The Efects of Internal Controls on the Financial Performance of Parastatals in Kenya

Abstract

The purpose of the study was to look into the impact of internal control systems on the financial performance of Kenyan state enterprises that fall under the authority of the national treasury. Internal control systems were the study's independent variable, while financial success was the dependent variable. It used a descriptive research method. All five of Kenya's state-owned sugar firms were represented in the population. The study used primary data obtained using a standardized questionnaire, which was processed on SPSS version 22 using descriptive and inferential statistics. Senior management workers in several departments of the organization, such as accounting, human resource, procurement, and security, were the target responses. The information was gathered and analyzed from 112 respondents from the target population. 101 respondents (90%) completed the questionnaire correctly, whereas 11 respondents (10%) did not complete the form correctly. The R-square value for the model summary was 0.520, indicating that the predictor variables used for this study explain 52 percent of variations in the dependent variable. Internal control systems have a positive substantial effect on the financial performance of state-owned enterprises in Kenya, according to the study. The study stated that, in order to manage its risks, the company has to ensure that risks are assessed in relation to changes in the operating environment, based on the risk assessment. Furthermore, the study found that the organization has established a positive working connection among employees, that they are dedicated to their duties, that all employees have work schedules and thus no employment conflicts, and that there is a mechanism in place to check regular attendance of employees. According to the report, management should constantly put in place procedures that allow it to recognize risks that could jeopardize the company's financial goals.