Accounting and Finance

The impact of value added tax reforms on price stability in Sugar firms: a case study of western Kenya

2025-11-12T06:05:08Z

The impact of value added tax reforms on price stability in Sugar firms: a case study of western Kenya AWUONDA, Hillary Ochieng Price stability refers to a condition where money maintains its value over a considerable period of time, by allowing money to mitigate cost efficiency, control inflationary trends and maintain economic developments, and investments. It is the reigning general price level in an economy, essential for fostering sustainable economic growth, reducing uncertainties, enhancing investment, and supporting long-term planning for households and businesses. Over the period 2019 to 2023, significant price fluctuations have been observed in the sugar sector, presumably attributed to implementation and compliance with aspects of VAT reforms (2018); including standardization of VAT rates at 16% and the expansion of the VAT base, with apparent increased cost of production inputs, such as fertilizers and machinery. The introduction of digital tax invoicing systems further complicated compliance for sugar firms, especially smaller enterprises, leading to increased operational costs. These fluctuations in production costs passed to consumers, results in to inconsistencies in sugar prices. VAT reforms, while designed to enhance government revenue and broaden the tax base, have introduced increased challenges with production inputs. Despite VAT reforms being implemented to enhance revenue collection from the proportionate cost to product values on marketed goods and services, it is unknown how compliance to the VAT reforms affect price movement in the economy. Specifically, there has been continued instability in sugar prices, affecting both producers and consumers’ returns and investment in the sugar sector. The purpose of this study is to assess the effect of Value Added Tax (VAT) reforms on price stability within the sugar firms in western Kenya. Specifically, the study seeks to examine the effects of VAT reforms on price stability by focusing on three core objectives: to evaluate the influence of inflation-linked VAT reforms on price stability, to investigate the effect of VAT reforms on the production costs within sugar firms, and to assess how compliance with VAT reforms influences price stability in the sector. The study will adopt a descriptive and causalcomparative research design. western Kenya region that has a population of over 1.2 million people residing in the region, with close to 500,000 being sugarcane farmers. Census survey will be employed to collect secondary data for the study. Secondary data, consisting of relevant inflation to sugar sector; consumer price sensitivity, input cost inflation, compliance cost, operation expense, Input cost variation, administrative cost compliance, tax reporting efficiency, price volatility index, supply demand balance in the sugar industry. With data collected from key personnel from twelve sugar firms, each having 5 respondents, resulting in sixty respondence in total. Consisting of general managers, production managers, finance managers, and sales). The regression model showed a strong relationship, with an R Square of 0.624, indicating that 62.4% of the variance in performance is explained by the predictors. Significant predictors included inflation-based VAT reforms (B = 0.633, Beta = 0.297, p = .003), money supply-based VAT reforms (B = 0.452, Beta = 0.318, p = .004), and trade openness-based VA333ms (B = 0.748, Beta = 0.353, p = .002). The study concludes that VAT reforms significantly impact performance, recommending a continued focus on targeted VAT adjustments to enhance stability in the sugar industry. The significance of this study lies in its potential to provide policymakers and industry stakeholders with empirical data on the effectiveness of VAT reforms, offering recommendations for more targeted tax policies that promote price stability and economic resilience in the sugar industry. This research is crucial as it addresses a gap in sectorspecific studies on how macroeconomic policies like VAT reforms directly impact pricing mechanisms in Kenya's sugar industry. Master's Project

Effect of working capital management on operational performance of savings and credit co-operative societies in Kisumu County

