The Effect of Financial Sensitization and Internal Audit Practices On Financial Performance in Public Universities, Kenya.

Abstract

Kenyan public universities have been performing dismally financially for several years resulting to closures of campuses and an ever-increasing pending bills. The universities have not been able to engage adequate scholars to meet the instruction capacity in the delivery of curriculums. The research looked at correlation between financial sensitization, internal audit practice and the financial performance of public universities in Kenya. The study was guided by a number of theories namely Resource based theory, prospect theory, motivation theory, with agency theory being the anchor theory. General objective of this study was to carry out evaluation of correlation between financial awareness, human capital competency, procurement process, project appraisal, technology adoption, internal audit practices and finance performance in public universities, Kenya. Independent variables were financial awareness, human capital, procurement process, project appraisal and technology adoption. The moderating variable was internal audit practices. Dependent variable wasfinancial performance in public universities from the sampled universities. Targeted population were the public universities in Kenya with a purposive sample of 155 managers selected from three categories of universities according to their age and when they were chartered. The data was sourced by use of questionnaires and pilot survey was done to test the instrument. The data was analyzed through statistical inference. Statistical Package that is popularly used for Social Science (SPSS) software was also during the analysis of data including multiple regression and other measures of central tendency. The study findings revealed that financial awareness, human capital competency, procurement process, project appraisal, and technology adoption posted positive and high relationship with finance performance. Study also found that internal audit practices had significant positive moderator influence on relation between financial sensitization and financial performance of public universities. Study concluded that financial sensitization contributes significantly to financial performance in public universities. Study also concluded that introduction of internal audit practices enhances how it influences the financial sensitization on how public owned Universities, Kenya perform financially. Study recommends that university managers should ensure that employees understand financial risk as well as saving culture. The management should also equip employees with knowledge on financial procedures and debt policy. There is need to review staff training policy with the aim of achieving better outcome. There is need to ensure that quality of goods and services purchased are up to standard. There is need to ensure that projects are implemented as per schedule in the contract. There is need to invest in information technology infrastructure. Financial innovations such as mobile banking and internet banking to be adopted in collection of fees. There is need for frequent internal audits in the institutions. Management should build the capacity of internal audit team in terms of personnel and training. Internal audit team should be given necessary space to operate with no interference. The study recommends that future studies should consider investigating relationship between financial sensitization and how Private Universities in Kenya perform financially.