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Internal Accounting controls and financial statements accuracy of Public Sector firms in Kenya

Author

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  • Susan Karendi Kimathi

    (Department of Accounting and Finance, TUM, Kenya)

Abstract

This study examines the influence of internal accounting controls on the accuracy of financial statements within public sector institutions in Kenya. Accurate financial reporting is critical for ensuring transparency, accountability, and sound decision-making in public finance management. The study explores key components of internal controls, including the control environment, risk assessment, control activities, information and communication systems, and monitoring processes. Drawing from theoretical frameworks such as agency theory, stewardship theory, and contingency theory, the research highlights how robust internal controls contribute to the integrity and reliability of financial information. A review of relevant literature and case studies underscores that deficiencies in internal controls often lead to misstatements, financial irregularities, and diminished public trust. The findings affirm that strengthening internal control systems enhances the quality and accuracy of financial reporting. The study recommends that institutions adopt more comprehensive and technology-driven internal control mechanisms, empower internal audit functions, and cultivate a culture of accountability to ensure compliance with regulatory standards and improve financial reporting outcomes.

Suggested Citation

  • Susan Karendi Kimathi, 2025. "Internal Accounting controls and financial statements accuracy of Public Sector firms in Kenya," East African Finance Journal, East African Finance Journal, vol. 4(2).
  • Handle: RePEc:cwk:eafjke:2025-13
    DOI: 10.59413/eafj/v4.i2.2
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    References listed on IDEAS

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    1. Gabriel Muchoki Mutua, 2023. "Effects of Internal Control Components on Revenue Generation among Corporations in Kenya," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 2(1).
    2. Idrees Khawaja & Nasir Iqbal, 2019. "Determinants of Expansion of Micro and Small Firms and State of Entrepreneurship in Pakistan," PIDE-Working Papers 2019:160, Pakistan Institute of Development Economics.
    3. Söhnke M. Bartram, 2000. "Corporate Risk Management as a Lever for Shareholder Value Creation," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 9(5), pages 279-324, December.
    4. DeAngelo, Linda Elizabeth, 1981. "Auditor size and audit quality," Journal of Accounting and Economics, Elsevier, vol. 3(3), pages 183-199, December.
    5. Bancy Kagiri, 2023. "Internal Audit Report Quality and Financial Statement Accuracy of Savings and Credit Cooperatives Societies in Kenya," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 3(1).
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    Cited by:

    1. CPA. Solomon Ngahu, PhD & CPA. Cecilia Ndunge Waweru, 2025. "Determinants of Migration to Accrual Accounting for the Central and Devolved Governments in Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(7), pages 4397-4404, July.

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