard deviations—and inferential statistics, including regression and correlation. The research's findings were shown in tables. According to the report, Kenya Power has enough workers in the Central Rift Region to do every assignment. It also revealed that the organization regularly does surprise cash checks and that each employee's authority and duty are well-defined. Regression research revealed that cash management, inventory audits, cash reconciliations, and division of responsibilities all had a favourable and statistically significant impact on Kenya Power's financial performance in the Central Rift Region. According to the report, Kenya Power should examine and update its personnel rules on a regular basis to reflect evolving industry standards and organizational demands. Furthermore, funding ongoing training and development initiatives would provide staff members the abilities and know-how to succeed in their positions. In order to improve operational efficiency, the report also suggested that Kenya Power use technological solutions, such as inventory management software, to automate inventory monitoring and expedite record-keeping procedures
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirement for the Award of Degree of Master in Business Administration (Finance Option) of Kenyatta University. June, 2025
Supervisor
Daniel Makori