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

Abstract

The objective of National Government Constituencies Development Fund is to promote human and infrastructural development at the community and constituency levels. The fund is expected to be operated with the highest level of transparency, probity, propriety and accountability. Despite the elaborate measures put in place by the government to ensure transparency, financial accountability in many constituencies is still in still in doubt. The aim of the study was to examine the effect of internacial accountability of 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 financial accountability of NG-CDF in Kenya.The nullhypothesis was adopted for all objectives that were all rejected based on results. The study was structured on; agency, fraud triangle and accountability theories. Positivism research philosophy guided the study. Correlation research design was adopted. The target population of the study was 1160 respondents while the sample population was 288 respondents consisting of; 72 committee members, 72 Sub County Accountants, 72 Fund Account Managers and 72 internal auditors. Primary data was obtained by use of questionnaire while secondary data was obtained from Auditor General’s reports and financial statements of the NG-CDF’s. Pilot test was carried out using 29 respondents. Cronbach Alpha was used to test internal consistency of the questionnaire. All the constructs had indicators of above 0.7 confirming reliability. KMO and Bartlett’s tests were carried to test validity. All constructs loaded values of above 0.4 thus confirming validity. Descriptive statistics included mean, standard deviation and variance. Inferential statistics consisted of correlation analysis and multiple linear regression analysis. Data was presented using tables, charts, and graphs. 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 on the ANOVA showed F statistic of 15.513, P-value 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 0.009for control activities, risk assessment, monitoring communication and control environment respectively. It was recommended that the NG-CDF management committee should strengthen 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. The government will find the findings of this study crucial in creating policies that will improve financial management in public institutions like county governments, public secondary schools, and other parastatals in addition to NG-CDF.