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

Susan Karendi Kimathi
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Susan Karendi Kimathi: Department of Accounting and Finance, TUM, Kenya

East African Finance Journal, 2025, vol. 4, issue 2

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.

Keywords: Internal Accounting Controls; Financial Statement Accuracy; Public Sector firms; Financial Reporting (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:cwk:eafjke:2025-13

DOI: 10.59413/eafj/v4.i2.2

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