2025-11-11T09:33:46Z

Effect of working capital management on operational performance of savings and credit co-operative societies in Kisumu County MAKORI, John Nyandika Working capital management is a very important component of corporate finance because it directly involves the planning and controlling of current assets and liabilities in a manner that eliminates the risk of inability to meet short term obligations and avoid excessive investments in these assets. However, some managers use wrong methods for working capital decisions which results in their under or overcapitalization or worse still, liquidation of their organizations. This has been the case of savings and credit co-operative societies (SACCO’S) in Kisumu County in the last decade. It has been noted that SACCO’s that are newly registered and operating within Kisumu county fail within the first three years of their formation according to statistics from Kisumu county government. In the financial year 2017/2018, a total of 14 Sacco’s within Kisumu County failed and closed down their operations. This has been attributed to failure to effectively manage their working capital. Prior studies have produced mixed results as regards the effect of working capital on performance of firms. The purpose of this study was to analyze the effect of working capital management on performance of Sacco’s within Kisumu County. The specific objectives of the study were to establish the effect of cash management on performance of Sacco’s, to determine the effect of debt management on performance of Sacco’s and to determine the effect of inventory management on the performance of Sacco’s within Kisumu County. The study was anchored on risk and return theory, Operating cycle theory and cash conversion cycle theory. A correlational survey design was adopted with a study population 47 finance officers judgmentally selected from 47 Sacco’s in Kisumu County. Reliability of the research instrument was ascertained by use of Cronbach’s alpha coefficient at α= 0.7. Validity of the instrument was ascertained through expert opinion. Primary data was collected by use of structured questionnaire while secondary data was obtained from the audited financial reports of the Sacco’s. Data analysis was done using descriptive statistics and results presented in form of tables. The results showed that the unstandardized coefficient for cash management was a 0.338 meaning that a unit % age change in cash management Sacco’s is likely to lead to a change in performance by 0.338%. Similarly, the unstandardized coefficients for debt management and inventory management were 0.680 and 0.234 respectively. This means that a unit % age change debt management and inventory management is likely to lead to a change in Sacco’s Performance by 0.1680% and 0.234% respectively. R2 = 0.702 meaning that cash management, debt management and inventory management all together account for 70.2% of performance by Sacco’s in Kisumu County. The study concludes that working capital management is a positive and predictor of operational performance of Sacco’s in Kisumu County. The study may guide policy makers to appreciate the importance of effective working capital management for the success of organizations. It may also form a basis of theory building for future research endeavors. Master's Project

Effect of asset valuation approaches on financial performance of real estate investments in Western Kenya region

2023-12-21T13:58:49Z

Effect of asset valuation approaches on financial performance of real estate investments in Western Kenya region BIFWOLI, Tracy Florence The real estate sector accounted for 6.2% of U.S. gross domestic product in 2018. It's more than the $1.13 trillion in 2017 but still less than the 2006 peak of $1.19 trillion. At that time, real estate construction was a hefty 8.9% component of GDP. Real estate valuation is still a challenge in Nigeria posing a significant challenge to the country's real estate sector. Due to lack of robust valuation approaches, most Nigerian cities are overpriced, which discourages potential investors.According to Uganda Bureau of Statistics, the real estate sector on average contributed about 7.5 per cent to Uganda’s GDP in 2020 as compared to 9.1% in 2017 showing a significant reduction. In the recent past, there has been progress in infrastructure advancement in Kenya. However, in the Kenyan real estate sector, financial performance has been on a declining trend with a slowed down performance of up to 18.4% in 2017, with far reaching implications in its potential contribution to the Kenyan Economy. In Western Kenya Region, real estate sector offered investors with 13% return on investments annually with the income revenue of 4.8% and yearly capital gratitude of 8.5%. This was still low compared to other regions in the country for instance information on the Kenyan real estate sector’s financial performance indicate a slowed down trend with 16.2% in 2016, 15.5% in 2017, 10.1% in 2018 and 13.2% in 2019.In spite of the relative National success in the sector, real estate asset valuation still presentedsignificant problem in measuring industry performance.Incorrectly valued assets can create a number of problems to the investors and the country at large. These could range from negative or stagnant cash flows to shocks in the general economy brought about by inflation. Therefore, the main aim of this study was to examine the effect of asset valuation approaches on financial performance of real estate management investments in Western region, Kenya. Specifically, the study sought to establish contribution of asset-based valuation approach on the financial performance of real estate investments; to determine effects of the Income Approach to the valuation on the financial performance of real estate investments; and to examine effects of Market Approach to the valuation on the financial performance of real estate investments in the Western region, Kenya. This study was guided by the Q Theory of Investment which deals with Market Value and Development costs and the Real Estate Simulation Theory. The study targeted 52 registered real estate agents within the western Kenya region. The study adopted a census technique to gather all the required data from the existing population. The studyemployed a correlational research design and was targeting the real estate agencies registered in Western region of Kenya.Structured questionnaires and secondary data schedules wereused to gather the required data for analysis. Pretesting of survey instruments was conducted as an effort of ensuring that there was both content validity and reliability. Both descriptive and inferential statistics was employed for data analysis. From the study results, asset-based approaches explained 34.3% of variance in financial performance of real estate investments while income based explained 12.1% and market based explained 57.2%. Using returns on investment as measure of financial performance, the three hypotheses were rejected although income based valuation had significant negative effect on return on investment. This implied that increase in market and asset based valuation approach would result to increase in the return on investment while increase in income approach would result to decrease in the return on investment. The study therefore concluded that asset valuation approaches influence financial performance and recommended that real estate firms should use more than once approach during valuation of their assets. Master's Thesis

