Internal control practices and financial performance of faith based facilities in kakamega county

Abstract

The study is founded on the nature of organization, development, pillars, roles, functions, financial performance and aspirations of the Faith Based health facilitiess. The main objective of the study was to establish the effect of internal control practices on financial performance of Faith Based facilities in Kakamega County, Kenya. Specifically, the study aimed to; establish effect of personnel control practices on financial performance of Faith Based health facilities, determine effect of periodic review practices on financial performance of Faith Based health facilities, determine effect of operational control practices on financial performance of Faith Based health facilities and establish effect of organizational control practices on financial performance of based facilities. The study was guided by attribution theory, agency theory and procedural justice theory. Target population was 550 employees in Faith Based health facilities in Kakamega County. Stratified and simple random sampling techniques were used. Fisher’s formula was used to arrive at a sample size of 226 respondents. Data collection instruments were both primary and secondary. Primary data collection instruments namely questionnaire was used to get firsthand information from the respondents on internal control practices in their facilities. Secondary data collection involved documentary analysis to capture information on financial performance of the facilities. Pilot study was carried out on a group of employees from Kakamega County Public hospital to ensure the research instruments capture the required information before carrying out research. Content and construct validity of research instruments were achieved by involving experts from the school and Business and Economics, Finance and Accounting while drafting them. Moreover, Cronbach’s Alpha of Coefficient was used to test on the reliability of the research instruments, which ought to be at least 0.7 in Social Sciences. The study attained a Cronbach alpha of 0.819 implying the research instruments were reliable. Descriptive and inferential statistics which include mean, frequency and regression will be used in this study. The test criteria were to reject the first null hypothesis if the value of beta is not equal to zero (β1 ≠0). From the results, the beta value for risk assessment control from the regression model was 0.377 at p< 0.05. These results imply 37.7% of change in financial performance is attributed to risk assessment control practices. Therefore the first hypothesis was rejected. The test criteria were to reject the second null hypothesis if the value of beta is not equal to zero (β2 ≠0). From the results, the beta value for audit activities from the regression model was 0.537 at p< 0.05. These results imply 53.7% of change in financial performance is explained by audit activities. Therefore the second hypothesis was rejected. The test criteria were to reject the third null hypothesis if the value of beta is not equal to zero (β3 ≠0). From the results, the beta value for monitoring control activities from the regression model was 0.426 at p< 0.05. These results imply 42.6% of change in financial performance is attributed to monitoring control activities. Therefore the third hypothesis was rejected. The test criteria were to reject the fourth null hypothesis if the value of beta is not equal to zero (β4 ≠0). From the results, the beta value for information system control practices from the regression model was 0.322 at p< 0.05. These results imply 32.2% of change in financial performance is explained by information system practices. Therefore the fourth hypothesis was rejected; the study established a statistically significant correlation between internal control practices and financial performance. The findings of the current study forms a basis for reference in future by interested parties.