Effects of Financial Controls On Financi

INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 www.ijarke.
com
IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article12
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH

(IJARKE Business & Management Journal)
Effects of Financial Controls on Financial Performance of Devolved

Governments in Kenya: A Case of Mombasa County Government
Babu Ali Said, Jomo Kenyatta University of Agriculture & Technology, Kenya
Dr. Gladys Wamiori, Jomo Kenyatta University of Agriculture & Technology, Kenya
Abstract
Financial controls are critical in an organization in eradicating opportunities for fraud, safeguarding the resources of the
organization, and ensuring the truthfulness of financial reports. The study sought to determine the effects of financial controls
on the financial performance of devolved governments in Kenya, with a focus on Mombasa County Government (CGM). To
strengthen the conceptual framework, the researcher used theories such as the lending credibility theory, systems theory, new
public management theory and the agency theory. This research adopted a descriptive research design. The study population
was 64 employees in the county revenue offices, internal audit offices, county procurement offices and the county finance and
accounts offices in Mombasa County Government (CGM). The study was a census of all the 64 employees. A questionnaire
was used in the study as the data collection tool. Data collection used the drop-and-pick-later procedure of questionnaire
administration. A pilot test was conducted, and the questionnaire was tested for validity and reliability. Statistical Package for
Social Sciences (SPSS) software was utilized for data analysis where inferential (regression) and descriptive statistics (means,
standard deviations and percentages) were generated to assist in testing the study hypotheses. Study findings indicated that
audit (β = 0.456; p = 0.000), periodic reconciliations (β = 0.663; p = 0.000) and payables control (β = 0.417; p = 0.014) had a
positive and statistically significant influence on financial performance of CGM. However, monitoring did not have a
significant effect on financial performance of county governments in Kenya (β = 0.092; p = 0.556). Based on the study
conclusions, the study recommends that audit should not only track expenditure and budgets but should also be a value adding
activity which establishes whether expenditures provide value for money. Further, though CGM observed best practices in
periodic reconciliations, it should ensure that the reconciliation processes are performed immediately after the end of any
accounting cycle. Additionally, payables to suppliers should be fast-tracked so as the CGM have a good relationship with
suppliers and contactors. Lastly, CGM should ensure that monitoring process is continuous so that existing deficiencies are
identified on time and corrective action taken.
Key words: Financial Controls, Audit Control, Monitoring, Financial Performance, County Governments
1. Introduction
Financial controls play a vital duty in ensuring the correctness of financial reporting, getting rid of fraudulence and
safeguarding the company's resources, both tangible as well as abstract. According to Badara and Saidin (2016), internal controls
denote the procedures set up by an entity to safeguard the achievement of the firm‟s mission, vision, purpose and objectives.
Additionally, Zhou (2012) postulates that financial controls are systems of remedies, procedures and policies that secure the
properties of an organization, produce trustworthy monetary reporting, promote conformity with procedures, guidelines and
legislations to enable efficient attainment of its objectives. Litvack (2016) notes that these systems are not only pertaining to
financial reporting and financial management but they also connect to the coordination of the company‟s procedures, both internal
and external and consist of dealings for: - preparing timely and ideal financial reporting to senior company officials and board
members, managing funds received and expended by the organization, keeping inventory accounts of the location and existence of
residential and real properties and conducting the annual audit of the organization's monetary statements.
Economic policy and control are specified as the procedures created to make certain that all financial transactions are recorded
and shield the organization possessions to detect and stop fraud or mistakes (Bahl & Bird, 2014). The aim of financial controls
and guidelines is to offer a complete directing framework for effective and sound administration of all organizational resources.
An institution's system of monetary control has a vital duty in the preventing fraud or hazards that can challenge the organization
in its focus towards satisfaction of its functional objectives. Various monetary controls and laws contribute in securing the
institution's properties and stakeholders' financial investments.
In both the developing and the advanced nations, public financial management experts functioning within the public sphere are
interested in boosting monetary budgeting and administration, ensuring effective fiscal regulations, safeguarding effective laws,
enhancing organizations and improving administration and management and auditing to curb corruption and fraudulent activities
114 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 www.ijarke.com
(Fosu & Ashiagbotr, 2013). Financial monitoring considers all those activities which entail sourcing for finance and appropriating
it efficiently and effectively. Financial administration includes effective planning and efficient application of firm resources.
Correct economic administration can make sure that economic concerns are developed in accordance with organizational purpose,
aims and objectives, investing is planned for and executed according to well established priorities and enough funding is available
when it is needed both for the current period and the future. Abubakar, Dibal, Amade and Pwagusadi (2017) observe that it is
generally acknowledged that a lot of developing nations possess ineffective governmental economic control systems. The serious
financial control systems‟ weaknesses in the majority of developing nations are typically acknowledged as the significant variable
which leads to corruption and misappropriation of public funds in these nations.
In Zambia, there has been no notable economic progress in public financial management over the past twenty years.
Historically, public organizations have continually worked under capacity restraints worsened by inadequate control systems and
procedures. Furthermore, non-conformity with financial controls has brought about serious inadequacy in government capacity to
manage public funds and uncontrolled and unplanned government spending. Whereas the Zambian government needs to enhance
its financial controls, financial reporting and monetary systems, the difficulties for Zimbabwe is grappling with an acute shortage
of qualified specialists in financial management in the public sector. Likewise, Botswana has similar issues to those in Zimbabwe.
Although a reasonably abundant nation, the public sector in Botswana was affected by the corporate sector poaching some of its
key public finance management experts (Enofe, Mgbame, Osa-Erhabor & Ehiorobo, 2013).
In East Africa, Karanja and Ng'ang'a (2014) observe that Kenya is taken into consideration to have the biggest, most varied
and ingenious economic climate. The nation has the possibility of making progress towards poverty reduction as well as boosting
employment opportunities not just in the county but for the entire East African region. According to the Country Plan and
Institutional Analysis (CPIA) Records of 2006 to 2012, Kenya has made key strides in the overall enhancement of the economic
climate by enabling efficiency in management of public funds above what is experienced in other Sub-Saharan Africa (SSA)
countries. However, corruption remains one of the most regrettable constraints in the country, challenging its progress towards
economic growth and prosperity. Generally, corruption in Kenya is experienced in two forms; grand corruption and petty
corruption. Petty corruption is small favours and the low-level corruption involving small amounts of cash mostly undertaken by
low-level employees. Grand corruption on the other hand, is corruption affecting the government on a large scale. This entails
inflating purchase prices in government procurement, non-equitable employment, offering tenders and payment to fictitious
companies, receiving kickbacks and misappropriating government finances.
Kenya is in critical stage of transition from the centralized form of government to the decentralized form of government
introduced in the Constitution of Kenya 2010 (Kamau, 2014). The formation of the 47 county governments also brought with it
various public financial management institutions to oversee financial management at the county level. These include the Senate,
Commission on Revenue Allocation (CRA), Controller of Budget (CoB) and office of the Auditor General which have distinct
responsibilities in ensuring that county governments adhere to effective public financial management practices. Furthermore, the
PFM Act 2012 sets up regulations aimed at promoting accountability and transparency in the management of public funds at the
county and national governments.
Ola and Tonwe (2013) note that though various public organizations have internalized disclosure of accounting information, it
is evident that the financial control mechanisms in place in an organization largely influence the quality of financial reporting.
There is a basic assumption that enforcement and establishment of effective financial controls systems will always lead to
enhanced management of public resources and economic advancement. Moreover, Bahl and Bird (2014) indicate that effectively
