Abstract:
The aim of the study was to examine the effect of internal controls on the financial
accountability of the National Government Constituencies Development Fund in Kenya.
The specific objectives were: to establish the effect of control activities, risk assessment,
communication, monitoring and control environment on the financial accountability of
NG-CDF in Kenya. The study was structured on: agency, fraud triangle and accountability theories. Positivism research philosophy guided the study. A correlation research design was adopted. The target population of the study was 1160 respondents, while the sample population was 288 respondents. Primary data was obtained by use of a questionnaire, while secondary data was obtained from the auditor’s general reports and financial statements of the NG-CDFs. A pilot test was carried out using 29 respondents. It was established that there exists a strong and positive association exists between internal controls and financial accountability for all the variables, as confirmed by; r = 0.718 for control activities, r = 0.707 for risk assessment, r = 0.759 for monitoring, r = 0.703 for communication and r = 0.686 for control environment and financial accountability. The R-square value was 0.762. The results of the ANOVA showed an F statistic of 15.513, and a p-value of 0.008. All the constructs of internal controls were established to have a significant effect on unsupported expenditure, which was confirmed by β = 2.157, p-value 0.005, β = 0.998, p-value 0.014, β = 1.282, p-value of 0.004. β = 0.371, p-value of 0. 047 and β = 1.13 6, p-value 0.009 for control activities, risk assessment, monitoring communication and control environment respectively. It was recommended that the NG-CDF management committee should strengthen the
separation of duties and ensure that the stipulated guidelines for approval are followed at all times. Close scrutiny of all risk-prone activities should be analyzed. External auditors must give unbiased reports. NG-CDF committee members should be honest and have no conflict of interest.