Influence of lending interest rates on the relationship between mortgage financing and financial performance of commercial banks in Kenya

2023-12-19T15:46:57Z

Influence of lending interest rates on the relationship between mortgage financing and financial performance of commercial banks in Kenya ODHIAMBO, Daniel Dondi Financial performance of commercial banks has not been stable as evidenced in annual supervision report of 2011 to 2020, the period within which Return on Assets (ROA) rose to 6.2% in 2012 from 3% in 2011, and to lower than 3% in the years 2016 to 2020. Literature reveals commercial banks’ lending criteria as pro-cyclical, implying being very strict during real estate boom and flexible during the bust; with likelihood of commercial Banks underestimating the default risk of the loans during periods of high demand, subsequently resulting in credit risk exposure to mortgage product. Literature provides evidence of increased mortgage lending while the performance of the Commercial Banks was declining on a fluctuating trend with non-performing Loans increasing. On the other hand interest rates demonstrate fluctuation in a less volatile order despite that studies revealing limited information on the influence of lending cost on the relationship between mortgage financing and financial performance of commercial banks. The purpose of this study was to analyse the influence of lending interest rates on the relationship between mortgage financing and financial performance of commercial banks in Kenya. Specifically, the study sought to: establish the effect of mortgage financing on financial performance of commercial banks in Kenya, to analyse the effect of lending interest rates on financial performance of commercial banks in Kenya and to evaluate the moderating effect of lending interest rates on the relationship between mortgage financing and financial performance of commercial banks in Kenya. The study was guided by Title Theory and Lien Theory of Mortgages, Loanable Funds Theory and Efficiency Theory. Banks in rerun; gain right to title, interest income and better management in respective theories. Secondary balanced panel data obtained from the audited published financial reports of 27 commercial banks offering mortgage financing in Kenya was used and found to be valid and reliable. The study covered 7-year period as from 2015 to 2021, giving 189 data points. Data was analysed using E-views 10 statistical package. The regression analysis revealed that the independent variables explained 86.69% (R2=0.8669). In the regression analysis, the coefficient of mortgage financing is 0.004434, with a p-value=0.0004 meaning that mortgage financing has a significant positive effect on financial performance of commercial banks in Kenya. The coefficient of lending interest rate was found to be -0.158824 with a p-value= 0.0020 meaning that banks’ lending interest rates have a significant negative effect on financial performance of commercial banks in Kenya. The coefficient of the product term for mortgage financing and lending interest rate was found to be -0.057650 with a p-value=0.0066. This means that lending interest rates moderates the relationship between mortgage financing and financial performance of commercial banks in Kenya. This study will be of significance to banking industry, government and academicians. The conclusions of the study are that mortgage financing has a significant positive effect on financial performance; lending interest rates have a negative and significant effect on financial performance; lending interest rates have a moderating effect on the relationship between mortgage financing and financial performance; the effect of capital adequacy on financial performance is non-monotonic. The study recommends that commercial banks in Kenya should increase the amount of mortgage offered and adjust their mortgage lending rates positively whenever they increase the amount of mortgage offered which will in turn enhance their profitability leading to an improvement in financial performance. PhD Theses

Effect of operating leverage on the relationship between liquidity management, credit risk and loan repayment among microfinance Banks, Kenya

