INTERNAL CONTROLS AND FINANCIAL ACCOUNTABILITY OF NATIONAL GOVERNMENT CONSTITUENCIES DEVELOPMENT FUND IN KENYA

Abstract

The aim of the study was to examine the effect of internal controls on the financial accountability of the National Government Constituencies Development Fund in Kenya. The specific objectives were: to establish the effect of control activities, risk assessment, communication, monitoring and control environment on the financial accountability of NG-CDF in Kenya. The study was structured on: agency, fraud triangle and accountability theories. Positivism research philosophy guided the study. A correlation research design was adopted. The target population of the study was 1160 respondents, while the sample population was 288 respondents. Primary data was obtained by use of a questionnaire, while secondary data was obtained from the auditor’s general reports and financial statements of the NG-CDFs. A pilot test was carried out using 29 respondents. It was established that there exists a strong and positive association exists between internal controls and financial accountability for all the variables, as confirmed by; r = 0.718 for control activities, r = 0.707 for risk assessment, r = 0.759 for monitoring, r = 0.703 for communication and r = 0.686 for control environment and financial accountability. The R-square value was 0.762. The results of the ANOVA showed an F statistic of 15.513, and a p-value of 0.008. All the constructs of internal controls were established to have a significant effect on unsupported expenditure, which was confirmed by β = 2.157, p-value 0.005, β = 0.998, p-value 0.014, β = 1.282, p-value of 0.004. β = 0.371, p-value of 0. 047 and β = 1.13 6, p-value 0.009 for control activities, risk assessment, monitoring communication and control environment respectively. It was recommended that the NG-CDF management committee should strengthen the separation of duties and ensure that the stipulated guidelines for approval are followed at all times. Close scrutiny of all risk-prone activities should be analyzed. External auditors must give unbiased reports. NG-CDF committee members should be honest and have no conflict of interest.