Internal Control Systems on Financial Accountability in National Public Secondary Schools in Kenya

Abstract

The purpose of this study was to evaluate the effect of internal control systems on financial accountability in national public secondary school in Kenya. The government of Kenya has put in place internal control systems to ensure that the funds invested in education are used for the right purpose. However, accountability is still wanting in some public secondary schools. The study was carried out in 103 national public secondary schools in Kenya. The study was guided by; Agency theory, Fraud triangle theory and accountability theory. Survey research design was used on a population of 309 consisting of; 103 principals, 103 bursars, 103 BOM chairs. Purposive and simple random sampling were used to select principals, bursars and BOM chair. Primary data was collected by use of questionnaires, while secondary data was collected through audited financial statements. Reliability of the research instruments was tested through Cronbach’s Alpha. Construct validity was assessed through factor analysis. Both descriptive and inferential statistics were used to analyze the data collected. Descriptive statistics comprised of frequencies; means, standard deviation and variance. Inferential statistics comprised of; Correlation analysis, ANOVA, regression analysis, testing for normality, autocorrelation and multicollinearity. Effect of control environment on financial accountability indicated an R-square of 0.344 and F-statistic of 33.14 which has a p-value of 0.000. The effect of control activities on financial accountability indicated an R-square and F-statistic of 29.05 which has a p-value of 0.000.The effect of risk assessment on financial accountability showed an R-square of 0.121 and F-statistic of 9.11 which has a p-value of 0.000. The effect of information and communication on financial accountability show an R-square of 0.239 and F-statistic of 20.72 which has a p-value of 0.000. The effect of monitoring on financial accountability showed an R-square of 0.276 and F-statistic of 25.16 which has a p-value of 0.000. The dimensions of internal control systems were found to have a significant joint effect on financial accountability. The results for the regression model show an R-square of 0.634, the Analysis of Variance (ANOVA) had an F-statistic of 21.56 with a p-value of 0.000. JB statistic which has a p-value of 0.813 that is greater than 0.05. The BP chi-square statistic for also had a p-value of 0.133. It was therefore recommended that the government should ensure that BOM have accounting knowledge and should be appointed based on integrity and ethical values. Segregation of duties should be strengthened with clear roles of the principal, bursar, other BOM members, storekeeper and other employees. The government should interlink the schools bank accounts to a central accounting information system. The government should ensure through independent checks that the budgets and other financial statements are complete, reliable and correct. There should be frequent external audits by county auditors. The Principal and bursar should be allowed to evaluate the work done by the auditors and post to the central website.