Effect of Internal Control Systems on Financial Accountability in Public Technical Institutions in Eastern Region Kenya

Abstract

The main aim of this research was to scrutinize the effect of internal control systems on financial accountability within the Technical and Vocational Education and Training institutions located in Kenya's Eastern region. The Kenyan government had implemented internal control mechanisms to ascertain the judicious use of funds allocated for education. Nevertheless, a gap in accountability persisted in certain public TVET institutions. The objectives that guided this study included; assessing the influence of institutional governance structure, accounting information systems, legal framework, and monitoring on financial accountability in TVET institutions in the same region. The theoretical framework underpinning this study included agency theory, fraud triangle theory, and accountability theory. The target population was 69 participants, encompassing 23 principals, 23 Board of Governors (BOG) chairs, and 23 finance officers from 23 TVET institutions within the Eastern Region. Census method was adopted and a mixed-method approach using a descriptive design was employed in this research. Questionnaires were used to collect primary data, while scrutinizing audited financial statements to amass secondary data. The data was processed through a blend of descriptive and inferential statistical methods. It was established that legal framework had the strongest influence on performance whereas institutional governance structure had the least influence on financial performance. The conclusion on institutional governance structure was that the various financial decisions made by the BOG were closely influenced by personal interests of the BOG members. On accounting information system, the implementation of AIS had enabled most TVETs to report their financial standings on time due to efficient processing of information when inputted accurately. On legal framework, the management had still not given full authority to legal counsel to fully implement legal measures in bid to curbing identified careless spending and misappropriation of funds. On monitoring, the extent to which the BOG did their oversight role was limited by failure to consistently follow through to monitor budgets implementation process. The study recommends that the BOG appointing body should conduct thorough background checks to facilitate appointment of BOG members who have no conflicting interests with the operations of the TVET. On AIS, the TVET management should provide more funding to strengthen the current accounting information systems from cyber-attack. Further, the BOG members should appoint a team of members whose role will include consistent monitoring and evaluation budgets