The impact of internal control systems on the financial performance of private hospitals in Nairobi

Abstract

Internal control systems is a topical issue following global fraudulent financial reporting and accounting scandals in both developed and developing countries. This requires a critical evaluation of internal control systems and their impact on financial performance. The prior studies evaluated tend to focus on aspects of controls that relates to performance reporting, organization structure, behavior and external auditors’ work with no focus on financial performance. It is on this basis therefore that this study sought to examine the impact of internal control systems on the financial performance of private hospitals in Kenya. The objective of this study was to examine the impact of internal control systems on the financial performance of private hospitals in Kenya. The study was carried out using survey design. The target population of the study was all the private hospitals accredited by National Hospital Insurance Fund (NHIF) operating within the County of Nairobi. The sample size was based on number of beds. Based on the researcher’s judgment, a private hospital was included in the sample if it had a patient capacity of 20 beds and above. Regression analysis was used to find the relationship between monitoring, control activities, risk assessment, information and communication, control environment and financial performance of private hospitals in Kenya