Internal Control Practices on Financial Performance of Private Hospitals in Western Region, Kenya

Abstract

Private hospitals plays a key role in any economy for both developed and developing countries in terms of economic growth as well as creation of employment opportunities. However, despite the vital role, Private hospitals are still faced with a number of challenges that deprives them from effective and optimal competition in the current market dynamics. And as such, an effective internal control practice that has the potential to reduce theft, fraud and fraudulent activities is an essential enabler towards the achievements of organizational objectives as well as goals. This study examines the internal control practices on financial performance of private hospitals in western region,Kenya. A descriptive research design was used for the study. A population of 19 registered private hospitals was randomly selected with a sample size of 3 people per organization giving a total of 57 self-administered questionnaires which were distributed to respondent and collected after filling for analysis. The research results established that through Segregation of duties, Authorization of work activities, and internal audit of books, financial performance of the organization increased for the year 2020 as compared to year 2019 and hence a positive correlations in respect to financial perspective of private hospitals in western Kenya region. The results further revealed that Documentation of transactions and Standard operating policy has significant negative correlations on financial performance of private hospitals in western region,Kenya. The study therefore concluded that there exist an inverse relationship between documentation of transaction and standard operation policy on financial performances of private hospitals in western region Kenya. The studies also further concluded that there exist a direct relationship between Segregation of duties, Authorization of work activities and internal audits of books on financial performance of private hospitals in western region Kenya. The study recommend that private hospitals should implement an effective internal policies on Documentation of transactions and standard operating policy to facilitate efficient flow of work schedules as well as minimizing fraud and loss of resources and this should be geared towards achievement of Mission, Vision and goals .They should also ensure proper strategic plans targeted towards success through provision of services that are beyond customers expectations. They should also ensure that regular monitoring and evaluations of the control practices are carried out for consistency and effective operation.