Is Use of IFMIS in Financial Reporting the Solution to Financial Accountability? Answers from County Governments in Western Kenya

Abstract

Purpose: The implementation of Integrated Financial Management Information System (IFMIS) is aimed at increasing the effectiveness and efficiency of state financial management and facilitate the adoption of modern public expenditure practices in keeping with international standards and benchmarks. Despite IFMIS being implemented, many county governments’ still face accountability challenges. The purpose of this study was to evaluate the influence of financial reporting on financial accountability of county Governments in western Kenya.

Methodology: The study was guided by Agency theory, Accountability theory and Technological Acceptance model. The study adopted correlational research design. Primary data was collected using questionnaires. The study target population was 1110 county staffs comprising of Cabinet executive officers, IFMIS directors, finance staff, revenue officers, planning and procurement staffs. Simple random sampling was used to select 294 respondents. Reliability was tested through Cronbach Alpha, validity was tested through expert analysis and principal component factor analysis. SPSS was used to analyze descriptive and inferential statistics. Descriptive statistics consisted of frequencies. Inferential statistics consisted of Binary logistic regression analysis.

Findings: Cox & Snell R Square was established as 0.699. Wald statistic was significant with p values of 0.00, and 0.022 for financial reporting. Correlation analysis for financial reporting and internal controls was r = 0.944. The binary logistic regression coefficient was β of 6.17, p value .000 and Exp (β) = 479.88 for financial reporting. Data was presented using tables.

Recommendation: It was recommended that implementation of IFMIS should be strengthened and regularly reviewed to identify loop holes that still exist that reduce effectiveness. This would improve fiscal discipline by a very high percentage as shown by the odds ratio of budgetary controls, financial reporting and internal controls which are all greater than one. There will be improved adherence to statutory regulations, unsupported expenditures would reduce and Misappropriations and budget variances will be minimal.