2023-12-19T15:15:43Z

Effect of operating leverage on the relationship between liquidity management, credit risk and loan repayment among microfinance Banks, Kenya NADEBU, Philbert Caleb Globally, reports indicate that of the loans disbursed in the United States of America, 45% of borrowers default on repayment, 60% of whom eventually end up as non-performing. In India, loan repayment rates experienced rise in default by over 50% between 2017 and 2020. In Ghana, adverse loan repayment was recorded at USD 0.97B in 2015 which grew to USD1.84B by 2018. Uganda recorded about USD.1.215 billion worth of non-performing loans in its MFI sector in 2018, from USD 324 million in 2017. The Kenyan scene recorded steep rise in default from about Kshs.100M in 2015 to over Kshs. 2.7B in 2022. Leverage remains an alternative source of funding available to microfinance banks (MFBs) to plug financial deficiency brought by default-triggered liquidity shortfalls for their operational sustainability. MFBs serve low-end borrowers, prone to fall in default of honouring their loan repayment obligations. The reported adverse loan repayment trend among MFBs reflects a trajectory calling for urgent invention measures. Previous studies on loan repayment have focused on conventional banking institutions, whose operational lending dynamics are significantly distinct from those of MFB. Existing literature is focused towards investigating study parameters associated to profitability, yet its analysis is preceded by loan repayment. Operating leverage (MLG) was a plausible robust moderator since literature demonstrates it influencing the transactional environment of study parameters. Main study objective was to establish effect of operating leverage on the relationship between liquidity management, credit risk and loan repayment among MFBs in Kenya. Specifically, it sought to; analyze relationship between liquidity management (MLDM) and loan repayment (LRP); assess relationship between credit risk management (MCRK) and LRP; determine relationship between MLG and LRP; assess moderating effect of MLG on relationship between MLDM and LRP; and, investigate moderating effect of MLG on relationship between MCRK and LRP among MFBs in Kenya. The anticipated income, credit risk, liquidity preference and moral hazard theories underpinned study objectives. Secondary balanced panel data sourced from audited annual reports of 12 regulated MFBs in Kenya was used. The study covered an eight-year period from 2015 to 2022, yielding 96 data points. Moderated multiple regression was applied to realize the study objectives. Regression results showed; a unit change in liquidity management results in 2.01% significant change in loan repayment (β=0.020110, p=0.0085) with adjusted R2=79.7024%; credit risk management yields a negative and significant change in loan repayment (β=-0.009874, p=0.0260); operating leverage to loan repayment is positive and insignificant (β=-0.004192, p=0.9100) with adjusted R2 of 78.5133%; product term of MLDM and MLG yields an inverse significant relationship (β=-0.099417, p=0.0109) with adjusted R2 of 79.8886%% posting an overall computed effect size change in R2 of 1.36%, calculated to 3.481%. Results indicate MLG fully moderates the relationship between liquidity management and LRP. In conclusion, the interaction term of MLDM and MLG alters the direction of primary relationship between MLDM and LRP. The study recommends MFBs to cautiously use debt capital in their financing options. The regulations for MFBs should streamline their proclamation on acceptable liquidity controls to foster sustainability. Further studies should investigate why credit risk management posts conflicting results when implemented to overcome default. PhD Theses

Effect of cognitive biases on individual investment decision in stock market among teachers in Vihiga sub county, Kenya