setting up financial control systems can generate trusted reports and boost the reporting procedures, leading to improvement in the
responsibility function of administration of an entity. According to Ahmad (2013), ideal efficiency steps are those which allow
organizations to route their activities in the direction of achieving their strategic purposes.
1.1 County Governments in Kenya
County Governments are geographical systems created by the 2010 constitution of Kenya as the systems of decentralized
government. Their powers are supplied in Constitution of Kenya‟s Articles 191, 192 and the Fourth Schedule and in County
Governments Act of 2012. These governments are responsible for: executive functions, regional regulations, functions agreed
upon with other regions and activities transferred from the national government such as health and agriculture, and staffing and
establishment of a civil service. In Kenya, counties after decentralizing the government from the centralized form of government.
This was meant to eliminate centralization of power and resources and re-distribute the power in strategizing, formulating and
passing budgets, making governing policies and to forty-seven county governments and executives. Devolution focuses on
providing efficient services to the people by supplying services and goods that may not be provided by the private sector, at a cost
that makes them easily accessible to all the people in the county. This is essentially a 'public excellence' concept which considers
public goods as those which have the qualities of non-competitiveness and non-excludability. The prices of these public goods or
social necessities, like health and wellness, education and learning and also mode of public transport, are not always determined
by market forces.
Financial monitoring and performance according to Robbins, Turley and McNena (2016) involve the implementation of
various systems, strategies and techniques to aid an organization plan and apply its strategies to support the achievement of its
business goals. To achieve effective financial management and performance, the organization needs to focus on various
capabilities and disciplines, consisting of forecasting, planning, resource and funding management, expenditure and income
management, focusing on efficiency in goal attainment, and improving asset utilization and operational management (Jordan &
Messner, 2016). Financial monitoring and organizational efficiency cover the administration of a company's funds and includes
activities such as operational and capital resource administration, budgeting, projecting and ensuring allocation of resources to the
most profitable investments and projects. Effective allocation of resources is made possible by use of appropriate investment
appraisal methods (IFAC, 2018).
According to a study conducted in 2014 on the performance of county governments in Kenya by Transparency International,
41 percent of the study participants from all the 47 counties were disappointed with how their counties managed public resources
and overall county performance. Bulk of the populace measured performance of their county governments based upon; efficiency
in use of county resources on development activities such as education, agriculture, health and promotion of trade and industry as
well as enhancing civic awareness (SID, 2017). The survey also focused on how well the participants were satisfied with the
solutions provided by their county governments. More importantly, this included concerns regarding service delivery by the
counties. The third perspective consisted of economic policies by the county governments for the benefits of residents, timely
reporting, the public relations and communications with key stakeholders and risk management by the county departments. Fourth
viewpoint was the capacity of the County governments to create employments opportunities for the unemployed in the counties,
support provided to micro, small and medium enterprises, agricultural produce marketing and tourism promotion. Lastly,
transparency and also straight responsibility of leaders was one more element of efficiency evaluated according to the
Transparency International Report (SID, 2017).
1.2 Financial controls and County Performance
Financial controls describe ways through which a company's resources are determined, utilized and monitored. It plays a vital
function in finding and avoiding fraud and securing the company's resources, both physical (for instance machinery) and abstract
(for instance trademarks). The purpose of financial controls is to decrease process variation and provide more predictable
outcomes. Zhou (2012) indicates that financial controls is a process instituted by the board of directors of entity, administration
and other personnel given the mandate to offer practical guarantee towards achievement of the organizational objectives. They
assist the people in the organization to comply with applicable regulations and laws, be efficient in performance and operations
and observe integrity of financial management.
The purpose of financial controls in the organization is to introduce methodical controls in the management procedure to guide
and control the activities of a company or any of its components, using management activities, choices and judgments to achieve
the organization objectives. In a company, control consists of verifying whether everything occurs in conformity with the
directions provided, the established concepts and adopted plans. Controls can be either operational or strategic. Gramage, Lock
and Fernando (2014) postulate that the objective of financial controls is to enhance the total performance of the company or a
considerable component of it. Operational controls are those processes within sub-units of a company and generally cover a much
shorter time period than strategic controls. The purpose of such controls is to check whether the organization's operations and
strategies are being implemented and understood effectively. When deviations or shortfalls from expected efficiency levels are
experienced, the organization should take corrective action immediately (Lugwe, 2016). Control can happen before, during or
after an event, (the earlier the better), yet several controls can just reasonably be presented after business transaction have taken
place after the organization management assess the impact of such transactions on organizational actions.
2. Statement of the Problem
Financial controls are essential systems for administration of the firm to influences the dependability of both external and
internal financial reporting and manage effectiveness of resource use in the organization. However, financial controls only offer
reasonable but not absolute guarantee to an entity's board of directors and management that the company's objectives will
certainly be attained. According to Abubakar et al. (2017), the probability of achievement is influenced by constraints integral in
all systems of financial control. Organizations develop systems of financial controls to assist them to prevent wastage of
resources, enable effective financial reporting, ascertain compliance with legislations and guidelines and enhance financial
performance (Gramage et al., 2014). With effective financial controls in financial management of the county governments, there
is an expectation that there will be enhanced service delivery, growth and success.
Nevertheless, research studies on financial control systems that have been carried out in Kenya clearly indicate that financial
controls in organizations and their effect on financial performance of the organizations is an understudied area. Kamau (2014)
studied the impact of internal controls on the financial performance of manufacturing companies in Kenya where they established
a positive effect. A study by Cheruiyot, Oketch, Namusonge and Sakwa (2017) revealed that a few of the difficulties experienced
when it comes to financial controls at the county level include, fraud, having financial reports produced after the deadline date,
liquidity problems, lack of accountability for the financial resources and misappropriation of county resources. Moreover, the
study established that the steps undertaken to deal with the challenges have not produced any positive result. A research study
accomplished in Nigeria in Benue State by Badara and Saidin (2016) investigated the effectiveness of financial controls in federal
government ministries. The study findings revealed that the ministry of finance in Benue State monitors expenses effectively,
avoids misappropriation of public funds and prepares yearly budget plan promptly.
A study by Wakiriba, Ngahu and Wagoki (2014) interrogated the effects of financial controls on financial monitoring in the
public sector in Kenya. The research conducted in Mirangine Sub-County of Nyandarua County focused on the agencies of the
national government. The research study established that the public agencies in Mirangine Sub County had an efficient financial
control system defined by continuous monitoring, clear separation of duties and effective supervision. Nevertheless, there were
weaknesses in the execution of financial controls considering that internal audit function was not well executed in all the
divisions. Additionally, the study established a positive and significant association between financial effectiveness and control
activities (Wakiriba et al., 2014).
Kamau (2014) conducted a research study on the influence of financial control techniques on efficiency of manufacturing
companies in Kenya. The study established that organizations deal with quite a variety of difficulties on their internal controls.
These consist of lack of timeliness in release of financial reports, poor accessibility of financial reports and limited resources. Ejoh
and Ejom (2014) studied the influence of financial control on performance of tertiary establishments in Nigeria and established
