INTERNAL CONTROL SYSTEMS AND FINANCIAL GOVERNANCE OF NAIROBI CITY COUNTY, KENYA
Abstract
Purpose of the study: The study sought to ascertain internal control systems effects on financial governance of Nairobi City County, Kenya. Specifically on the impacts of control environment, risk management, control activities, monitoring activities and information communication. Resource dependency, agency and systems theories anchored the review.
Statement of the problem: Since 2020, the Nairobi City County government has faced significant challenges in revenue collection, largely due to COVID-19 epidemic, which disrupted commercial activities and led to a decline in tax revenues as many businesses closed or operated at reduced capacity. Additionally, outdated revenue collection systems and inefficiencies in tax administration, including reliance on manual processes, have caused delays and revenue leakages
Methodology: The study employed an explanatory research design targeting 89 employees from the ministry of finance and economic planning, using structured questionnaires for data collection. Quantitative data was analyzed using descriptive statistics (mean and standard deviation) and inferential statistics (regression and correlation analyses) to examine relationships between variables.
Findings: The study found control environment, risk management, control activities, monitoring activities and information communication have a significant influence on financial governance.
Conclusion: The study conclude that whole financial management effectiveness and integrity of the County had been positively influenced by its control environment mechanisms. Internal control systems of the County had enhanced the financial monitoring and process of making decision by the County ensuring that financial operations are conducted transparently and accountably.
Recommendations: The study recommends that the County should implement comprehensive training programs, conduct regular audits, and establish clear internal control policies to strengthen financial governance. Additionally, the County should invest in automated financial management systems and leverage digital platforms to enhance transparency, monitoring, and citizen engagement in financial matters.
Keywords: Internal control system, financial governance, Control environment, Information communication and monitoring activities, Nairobi City County, Kenya
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