2022-05-11T10:52:58Z

Effect of cognitive biases on individual investment decision in stock market among teachers in Vihiga sub county, Kenya LUDENYO, Jesse Isiaho Globally, investment in the stock market is paramount to the establishment of a vibrant economy and personal wealth building and in some instances is influenced by behavioral factors such as cognitive biases. According to Cambridge Analytica, stock market investment among individual investors in the UK has been declining, to average at 13.5 % from 1970 to 2019. The same trend is also reported among Kenyan’s individual investors stagnating at 5.5% in 2019 according to Capital Market Authority report, of whom teachers are a part of. Even though behavioral finance contends that cognitive biases explain this declining participation in stock market investment, previous studies mainly used descriptive research design in investigating factors affecting investment participation among lawyers and financial managers among others. The main purpose assesses the effect of behavioral cognitive biases on teacher investment decision in stock market. Objectives of the study were to: determine the effect of financial literacy bias; cognitive dissonance bias and herd-perception bias on teacher investment decision in stock market investing in Vihiga Sub-County. The study was guided by behavioral finance and efficient market theories. The study adopted correlation research design through binary logistic regression analysis. The target population of the study was 1,126 teachers where stratified random sampling was used to select the sample size of 257 teachers. Primary data was collected through structured questionnaires. The research instrument reliability test yielded alpha coefficients of more than 0.7 implying the instrument elements were consistent and reliable whereas validity was done using two expert reviewers and an average score of 80%. Results revealed that there exists significant effect on individual investment decision of financial literacy bias measured by investment knowledge awareness (β =0.623; Odds Ratio=1.865, p=0.021) and investment services access (β =0.828; Odds Ratio=2.288, p= 0.015); cognitive dissonance measured by teacher perceptions (β =-1.361; Odds Ratio=0.256, p=0.042) and teacher risk averseness (β= 0.984; Odds Ratio=0.374, p= 0.033) and herd- instinct bias by family influence (β= 0.576; Odds Ratio=1.779, p= 0.02) and peer influence(β= 0.432; Odds Ratio=1.5403, p= 0.031). This meant that access to investment services; investment knowledge, family and peer influence increased the log odds of teachers having invested in the stock market while teacher perceptions and risk averseness decreased the odds. Based on the overall relationship financial literacy bias and herd-instinct bias had a positive effect on investment decision while cognitive dissonance bias had a negative effect. Therefore, cognitive biases had significant effect on individual investment decision among teachers in Vihiga Sub- County. Aside from improvement in financial literacy among teachers, the study recommended that more cognitive skills need to be enhanced among teachers and individual investors in Kenya in order to counter the negative effect of cognitive dissonance bias. Study is significant in adding value to existing knowledge in behavioral finance among individual investors in Kenya.

Effect of Electronic Payment Mechanisms On Revenue Performance: A Case of Kisumu County Government, Kenya

2021-04-21T07:41:37Z

Effect of Electronic Payment Mechanisms On Revenue Performance: A Case of Kisumu County Government, Kenya OKWANYO, George Mboya ABSTRACT Globally,realization of revenue targets in counties is core to meeting their financial responsibilities which will lead to recognition of their directive to offer valuable and well-timed services to the residents.Counties have sufficient revenue streams to fund their current projects and programmes, but revenue collection levels often do not meet projections. According to approved supplementary budget of Kisumu county for the financial year 2017/2018, the total revenue generated by the county from all its revenue streams depicted a deficit 4.59% less than the projected revenue.This is a pointer to the fact that electronic payment(e-payment) system introduced by the county government in revenue collection is not achieving the much desired outcome in revenue collection.Studies however reveal that the use of electronic payment positively influence revenue performance.The effect of e-payment on revenue performance is still not clear.Similarly past studies have failed to examine the extent of mobile and online payments in revenue collection. The general objective of the study was to assess the effect of electronic payment mechanism on revenue performance in Kisumu county.Specifically, the study sought to: establish the extent of usage of mobile phone payment in revenue collection, to determine the extent of application of online payment in revenue collection in Kisumu county.The study was anchored on technology acceptance theory.A correlational survey design was adopted with a study population of 140 taken from 7 sub counties using stratified judgemental sampling technique, primary data was collected using structured questinnares and secondary from audited financial records.Out of the 140 respondent there was 72.1% response rate. The questionnares were administered on drop and pick technique. The 140 sampled group was informed as a result of pilot study in Butere subcounty of Kakamega County and subsequent reconnaisance in the target subcounties in Kisumu county. The validity of the instrument was achieved through pilot testing with analysis of the pilit study data yielding a Cronbach alpha of 0.742 which compares favorably with the acceptance standard value of Cronbach's Alpha coefficient at α=0.7 used to test reliability There was a strong positive association between mobile phone payment and revenue performance in Kisumu County as depicted by r value of 0.781, p-value 0.006< 0.05 hence indicating there was sufficient evidence to confirm existence of a significant relationship between mobile money payment and revenue performance. The value of r of 0.603 signifies moderate positive association between online payment and revenue performance which resonate with the p-value of 0.000<0.05 (at 95% confidence level/alpha value) which evince existence of sufficient evidence to confirm existence of a significant relationship between online payment and revenue performance. In conclusion it was evident that the electronic payment mechanisms have a significant effect on revenue performance. Therefore it was recommended that the county government finds a mechanism of fully implementing electronic payment to boost revenue collection. It also forms a basis of theory building for future research endeavors.