that there are still accountability challenges in funds utilization. This is because misuse of institutional resources and fraud are still
rampant. Likewise, a study conducted by Wang'ombe and Kibati (2016) on the analysis of financial control practices in the
Nakuru County Government clearly show variability in the existing financial control practices thereby presenting consistency
challenges.
Nevertheless, despite intricate system of controls in companies, effectiveness in financial management has been evasive in
most of these companies. Consequently, all facets of financial monitoring in government agencies should operate in an
atmosphere where there is self-confidence in the veracity of the monetary information being utilized. SID (2017) suggests that
government agencies need robust systems of financial policies and regulations supported by effective assurance and audit
arrangements. However, the reviewed studies have not concentrated on the influence of financial controls on financial
performance of county governments in Kenya. Furthermore, the results from previous studies were general and focused on a
variety of firms and contexts and hence fail to inform how financial controls can affect financial performance of county
governments in Kenya (for example Wang'ombe & Kibati, 2016). Additionally, most of the reviewed studies focus on various
industries such as financial services, manufacturing and commercial services (Kamau, 2014). This study sought to fill this gap in
knowledge by examining the effect of financial controls on financial performance of Kenya‟s county governments.
3. Objective of the study
The general objective was to determine the effects of financial controls on financial performance of devolved governments in
Kenya, with specific interest on Mombasa County Government.
4. Literature Review
4.1 Theoretical Review
4.1.1 Lending Credibility Theory
Limperg (1932) developed the lending credibility theory and recommends that the key importance of audit is to add
trustworthiness to the financial statements and financial management procedure with an aim of enhancing the efficiency of the
organisation. Therefore, reputation is the key selling point of the auditor to the client. When financial statements are audited, they
raise the confidence of the organization‟s monetary transactions, declarations and figures provided by the management. This
theory will be used in this study to inform the study on how the management of the audit function can influence efficiency of the
audit and hence affect performance of the devolved governments.
How an audit is carried out in the devolved government is critical as it can enhance or diminish performance in the devolved
government. The lending credibility theory suggests that the primary feature of the audit is to add credibility to the financial
declarations which indicate the organizations past performance (Wang‟ombe & Kibati, 2016). Consequently, the service that the
auditors are offering to the stakeholders is integrity. Audited financial reports provide users with confidence that the assertion in
the statements is a true reflection of the transactions that have taken place. The users are expected to use this confidence to make
informed investment decisions in regard to the organization. Moreover, since financial reports provide a true reflection of
organizations transactions, management are forced to manage the organisation for the benefit of stakeholders (Mecha, 2015). This
theory was applied in this study to inform how the effectiveness of the audit can enable the devolved government to enhance its
performance while poor audit can lead to poor performance in the devolved government.
4.1.2 Systems Theory
Easton (1965) devised the systems theory. The theory generally posits that any organization is a system that has a set of
patterned relationships entailing frequent communications, and a considerable level of interdependence amongst participants of
the system. Systems theory is grounded on the idea that intents or foundations within a group are related to one another and
subsequently connect with each other on the basis of specific recognizable procedures. This theory will be used in this research
study to show how the integration and coordination of financial systems and financial controls in county governments can enhance
functionality within the governments to guarantee that public financial resources are efficiently used to deliver service to citizens.
According to Okwiri (2012), public financial management consist of vital sub-components recognized as planning and
budgeting, revenue collection, administration, accounting and auditing. Additionally, Anderson and Isaksen (2013) state that the
sub-components exist as a system of relevant components where the effectiveness of one sub-component is conditioned and
dependent on the state of the various other parts. Therefore, for development objectives to be achieved, all the sub-parts must
work together as a system. Having integrated information systems and financial controls can make it possible for the government
to implement its service delivery and development goals. This theory was applied in this research to explain how periodic
reconciliations in the county government can enhance efficiency of financial management and hence enhance performance of the
devolved government.
4.1.3 New Public Management Theory
The new public management (NPM) theory was developed by (Kaboolian, 1998) and focuses specifically on issues of making
governments reliable. Litvack (2016) posits that the theory advises modifications to make governments more receptive and
reliable by establishing effective service delivery models and employing private sector strategies. Furthermore, Khan and
Chowdhury (2012) indicate that the NPM concept asserts the supremacy of private managerial strategies over those of public
management and has the presumption that fostering of private sector techniques would precipitate reforms in the performance and
effectiveness of public management functions and public service delivery. Effectively, NPM concept depends heavily on the
developments in the business perspective and the private sector (Holden, Otsuka & Place, 2012).
The presumptions of NPM concept is the provision of public services can be influenced by adopting effective governing
techniques. NPM viewpoints emphasize conformity with transparency, responsiveness, principles, equality, inclusion,
participation, fairness, duty and prudence towards management of public resources and providing for the needs of the citizens.
Public financial management is the control of public funds for effective public service delivery. Gramage, Lock and Fernando
(2014) indicate that it involves internal controls, collection of revenue, budgeting and planning, financial reporting, policy,
internal audit, and external audit, among others with a view towards promoting effective service delivery to the citizens.
According to Chado (2015), the regulations and policies provide for reliable organizing, directing and also handling of
economic activities in the public sector. There is, as a result, a demand for efficient institutional layouts and administration, both
of which are focused on making the government as effective as the private sector. This is expected to reduce corruption and
invigorate performance. Other presumptions consist of a responsive civil service, value for tax payers' money and citizen-centred
solutions. Andersen and Isaksen (2013) explain a few other elements of NPM which have strong importance to public economic
monitoring. The theory of NPM was used in this research to link best methods in payable control into financial systems and
devolved government performance.
4.1.4 Agency Theory
The proponents of this theory were Jensen and Meckling (1976) who posited that agency costs occurs where there is a
separation of management and control. The applicability of this theory in this study stems from how monitoring in the devolved
governments ensures prudent management of the devolved units and hence ensuring that they perform their duties and
responsibilities effectively. The theory informs that the monitoring processes put in place can affect the capacity of the county
management and governments to effectively play their role in delivering services to the people. Effective monitoring is expected
to enable the devolved government to lessen the agency conflict between the public and public officials and hence enhancing
performance of the devolved government.
The Agency theory suggests that monitoring is performed for both the third parties as well as the management (Ahmad, 2013).
A firm is viewed as a web of agreements. Numerous teams (vendors, bankers, clients, employees as well as others) make some
kind of payment to the business for a provided rate. The job of the administration is to work with these teams as well as contracts
and try to maximize them: low price for purchased supplies, high cost for offered products, low rate of interest for financings, high
share rates as well as low earnings for workers. In these relationships, monitoring is the representative, which tries to acquire
contributions from principals (employees, shareholders, banker and many others). In the devolved government, the county
government employees are the agents while citizens are the principal. Monitoring in the county government will ensure that the
employees of the devolved government will perform its activities in the best interest of the citizens and thereby enhancing
performance of the devolved government.
4.2 Conceptual Framework
The research was based upon the conceptual framework presented in Figure 1. The framework conceptualizes that the four
response variables (audit, periodic reconciliations, payable control and monitoring) can influence financial performance of
devolved governments.
Financial Audit Control

