Abstract:
A number of private universities have reported better financial performance than
public Universities across the world. The dismal financial performance in public
universities can be ascribed to poor financial management practices due to lack of
robust internal control systems. Though financial management and internal control
systems are essential, there exists only a few studies and empirical evidence on the
relationship between financial performance and internal control systems in public
universities in Kenya. This study investigated the effect of internal control
systems on financial performance of public universities in Kenya. The research
was informed by the systems theory, agency theory, attribution theory, and
stewardship theory. The research adopted a causal research design, and targeted 160
respondents from 32 public universities. Census sampling technique was applied.
Semi-structured questionnaires and secondary sources were used to collect primary
and secondary on the financial performance of public universities for five years. The
study respondents were the Deputy Vice chancellors (finance), Registrars, In-charge
ICT, Finance Officers and Internal Auditors. A total of 142 questionnaires were
returned duly filled representing 88.75%. Data was analyzed using Descriptive and
inferential analysis. A pilot study was conducted to examine the reliability and
validity of the research instruments and instrument adjusted accordingly. Diagnostic
tests were carried out and the data was found to be normally distributed and did not
suffer from multicollinearity and heteroscedasticity. Results showed that preventive
controls regressed individually against the dependent variables. It was concluded
thatinternal control system had to a large extent effect on financial performance of
public higher learning institutions. There is need to strengthen internal control
systems in state corporations to improve financial performance of internal control
systems.