Effect of Banking Sectorial Factors on Financial Stability of Commercial Banks In Kenya

2019-11-19T05:24:52Z

Effect of Banking Sectorial Factors on Financial Stability of Commercial Banks In Kenya ODUNDO, Omondi Godfrey In recent years, the stability of commercial banks in a number of countries across the globe has not been that robust with those in Portugal recording cumulative decline of about 26.6% in assets since 2010. In the Sub-Saharan Africa (SSA) region, and Ghana in particular, commercial banks have continued to record higher figures for non-performing loans (NPLs), ranging from as high as 13%. Locally, the ratio of NPLs to gross loans for commercial banks in Kenya has continued to be on an upward trend, rising to 9.5 % in March 2017 from 6.8 % in March 2016. This is has also been the case for the listed commercial banks at the Nairobi Securities Exchange (NSE). This might be attributed to a number of factors including the banking sectorial factors. However, existing empirical studies including those based on data from commercial banks in Kenya are mixed at best on their findings on the effects of these factors on bank stability. This is despite them being critical in the formulation of effective policies essential to bank stability. Hence, the purpose of this study was to assess the effect of banking sectorial factors on financial stability of commercial banks in Kenya. The specific objectives were to; establish the effect of bank size on financial stability of commercial banks listed at the NSE, determine the effect of bank concentration on financial stability of commercial banks listed at the NSE and evaluate the effect of nation-wide branching on financial stability of commercial banks listed at the NSE. The study was anchored on the too big to fail hypothesis and adopted a correlation research design. Secondary balanced panel data sourced from the annual reports of all the 10 commercial banks listed at the NSE was used. The study spanned over a 5 year period as from 2013 to 2017, yielding 50 data points. Multiple regression was done to achieve the study objectives. In the regression analysis, the coefficient of bank size was found to be -7.132958 with a p-value=0.0391 meaning that bank size has a significant negative effect on the stability of commercial banks listed at the NSE. The coefficient of bank concentration was found to be -0.022892 with a p-value=0.4637 meaning that market concentration has a negative but insignificant effect on the stability of commercial banks listed at the NSE. Nation-wide branching was found to have a coefficient of 6.016090 with a p-value=0.4659 meaning that nation-wide branching has a positive but insignificant effect on the stability of the listed commercial banks at the NSE. Further, loan portfolio/risk was found to have a coefficient of 3.453852 with a p-value=0.6934 meaning that it has a positive but insignificant effect on the stability of commercial banks listed at the NSE. The conclusions of the study are that bank size has a significant negative effect on financial stability of commercial banks listed at the NSE; bank concentration has a negative but insignificant effect on the stability of commercial banks listed at the NSE; nation-wide branching and loan portfolio/risk have a positive but insignificant effects on financial stability of commercial banks listed at the NSE. The study therefore recommends that effective policies on bank size should be formulated by the Central Bank of Kenya (CBK) to ensure sustained stability of the commercial banks listed at the NSE and the country’s banking sector at large.

Effect of internal control systems on financial Performance of Seventh day Adventist Church, Kenya

