Relationship Between Internal Controls and Management of Public Funds in Marsabit County, Kenya

Abstract

The prudent management of public funds is a critical pillar of effective governance and sustainable development. Marsabit County, grapples with unique challenges in managing its public funds. The Auditor General’s report on operations of the Marsabit County Executive for the year 2021/2022 also revealed that projects worth Kshs 118 million were initiated but had stalled due to lack of feasibility study on their viability. This clearly indicates the issues with public fund management therefore the study sought to assess the relationship between internal controls and management of public funds in Marsabit County, Kenya. Specifically, the study sought to assess the relationship between control environment and management of public funds, relationship between control activities and management of public funds, relationship between internal audit and management of public funds and relationship between risk assessment and management of public funds in Marsabit County, Kenya. The study was informed on the concept of the agency theory, stewardship theory and risk management theory. The study employed an explanatory research design. The target population was 54 employees in the county government of Marsabit drawn from the department of accounts and finance. Since the study population was small census technique was conducted. Questionnaires were used to collect primary data desirable for the study. A pilot study was conducted in Baringo County where five questionnaires were distributed to the finance officers. Content validity was ensured with the help of the research supervisors. The reliability was determined using Cronbach's alpha test. Both descriptive and inferential statistics were used. After data analysis, results were presented in form of tables. From the findings the study concluded that there exists a moderate positive and statistically significant relationship between control environment and management of public funds in Marsabit County, Kenya. The study also concluded that there is a positive and statistically significant relationship between control activities and management of public funds in Marsabit County, Kenya. The study also concluded that there is positive and statistically significant relationship between internal audit and management of public funds in Marsabit County, Kenya. In addition, the study concluded that there is a positive and statistically significant relationship between risk assessment and the management of public funds in Marsabit County, Kenya. From the findings of the study recommended that the county governments should implement robust systems and processes that promote checks and balances in financial transactions. The county governments should establish effective controls over revenue collection processes to minimize the risk of revenue leakage or misappropriation. Finally, the study recommends that the county governments should develop a robust risk management framework that identifies, assesses, and manages financial risks. This includes conducting risk assessments, implementing control measures to mitigate identified risks, and regularly monitoring and reviewing risk management activities