 Annual audits
 Reports publication
 Reports utilization
 Appraising efficiency
Periodic reconciliations Control

 IFMIS reconciliations Financial Performance
 Error investigations
 Regular reconciliations  Fees revenue
 Timeliness of reconciliations  Charges/Levies revenue
 Rent revenue
 Rates revenue
Payable control  Business permit revenue
 Authorization levels
 Vendor verification
 Invoice accuracy
 Separation of duties
Financial Monitoring Control

 Ongoing evaluations
 Deficiency identification
 Deficiencies‟ communication
 Evidence based improvements
Independent Variables Dependent Variable

Figure 1: Conceptual Framework
4.3 Discussion of Key Variables
4.3.1 Financial Audit Control
Internal audit is an independent, evaluation activity within an organisation for the review of accountancy, financial and other
operations and their importance in achievement of the objectives of the organisation (Zhang & Zhou, 2017). It is a managerial
control which operates by measuring and reviewing the effectiveness of various other controls. Efficiency of internal audit is
indicated by honesty, objectivity, expertise, confidentiality and independence of the auditors carrying out the audit function.
The inner auditors ought to establish whether the existing system of controls agrees with the structure of the organisation
(International Federation of Accountants, 2018). As far as possible the focus on keeping the controls within the operating
functions and enabling them to act as a cost-effective measure. Audit function also reviews every control as well as analyses them
in terms of expenses and advantages, review the reliability as well as stability of monetary and running details and the means
made use of to identify action, categorize, as well as report such information and also evaluate the systems developed to guarantee
compliance with those policies, strategies, procedures, regulations, and policies which could have a significant influence on
operations as well as reports. Audit additionally needs to figure out whether the organisation remains in conformity (Cheruiyot et
al., 2017).
Effective audit practice entails evaluation of the means of securing properties and, as suitable, verifies the presence of such
assets (Zhang & Zhou, 2017). The purpose of the management relating to financing is to make certain that financial properties are
sensibly and sufficiently protected against loss which they are properly managed and represented. Ahmad et al. (2017)
additionally suggests that the guard of economic possessions should not be limited to plain pilferage but physical risks like fire as
well as other risks. Cheruiyot et al. (2017) keeps in mind that audit should appraise the economy as well as efficiency with which
financial resources are employed and also evaluate procedures or programs to establish whether outcomes follow well-known
purposes as well as objectives as well as whether the operations or programs are being performed as intended.
4.3.2 Periodic Reconciliations Control
Making certain that reconciliations of the financial transactions are prepared promptly is an effective monetary control for
finding bookkeeping as well as financial errors. This enables determining fraudulent deals stemming from inside or outside the
government (Chado, 2015). Bank reconciliations need to be prepared monthly as well as any kind of differences between internet
bank equilibriums as well as basic journal cash accounts should be researched as well as described. A manager ought to assess the
regular monthly financial institution reconciliations as well as undertake any kind of correcting entrances needed. Bank-to-book
reconciliations help in the discovery of fraud and record-keeping mistakes. Supervisory review of financial reconciliations also
ensures the timeliness of financial settlements and the authorization of any kind of improvements needed.
Financial reconciliations ought to be performed by an employee or official that does not have custodianship or access to cash
money and who does not record money receipt, cash disbursement, or journal entry purchases (International Federation of
Accountants, 2018). Setting apart the inappropriate obligations of custodianship of cash money, record-keeping, consents, and
settlements protects against an employee or authorities from managing all stages of the audit function. When one person regulates
all phases of the audit function, the chance for mistakes as well as fraudulence to go unnoticed is high. An employee that manages
all stages of the accounting feature can potentially camouflage a theft of cash money or the issuance of a deceitful check by
changing accounting entrances or preparing fictitious bank reconciliations.
Throughout the bank settlement procedure, images of cheques (or terminated cheques) and bank statements must be assessed
for anything uncommon, such as questionable payees, big worth amounts and additional endorsements (Badara & Saidin, 2016).
All the images of the cheques must be retained in electronic style for audit objectives. Examining cheque photos and financial
institution statements can determine dubious or wrong deals. In addition, bank statements and the images of cheques should be
stored in a secure location. In today's digital environment, created cheques are much easier than ever to produce. Safeguarding the
bank account numbers will assist in decreasing the possibility of forged cheques taking place. Even more, all banking
correspondence that not called for to be kept need to be shredded to prevent replication of cheques and to limit accessibility to
savings account details.
4.3.3 Payable Control
A failure to embrace effective accounts payable procedures can hamper an organisation's ability to process invoices on a
prompt basis, benefit from readily available discounts and also set either much longer or shorter settlement terms with vendors,
depending on what is most beneficial. These effects can emerge when organizations rely also heavily on error-prone manual
procedures to accept appropriations, check supplier billings as well as problem repayments, stop working to provide purchase
orders for each new order, as well as do not validate if order shipments match contractual terms or cannot easily accessibility
vendor agreements. Various other threats consist of loss of access to early payment price cuts by over-extending settlement cycles
or simply approve discounts without computing the expense of capital outlay, forget to make use of optimum cost savings through
volume rebates or profession invest initiatives, inaccurately lots vendor and/or agreement information right into master
information files and absence of procedures and also systems to prevent late payments, under- or over-payments, replicate
payments or missed repayments.
Effective accounts payable internal controls are indicated by plan, partition of duties, paperwork, systematizing accounts
payable processing as well as coverage and also relocating in the direction of a paperless handling environment (Badara & Saidin,
2016). Other indications of reliable payable control include adopting more durable administration techniques, establishing supplier
