Financial Accountability and Financial Performance of County Governments in Kenya

Abstract

The annual amount of funds in the counties are not well utilized in the past years, and even the money that is returned to the treasury at the end of each financial year has always been less than what has remained after the total expenditure for the year. Worse still, there has been lack of accountability for the discrepancies and the gap between the allocated funds and the money spent. The study sought to understand the relationship between financial accountability and financial performance of county governments in Kenya. The study was based on elements of agency theory and employed the descriptive explanatory cross sectional survey design that was applied across the 47 targeted counties in Kenya and the finance managers. The researcher applied census sampling of all the 47 counties and collected primary data using questionnaires and secondary data for a five year period of 2016-2002. The data was entered into SPSS analysis tool where descriptive statistics and inferential statistics were conducted to link the variables. The study established that financial accountability had a moderate effect on financial performance based on the r values. The adjusted coefficient of determination was found to be 0.632 meaning that financial accountability accounted for 63.2% of financial performance in the county. It was concluded that financial accountability elements like transparency, timely responses, equitability, inclusivity and adherence to constitution requirements led to improved financial performance. The study then recommends that the counties adopt financial accountability measures when seeking to improve their financial performance.