2019-01-30T13:35:00Z

Effect of internal control systems on financial Performance of Seventh day Adventist Church, Kenya OYUGI, Nicodemus Okoth. Internal controls help prevent errors and irregularities from occurring. If errors or irregularities do occur, internal controls will help ensure they are detected in a timely manner. However,there are financial challenges in Seventh Day Adventist churches (SDA) evidenced by financial statements,there is poor budgetary controls, low liquidity and working capital leves. They are therefore faced with many financial challenges hindering,there mission,vision and growth. Empirical evidence shows that, good internal controls may influence the financial performance of organizations. While past studies indicate contradicting evidence on the influence of internal controls on financial performance,studies on the the the link between review of control environment,review of existence of assets, conduct of annual audit to financial performance in the the seventh Day Adventist church is missing. Therefore,the general objective of this study is to determine effect of internal control systems on financial performance of SDA churches in Kenya. Specific objective of the study were to; determine the relationship between review of the control environments and financial performance; establish the association between the review of existence of assets and financial performance of SDA church and establish the relationship between conduct of annual audit and financial performance of SDA church. The study was anchored on the systems theory, and lending credibility theory. Corelation research design was employed. The study target population was all the 200 employees of the centre. Stratified random sampling was used to select 67 respondents for the study. Both primary data collected using questionaires and secondary data collected using review. Inferential statistics using pearson correlation analysis was used to anaylize data.The findings were that indicates that review of control environment and financial performance had a positive and significant association (r = .457, p =.000) implying that review of control environment leads to improved financial performance; review of existence of assets had a positive and significant association with financial performance (r = .441, p=.000) meaning that review of assets leads to improved financial performance and conduct of annual audit and financial performance had a positive and significant association (r = .256, p =.000). The data is presented in tables and figures. The findings of the study may benefit policy makers in new policy formulation, investors on how to partner with the fund and future researchers in the area internal control systems in relation to financial performance. Masters' Thesis

Effect of risk based audit practices on financial performance in selected public owned Sugar companies in Kenya

2019-01-29T06:50:14Z

Effect of risk based audit practices on financial performance in selected public owned Sugar companies in Kenya GEKE, Abel Manas Risk based internal auditing being a methodology that links internal auditing to an organization’s overall risk management framework, provides risk management process, annual audit planning, internal audit capacity and internal auditing standards which improves the efficiency of the internal control system of an organization thereby improving the overall financial performance. Existing literature demonstrate that RBA has capacity of risk identification and reduction i.e. its adoption had several achievements amongst which were identification and resolving of civil servant payroll weaknesses to eliminate ghost staff thereby streamlining payments in a cost saving manner. It also increased law courts’ revenue collection of between 33% and 166% in 2007. Having been implemented by public institutions, including public sugar companies in Kenya, it requires analysis of its contribution in maintaining efficiency and effectiveness. Whereas public sugar companies apply risk based auditing as a tool of internal control system and financial performance, available information reveal that a number of the sugar companies still face critical challenges with internal control system and financial performance. The purpose of this study was to analyze the effect of risk based internal auditing on financial performance in public owned sugar companies in Kenya. Specifically the study sought to establish the effect of risk management on financial performance, to determine the effect of annual risk based planning on financial performance and to analyze the effect of internal audit capacity on financial performance. Agency theory was among the theories that guided the study. This study adopted correlation research design which provides for description, correlation and regression as it’s expected by the focused relations. The target population for the study constituted 50 respondents, comprising finance officers, deputy finance officers and internal auditors in the selected public owned sugar companies in Kenya. A pilot study was carried out on 5 respondents at a scale of 0.7 leaving 45 respondents for the main study and was used to test reliability of the research instrument. The study administered questionnaires to all the respondents since it was the most appropriate tool to gather information. Bi-variate correlation analysis was used to test hypothesis and regression analysis model to establish the relationship between the effects of RBIA elements on financial performance of selected 4 public owned sugar companies in Kenya. Level of association was factored i.e. independent and dependent variables in the study. The study may also be significant in that it may be a reference for other scholars interested in the general body of knowledge and form a basis for further research. The study established that risk management had a significant positive correlation (0.678, p<0.01) with financial performance. The study also found out annual risk based planning had a significant positive relationship (0.597, p<0.01) with financial performance. Finally, the study also established that. This was also supported by regression results which showed a significant positive influence (0.677, p<0.01) between internal audit capacity and financial performance. As such the null hypothesis that there is no significant positive relationship between risk base financial audit and financial performance was rejected. The study concluded that there was a significant positive relationship between risk based financial audit and financial performance. The study recommended that other researcher should focus on non-financial factors and their relationship with financial performance Masters' Thesis