websites, developing administration workflows and improving buying approval process. There ought to be plan across the
business through a shared service environment to make certain all staff members follow common practices and requirements and
measure their performance against established business metrics. This has the included advantage of allowing the organisation to
complete more tasks in a faster timeframe as well as with fewer sources, ultimately minimizing expenses as well as boosting
worth for cash.
Relocating towards a paperless handling setting is another payable control. Organizations that automate their accounts payable
systems by enabling electronic communication with suppliers acquire considerable capability benefits and also cost savings via
offered discount rates or rebates (International Federation of Accountants, 2018). With an e-Procurement system, for example, the
organisation can connect online with vendors as well as consumers to instantly create purchase orders (POs) for every brand-new
order, online validate and also approve billings, accept requisitions, track goods got and also pay billings on a prompt basis.
Depending upon the level of automation the organisation picks, it might also be able to scan invoices instantly, track delivery
invoices and also fix disagreements online instead of through hands-on follow up.
Another payable control is adopting a lot more durable governance methods, which can lower the risk of hands-on error and
also strengthen internal controls around accounts payable processing, and agreement review (Mecha, 2015). Even more, the
organisation can set up vendor websites so that distributors can electronically track the status of orders, delivery timetables,
possible item shortages as well as settlements received. Along with lowering time spent on these processes, these systems
additionally minimized hand-operated mistakes, enhancing order accuracy.
Creating monitoring process to enhance the efficiency of the accounts payable procedure is one more payable control ideal
practice (Abubakar et al., 2017). Administration process can assist the company to recognize as well as solve system traffic jams
as well as streamline procedure handoffs to boost liquidity monitoring in the most effective way possible. Better, Kamau (2014)
presumes that strengthening purchasing authorization processes by specifying the degree of administration authority required to
make various-sized acquisitions is key in ensuring that high value payables are handled by people higher up in the organization.
4.3.4 Financial Monitoring Control
Identifying threats and also applying control procedures will certainly not shield properties nor create dependable information
for monitoring purposes if staff members are not following recognized procedures. To ensure that controls work, department
heads and supervisors must on a regular basis review readily available documents as well as audit documents to confirm that
controls are being executed as created. It is additionally vital to think about the responses obtained from workers. Some control
procedures may seem a good option to a determined risk but, as soon as implemented, might cause unexpected troubles or
inadequacies. Other economic tasks might not appear to require controls, yet upon additional evaluation, some kind of control
might be required.
The organization must continually monitor its financial control systems to assess their efficiency and fitness for purpose over
time (International Federation of Accountants, 2018). This is completed via regular activities, separate analyses or a mix of both.
Ongoing tracking includes routine administration and also managerial activities, as well as various other activities employees take
in performing their responsibilities. In separate examinations, the extent as well as regularity of this relies on an evaluation of
threats and the efficiency of continuous monitoring treatments. Wakiriba et al. (2014) suggest that it is crucial that administration
display monetary control-related plans as well as treatments on a continuous basis to guarantee that they are continuing to operate
effectively, as made. Furthermore, monitoring must keep track of potential troubles disclosed by interior controls to make certain
that such situations are fixed or otherwise fixed on a timely basis.
The normal ongoing monitoring of internal controls usually is supplemented by separate analysis of the performance of
control-related plans as well as procedures. Auditors, for example, usually target controls in particular locations for unique
attention as component of their yearly work strategy. Furthermore, some governments have actually passed "economic honesty
regulations" that requires management itself to undertake periodic testimonials of interior controls as well as to report on the
results of these self-assessments to the governing body (Mecha, 2015). The independent auditor additionally will research the
interior control structure and also test specific control-related policies and also procedures as component of the audit of the federal
government's economic declarations. Generally, the independent auditor's job will be focused on determining "material weak
points in the interior control framework that are so significant that they can cause serious financial risks to the government
(Litvack, 2016).
5. Research Methodology
The study adopted descriptive research design. The study population was all employees in the county revenue offices, internal
audit offices, county procurement offices and the county finance and accounts offices in Mombasa County Government.
The population for the study was those top level and middle level employees in the county who understood financial controls
in the county and who were conversant with financial performance of the county. The total respondents in the four offices were as
indicated in Table 1.
Table 1 Target Population

Offices Frequency Percentage
Revenue Office 12 19
Internal Audit Office 14 22
Procurement Office 16 25
Finance and Accounts Office 22 33
Total 64 100
The study was a census of all the employees since the population of study was small and manageable. Therefore, all the 64
employees from the four target offices of the Mombasa County Government participated in the study. According to Babbie
(2011), there is no need of sampling when the population of study is small. The whole population participated in the study which
ensured that the study was a census.
6. Research Results
6.1 Descriptive Statistics
6.1.1 Internal Audit
The study‟s first objective was to establish the influence of audit on the financial performance of the devolved governments in
Kenya. The study sought to establish how internal audit was conducted at the CGM and to establish this; several statements on
internal audit were provided to the respondents. Respondents were requested to rate their agreement to the statements on a 5-point
Likert scale. Means and standard deviations were used to summarize the findings. The results are presented in Table 4.7.
Table 2 Internal Audi

