Impact of Internal Control Systems on Financial Accountability in County Governments in Kenya-A Case of Marsabit County

Abstract

The county governments in Kenya are facing challenges in the implementation of financial accountability. The reports of the OAG and the CoB raised red flags on several financial year expenditures. The increase in financial misappropriation instances suggests that there is a significant demand for research to identify and prevent possible theft of public funds. The main aim of this research was to analyze the influence of internal control systems on financial accountability in Marsabit County. The following objectives were used to provide guidance; to determine the influence of control environment on financial accountability, to study the effect of control activities on financial accountability, to study the effect of monitoring on financial accountability, to establish the effect of ICT systems on financial accountability and to assess the impact of risk assessment on financial accountability. This research adopted Agency theory, attribution theory and accountability theory. A descriptive research design was used in this research. The 102 employees in the department of finance and economic planning in Marsabit County served as the research population. Sample size was 81 respondents arrived at using Slovin’s formula. This research relied on primary data collected through questionnaires. Google forms were made use of in the questionnaire administration. The collected data was converted into quantitative format to make analysis using statistical package for social sciences. The statistics generated were descriptive statistics which included mean and standard deviation and inferential statistics which included both correlation analysis and multiple linear regression. The study revealed a significant positive relationship between control environment, control activities, monitoring, ICT systems, risk assessment and financial accountability in Marsabit County. Regression analysis revealed that 66.2% of changes in financial accountability were attributed to the five variables selected in this study. In conclusion, control environment, control activities, monitoring, ICT systems and risk assessment are essential in enhancing financial accountability. Based on the findings, monitoring had the greatest influence on financial accountability followed by control activities while control environment had the least influence. As a result, it is recommended that Counties should focus on internal control systems, as this improves financial accountability.