Internal Control Systems and Performance in Public Institutions: A Case Study of Maseno University, A Public Institution in Kenya

ABSTRACT

Public institutions in many parts of the world have poor performance compared to private institutions. The poor performance can be attributed to financial management practices. Sound financial management practices require the institution of strong internal control systems in an organization. However, there are limited empirical research findings in developing countries regarding the relationship between internal control systems and organizational performance. The main objectives of the study are to investigate the impact of internal control systems and organization performance in the public sector, establish the internal control systems prominent in public institutions, determine the effectiveness of internal control systems in public organizations,s and determine the relationship between internal control system and organizational performance in public institutions. Moreover, in addressing the impact of internal control systems on performance, the study tends to answer questions such as what are the internal control systems instituted by public institutions?, how effective are the ICS in the public organizations? and what is the relationship between ICS and organizational performance in public institutions? Regardless of an entity’s size or type, and regardless of whether it is held privately or publicly, managers and accountants should be alert to the rudiments of accounting systems and controls. Accounting records are kept for a variety of purposes, and a major purpose is to help managers operate their entities more efficiently and effectively. Any person who forms a business will soon discover that record-keeping is absolutely essential. Records form elements of internal control systems. For instance, records of receivables and payables must be created for transactions with customers and creditors, and cash disbursements and receipts must be traced to the individual accounts. Even the simplest of organizations must have some records. The concept of internal control is just as relevant to public universities as it is to profit-making organizations. Inadequate internal controls can hinder the management responsibilities of senior officers and employees and place them in a position where they may be tempted to engage in questionable activities and accounting malpractices or could subject individuals to unwarranted accusations of such activities. At Maseno University, there have been a lot of weaknesses in their policies and procedures and also in their Internal Audit, the extent to which employee’s in positions handling cash fail to take regular leave and lack of rotation of employees handling very sensitive areas in finance and administration. This study takes a sample study approach with its target population being the different categories of employees in different departments of Maseno University. It takes on a sample of 117 employees. It ensures equitable and proportionate representation of each stratum (department) in the sample. Primary and secondary data are used in the study. Primary data was collected from the sample population using open and closed-ended questionnaires. Primary data collection was supplemented by secondary data. Secondary data will be from literature, articles and books, and internet sources. Descriptive statistics are used in the data analysis and information presented in statistical forms. Maseno University started as a constituent college of Moi University on l’~ September 1990 and became a fully-fledged University in January 2001 through Maseno University Act 2000. The university currently has a total number of staff of 1200 which comprise both academic staff and non-academic staff. The Vision of the University is “To be a leading Institution and Center of Excellence in University teaching, outreach, research, and development.” The mission of the University is the promotion of excellence in undergraduate and postgraduate studies, and basic and applied research for the enhancement of economic, social, cultural, scientific, and technological development of Kenya, with special emphasis on training, practically oriented graduates.