Opinion Statement Mean Std. Dev.
Internal auditors determine the harmony between structure of the
.708
county government and the existing system of controls 3.74
Auditors evaluate the integrity and reliability of operating and
financial information and the methods used to report, measure, identify 3.68 .869
and classify such information
Internal auditors examine the systems set up to ensure conformity
3.82 .658
with those procedures, plans, policies, regulations and laws
Internal auditors verify existence of assets and review the methods
3.81 .735
of protecting those assets
Audit effectively appraises the efficiency and economy of resource
3.98 .901
appropriation by the county government
Internal audits review programmes or operations to establish
whether outcomes are consistent with predetermined goals and 3.33 .913
objectives
Internal audit assesses whether or programs and operations are
3.70 .906
conducted as intended
Any financial issues established after an audit are well investigated
and action taken 4.11 .673
The study findings presented in Table 2 show that the respondents were in agreement with the statement that any financial
issues established after an audit were well investigated and action taken (mean = 4.11; std. deviation = 0.673). The findings also
indicated that respondents agreed that audit reports are published by the county government in appropriate media (mean = 4.07;
std. deviation = 0.923). Study findings also indicated that respondents agreed that audit effectively appraises the efficiency and
economy of resource appropriation by the county government (mean = 3.98; std. deviation = 0.901). Findings also indicated that
respondents agree to other statements provided which included internal auditors determining the harmony between structure of the
county government and the existing system of controls, internal auditors verifying existence of assets and reviewing the methods
of protecting those assets and internal auditors examining the systems set up to ensure conformity with those procedures, plans,
policies, regulations and laws. These were statements that had means of between 3.5 and 4.5 indicating agreement on a five-point
Likert scale. However, respondents were neutral on one statement. This was the statement that „internal audits review programmes
or operations to establish whether outcomes are consistent with predetermined goals and objectives‟ (mean = 3.33; std. deviation
= 0.913). This finding suggests that there might be some weaknesses in the internal audit role of reviewing programmes and
operations to establish whether outcomes are consistent with predetermined goals and objectives.
6.1.2 Periodic Reconciliations
The second objective was to determine the influence of periodic reconciliations on the financial performance of the devolved
governments in Kenya. In this section, the results on the 5-point Likert scale responses on periodic reconciliations in the CGM are
presented. The analysis of the responses was through means and standard deviations. The results are presented in Table 3.
Findings indicate that respondents agreed with all the statements provided. This is evident because all the means were between 3.5
and 4.5 which, when rounded off to the nearest whole number, showed agreement on the Likert scale (4). These findings indicated
that respondents viewed periodic reconciliations in the CGM in a positive light. Specifically, the findings suggest that
reconciliations were regular, timely, accurate and efficient. Further, the findings indicate that the reconciliation process was
automated, the CGM had a government wide reconciliation policy and accuracy of the reconciliation process was always
paramount. These findings suggest that in the CGM, best practices were mostly observed in the reconciliation process.
Table 3 Periodic Reconciliations

The government conducts regular, timely, accurate and efficient
financial ending cycle starting with the process of account 3.96 .925
reconciliation
The government has automated the account reconciliation process
3.75 .931
in order to achieving balance sheet integrity
The county government ensures that all accounts are reconciled 4.13 .444
There is a government-wide reconciliation policy which is
4.09 .763
observed to in the whole county government
Account reconciliations are always accurate 3.66 .823
Account reconciliations are timely finished and reviewed 3.95 .875
Account reconciliations conducted in accordance to generally
4.42
accepted accounting principles .706
There is constant review and improvement of the account
3.93 .900
reconciliation process
When a material error is found, the government issues a statement
4.02 .668
and measures to be taken
6.1.3 Payable Control
The study sought to establish the effects of payable control on the financial performance of the devolved governments in
Kenya. In an endeavor to establish the payable control processes at the CGM, 5-point Likert statements regarding payable control
were provided and respondents were requested to indicate their level of agreement to the statements. Analysis of the responses
was through means and standard deviations. The findings are presented in Table 4.
Table 4 Payable Control at CGM

Suitable separation of responsibilities is maintained between
maintenance and approval of account payables 3.77 .851
There is segregation of duties between accounting for procurement,
receiving goods or services and cash disbursement 3.86 .649
System matches purchase order, receiving report and invoice
3.32 .929
entries (3-way match)
All exceptions to 3-way match must be flagged and
3.75 .808
investigated/reviewed.
Chief finance officer approves invoices regularly to enable timely
3.21 .921
vendor payments
There must be additional approval for disbursements in excess of
3.62 .933
specified amounts
The system cannot accept an identical entry of an invoice 3.99 .737
Appropriate departments review invoices before payment 3.88 .921
Before payment to contractors, there must be approval of work
3.56 1.000
orders
Regular verification of accounts payable accounts is conducted 3.00 .918
6.1.4 Monitoring of Financial Controls
The study‟s fourth objective was to examine the influence of monitoring on the financial performance of the devolved
governments in Kenya. To achieve this objective, the study provided several 5-point Likert statements on monitoring and required
respondents to indicate their level of agreement to the statements in the context of CGM. Responses were analyzed using means
and standard deviations. The findings are presented in Table 4.10. The findings presented in Table 4.10 reveal that respondents
showed agreement to the statement that there are ongoing evaluations to assess the effectiveness of the existing financial controls
(mean = 4.11; std. deviation = 0.771) and also agreed to the statement that all deficiencies identified in the monitoring are
communicated to the right authority (mean = 3.88; std. deviation = 0.810). Furthermore, findings showed that respondents agreed
that the monitoring in the county government focuses on processes and not people (mean = 3.84; std. deviation = 0.919).
However, respondents showed neutrality to the statements that evaluations of the system identify existing deficiencies and
enabling corrective action (mean = 3.39; std. deviation = 0.772), monitoring of financial controls provides reports that inform
improvements in financial management processes (mean = 3.20; std. deviation = 0.883) and that the county staff identifies and
monitors the problem areas in financial management (mean = 3.15; std. deviation = 0.761).
Table 5 Monitoring of Financial Controls

