Abstract: In the recent past, Kenya has experienced challenges in efficient utilisation and management of public funds in State Corporations. In the after math of scandals in state corporations and global financial crisis, significant attention from regulators and the public has been received concerning corporate governance. The focus on increasing disclosure requirements by regulators has in turn driven increased awareness and demand for internal assurance on processes including internal control system. Internal controls play an important role in every organisation since it assist in realization of effective utilisation of financial resources. The main objective of the study was to establish the effect of internal controls on utilisation of financial resources by state corporations that have operations in Nakuru County, Kenya. Specifically the study was guided by the following objectives; to determine the relationship between internal controls environment, internal audit function, internal control activities, corporate governance and utilisation of financial resources. The study adopted descriptive research design using both qualitative and quantitative approach. The target population was 52 head of internal audit and chief accountant of the 26 state corporations in Nakuru County. The study relied on primary data. Primary data was collected using structured questionnaires. Data collected was processed with the aid of SPSS software. Both inferential and descriptive statistics were used to analyse data and to test whether control environment, internal audit function, control activity and corporate governance have any influence on utilisation of financial resources. The findings revealed that most State Corporations in Nakuru had internal controls that greatly impacts on the utilisation of financial resources. It was found that internal controls had a significant relationship with utilisation of financial resources. Based on research findings, it can be concluded that internal control system is a positive significant predictor of utilisation of financial resources. The findings of the study suggested that internal control systems especially internal audit function, internal control environment, internal control activity and corporate governance are significant areas that management of State Corporations should give great attention to in order to improve utilisation of financial resources. The study further recommends that management of State Corporations should exert collective efforts in identifying the ideal mix of effective and efficient internal control systems that matches their operation needs and invest in them and also a governing body should ensure that the internal control system is periodically monitored and evaluated.
Keywords: Internal Controls, Internal Audit Function, Control Activities, Control Environment, Control Activities, Corporate Governance, Utilisation of Financial Resources and State Corporations.
Title: INTERNAL CONTROLS AND UTILISATION OF FINANCIAL RESOURCES BY STATE CORPORATIONS IN NAKURU COUNTY, KENYA
Author: Ann Warimu Mbugua, Joseph M. Theuri
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
Research Publish Journals