There are ongoing evaluations to assess the effectiveness of the
4.11 .771
existing financial controls
Evaluations of the system identify existing deficiencies and
3.39 .772
enabling corrective action
All deficiencies identified in the monitoring are communicated
3.88 .810
to the right authority
The county staff identifies and monitors the problem areas in
financial management 3.15 .761
The monitoring in the county government focuses on processes
3.84 .919
and not people
Monitoring of financial controls provides reports that inform
3.20 .883
improvements in financial management processes
6.1.5 Financial Performance
The study sought to establish the financial performance of the CGM. This was necessary because financial performance was
the dependent variable. In assessing financial performance of the county government, measures that were used included revenue
from fees, revenue from charges/levies, revenue from rental properties, revenue from business permits and revenue from land
rates. These measures were used since financial performance by a public entity such as the CGM is different from financial
performance of a for profit entity. The measures were rated on a 5-point Likert scale and responses were analyzed using means
and standard deviations. The reliability of the responses was tested against existing financial records by the CGM. The findings
are presented in Table 6.
Table 6 Financial Performance

Revenue from fees imposed by CGM has increased in the last one
4.22 .806
year
Revenue from charges/levies imposed by CGM has increased in the
4.04 .729
last one year
Revenue from rental properties by CGM has increased in the last
3.36 .931
one year
Revenue from business permits imposed by CGM has increased in
3.65 .983
the last one year
Revenue from land rates imposed by CGM has increased in the last
4.13 .511
one year
6.2 Inferential Analysis
The study conducted a correlation analysis of the four study variables. This was done to establish the relationship between the
four independent variables and the dependent variable.
6.2.1 Coefficient of Correlation
The study used Pearson Bivariate correlation coefficient was used to compute the correlation between the dependent variable
(Financial Performance) and the independent variables (Audit, Periodic Reconciliations, Payable Control and Monitoring).
Findings are presented in Table 7.
Findings in Table 7 show that audit had a significant and positive association with financial performance of CGM (r = 0.389; p
< 0.05). This finding suggests that increase in audit effectiveness is expected to be associated with an increase in financial
performance. Results also indicate that periodic reconciliations had a positive and significant relationship with financial
performance of CGM (r = 0.658; p < 0.05). Additionally, payable control had a significant and positive association with financial
performance of CGM (r = 0.647; p < 0.05). However, monitoring did not have a significant association with financial performance
of CGM (r = 0.128; p > 0.05).
Table 7 Correlation Analysis

Periodic
Audit reconciliation Payable Monitoring Financial
control control control control performance
Audit control Pearson
1
Correlation
Sig. (2-tailed)
N 57
Periodic Pearson
.102 1
reconciliation Correlation
control Sig. (2-tailed) .449
N 57 57
Payable Pearson .501
** .257 1
control Correlation
Sig. (2-tailed) .000 .054
N 57 57 57
Monitoring Pearson
.154 .203 .264* 1
control Correlation
Sig. (2-tailed) .252 .130 .047
N 57 57 57 57
Financial Pearson .389
** .658** .647 **
.128 1
performance Correlation
Sig. (2-tailed) .003 .000 .000 .343
N 57 57 57 57 57
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
6.2.2 Coefficient of Determination (R2)
A confirmatory factors analysis was conducted to evaluate the research model using linear regression in order to measure the
success of the model and predict causal relationship between independent variables (Audit, Periodic Reconciliations, Payable
Control and Monitoring) and the dependent variable (Financial Performance).
Table 8 Model Summary

Std. Error of the
R R Square Adjusted R Square Estimate
.745 .554 .512 .442
Study results in Table 8 present the model‟s correlation coefficient, r squared, adjusted r squared and standard error of the
estimate. Results indicate that correlation coefficient was 0.745 indicating that there was a strong linear relationship between the
dependent variable and all the independent variables. Findings further indicate that r square was 0.554 (Adjusted R Square =
0.512). This indicates that audit, periodic reconciliations, payable control and monitoring explained 55.4 percent of the change in
financial performance in CGM. This suggests that other factors that were not included in the model were responsible for the
unexplained variation of 44.6 percent.
6.2.3 Analysis of Variance (ANOVA)
The results of the analysis of variance are presented in Table 9. The findings show that the model‟s F value was 16.179 and
was significant at 5% significance level (p = 0.000).
Table 9 Analysis of Variance
Model Sum of Squares Df Mean Square F Sig.

Regression 16.1
10.431 4 2.608 .000
78
Residual 8.382 52 .161
Total 18.813 56
6.2.4 Regression Analysis
Results on the significance of each of the four independent variables in influencing financial performance is provided in Table
10.
Table 10 Statistical Significance of the Independent Variables

Unstandardized Standardized
Coefficients Coefficients
B Std. Error Beta T Sig.
(Constant) .955 .641 1.489 .144
Audit .650 .155 .456 4.194 .000
Periodic reconciliations .494 .085 .663 5.812 .000
Payable control .345 .134 .417 2.575 .014
Monitoring .070 .118 .092 .593 .556
The regression equation was:
Y= 0.65X1 + 0.494X2
Where;
Y= Financial Performance
X1 = Audit and X2 = Periodic reconciliations
6.3 Discussion of Key Findings
This section provides a discussion of the key findings. This enables explanation of the findings and relating the findings to the
empirical literature presented in chapter two of the study. Findings indicated that audit had a positive and statistically significant
influence on financial performance of CGM (β = 0.456; p ˂ 0.05). CGM mostly adopted best practices in internal audit which
enabled CGM to positively influence its financial performance. These findings support the findings by Morin (2016) that VFM
audits carried out in the Canadian province of Quebec from 1995 to 2002 were helpful in the agencies and organizations audited.
Other studies with similar findings included Enofe et al. (2013), Zhang and Zhou (2017) and Halligan (2017). The study findings
however, contradicted findings in a study in Brunei by Athmay (2013). The study established that auditing did not have any effect
on financial performance or service delivery by the government agencies audited.
The findings show that periodic reconciliations had a positive and statistically significant influence on financial performance
of county governments in Kenya (β = 0.663; p ˂ 0.05). These findings suggest that a positive change in periodic reconciliations
would result to a positive change in financial performance in the county governments. Additionally, the findings suggest that a
unit improvement in periodic reconciliations would results to 0.494 improvements in financial performance in the county
governments. These results support the findings by Chado (2015) that having periodic reconciliations is one control aspect that
ensures that funds are applied for the activities they are budgeted for. The findings also agree with the findings by Mwangi et al.
(2016) that implementation of periodic reconciliation ensures that the inventory and resources at hand are well accounted for thus
reducing chances of pilferage, misuse and fraud.
Regarding payables control, the findings reveal that payables control had a positive and statistically significant influence on
financial performance of CGM (β = 0.417; p ˂ 0.05). These findings show that a positive change in payables control would result
to a positive change in financial performance in the county governments and vice versa. These findings contradict findings by
Andrews et al. (2013) that having financial payable control had no effect on public service performance. The findings also
contradicted findings by Zhou (2012) in a study in Zimbabwe, which established that various processes and structures that are set
up to control payables in public sector organizations fail to perform their duties effectively due to poor structure and resource
constraints. This makes majority of the organizations ineffective in boosting financial payables control and service provision to
the people. However, the findings support previous findings by Prakash (2015) that financial payable control contributed
significantly towards performance and service delivery in the healthcare sector.
Findings showed that monitoring did not have a significant effect on financial performance of county governments in Kenya (β
= 0.092; p ˃ 0.05). These findings contradict the findings by Kuhlmann and Jakel (2018) who established that when performed
effectively, monitoring of financial controls can enhance performance of the public organization. The findings also contradict the
findings by Kloha et al. (2015) who studied local governments in US. The study established that monitoring is targeted at making
sure that the monetary controls perform effectively as planned. This can be achieved through ongoing monitoring or separate
examinations. Different evaluations are non-routine monitoring activities such as period audits by the internal auditors. The study
concluded that monitoring is very important to the financial performance of the firm. However, in the current study, monitoring
did not have a significant effect. This could be explained by the gaps and weaknesses established in monitoring of financial
controls at CGM.
7. Conclusions and Recommendations
7.1 Conclusions
The study makes the following conclusions after considering the key findings:
i. Audit in CGM is effectively performed which enables the audit process to contribute significantly to financial
performance. Key areas that audit made significant contributions included determining harmony between structure of the
county government and the existing system of controls, evaluating the integrity and reliability of operating and financial
information and examining systems set-up to ensure conformity with procedures, plans, policies, regulations and laws.
Other contributions of audit were in verifying and protection of assets, appraising economy and efficiency of resource
appropriation by the CGM and publishing of audit reports in appropriate and accessible media. However, the study
established gaps in internal audits review of operations and programmes that are aimed at establishing whether outcomes
are consistent with predetermined goals and objectives.
ii. Regarding periodic reconciliations, the study concluded that periodic reconciliations at CGM were mostly done effectively
which enabled the process to contribute positively and significantly towards financial performance of CGM. Specifically
CGM was effective in conducting regular, timely, accurate and efficient financial ending cycle starting with the process of
account reconciliation. The CGM was also effective in utilizing IFMIS automation of periodic reconciliations and taking
appropriate measures when material errors are found.
iii. The study concluded that payable control contributed significantly towards financial performance of CGM. Best practices
in payables control had been put in place at CGM. These included preventing identical invoice entry, review of invoices by
appropriate departments before payment, segregation of duties between accounting for procurement, receiving goods or
services and cash disbursement.
iv. Finally, the study concluded that monitoring did not play any contributory role towards financial performance of CGM.
The factors which could have contributed towards monitoring not supporting the financial performance in the CGM
included failure to identify existing deficiencies and enable corrective action, failure to provide reports that inform
improvements in financial management processes and weaknesses in identification of problem areas in financial
management.
7.2 Recommendations
Based on the study conclusions, the study makes the following recommendations. Regarding financial audit control, the study
established gaps in internal audits review of operations and programmes that are aimed at establishing whether outcomes are
consistent with predetermined goals and objectives. The study recommends that audit should not only track expenditure and
budgets but should also be a value adding activity which established whether expenditures provide value for money. This can be
done by ensuring that audits inform improvements in county governments by reviewing executed projects or programmes against
the budgets, operations and plans. This would ensure that implementation of any projects and programs in the county governments
would be done as per drafted plans.
On the other hand, the study recommends that though CGM observed best practices in periodic reconciliations, it should
ensure that the reconciliation processes are performed immediately after the end of any accounting cycle. Further, such
reconciliations should be rigorous to ensure that they unearth any material errors or inconsistencies. This will enable the CGM to
ensure integrity of account balances.
The study further recommends that payables to suppliers are fast tracked so as the CGM have a good relationship with
suppliers and contactors. Review of due invoices and works completed should also be regular. Further the CGM should ensure
that release of funds to suppliers and contractors is done after verification of work done according to contract terms. This will
prevent loss of funds and ensure value to taxpayers‟ money.
The study noted key weaknesses and gaps in monitoring of controls. It is recommended that CGM should ensure that
monitoring process is continuous so that existing deficiencies are identified on time and corrective action taken. Moreover, regular
and comprehensive periodic monitoring reports should be provided so that CGM can use the lessons learnt to make improvements
in future and prevent past mistakes in finance management.
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INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 www.ijarke.

INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH

Effects of Financial Controls on Financial Performance of Devolved

1.1 County Governments in Kenya

1.2 Financial controls and County Performance

2. Statement of the Problem

3. Objective of the study

4.1 Theoretical Review

4.1.1 Lending Credibility Theory

4.1.2 Systems Theory

4.1.3 New Public Management Theory

4.1.4 Agency Theory

4.2 Conceptual Framework

Financial Audit Control

Periodic reconciliations Control

Financial Monitoring Control

Independent Variables Dependent Variable

4.3 Discussion of Key Variables

4.3.1 Financial Audit Control

4.3.2 Periodic Reconciliations Control

4.3.3 Payable Control

4.3.4 Financial Monitoring Control

Table 1 Target Population

6.1 Descriptive Statistics

6.1.1 Internal Audit

Table 2 Internal Audi

6.1.2 Periodic Reconciliations

Table 3 Periodic Reconciliations

6.1.3 Payable Control

Table 4 Payable Control at CGM

6.1.4 Monitoring of Financial Controls

Table 5 Monitoring of Financial Controls

6.1.5 Financial Performance

Table 6 Financial Performance

6.2 Inferential Analysis

6.2.1 Coefficient of Correlation

Table 7 Correlation Analysis

6.2.2 Coefficient of Determination (R2)

Table 8 Model Summary

6.2.3 Analysis of Variance (ANOVA)

Table 9 Analysis of Variance

Model Sum of Squares Df Mean Square F Sig.

6.2.4 Regression Analysis

Table 10 Statistical Significance of the Independent Variables

The regression equation was:

6.3 Discussion of Key Findings

7. Conclusions and Recommendations

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