Does Monitoring Influence Financial Accountability? Answers from National Public Secondary Schools in Kenya

The general objective was to assess the effect of monitoring on financial accountability in national public secondary schools in Kenya.103 national public secondary schools in Kenya were used in the study. Agency theory, Fraud triangle theory and accountability theory guided the research. Survey research was used to collect data from a populace of; 103 principals, 103 bursars, 103 BOM chairs. Questionnaires and audited financial statements were used to obtain data. Reliability was tested through Cronbach’s Alpha.The association between monitoring and financial accountability was established through a bivariate simple linear regression model which was fitted to assess the influence of Monitoring on financial accountability. The regression coefficient estimate of Monitoring was (β =0.616, t=5.020, p-value = 0.000). It was recommended that frequent external audits by county auditors be done. The principal and bursar should be allowed to evaluate the work done by the auditors and post to the central website.


Sample Population
The sample population consisted of 82 schools composed of 82 principals, 82 bursars, and 82 BOM chairs.

Data Collection Instruments
Primary data was collected through the use of questionnaires while secondary data was collected through analysis of current ratio, debtors' ratio, debt ratio and change in public equity from audited financial statements.

Pilot Test
The pilot study was conducted on 9 national public schools which consisted of 27 respondents being that there were three respondents in each school that was randomly sampled throughout the whole country this was 10% of the expected sample size of 246 respondents.

Validity
Factor analysis was used to assess the construct validity. Uni-dimensionality of the study constructs was assessed by confirmatory factor analysis (CFA) and multi-dimensionality of the constructs and items assessed by Exploratory Factor Analysis (EFA) to explore the set of indicators that measure the constructs.

Reliability Analysis
Internal consistency was measured by use of Cronbach alpha where values of 0.70 or higher was considered sufficient.

Data Collection Procedure
Both Secondary and Primary data was collected by the researcher with the help of a research assistant where questionnaires were distributed to the sampled national public secondary schools and audited financial statements for four years from 2014 to 2017 obtained.

Data Analysis and Presentation
The data collected was processed and cleaned in Microsoft Excel before exporting to Stata for data analysis. Both descriptive and inferential statistics were used to analyze the data collected. Descriptive statistics comprised frequencies; mean, standard deviation and variance. Inferential statistics used to measure the relationship between variables comprised of Pearson Product moment correlation for correlation analysis, Simple and multiple regression analysis, normality test was done using Jacque Bera test, autocorrelation was tested using Durbin Watson statistic, multicollinearity was tested using variance inflation factors. Heteroscedasticity was tested using a scatter plot and a Breach Pagan test. Data was presented using tables, charts, and graphs.

Response rate
The study targeted 246 respondents in 82 schools. Responses were only got from 74 schools a total of 222 questionnaires out of 246 were returned which represents 90.24% of the targeted sample respondents

Validity Results
KMO and Bartlett's tests were carried with the aim of exploring the sampling adequacy of the data. The KMO statistics for all the constructs were found to be above 0.7 implying the suitability of data for the CFA models. Sampling adequacy was examined by Bartlett's. All Bartlett's statistics had p-values of 0.000 implying adequacy and suitability this is shown in table 4.1

Reliability Results
Cronbach's alpha was used in this study to check on the reliability. All the study constructs had reliability measures above 0.7 from all the items used to measure them. Constructs that had indicators that showed inadequate itemtotal correlations were further expunged this is shown in table 4.2.

Descriptive Statistics of Monitoring
Ten indicators were used to establish the relationship between monitoring and financial accountability. The first variable sought to find out among other indicators the perception of the respondents that there are independent process checks of controls activities on ongoing basis. Majority (50%) of the respondents strongly agreed, 84.6% of the respondents agreed or strongly agreed that there are independent process checks of controls activities on ongoing basis while 7.7% of the respondents disagreed or strongly disagreed. The results imply that in majority national public secondary schools, there are independent process checks of controls activities on ongoing basis, monitoring is therefore done consistently and thus risk prone areas can be easily identified and preventive  Vol.10, No.18, 2019 measures undertaken. However in some few schools, independent process checks of controls activities on ongoing basis is lacking.
Respondents were also asked the question whether internal reviews of implementation of internal controls are conducted periodically. Majority (36.5%) of the respondents agreed that internal reviews of implementation of internal controls are conducted periodically while 23.1% of the respondents were neutral. Some 65.4% of the respondents agreed or strongly agreed that internal reviews of implementation of internal controls are conducted periodically while 11.5% of the respondents disagreed or strongly disagreed. From the results it can be concluded that in majority of the schools, internal reviews of implementation of internal controls are conducted periodically. Though in about 10% of the national public secondary schools, internal reviews of implementation of internal controls are not conducted periodically.
Regarding the question of whether external auditors visit the school frequently. Majority (47.1%) of the respondents agreed, 67.3% of the respondents agreed or strongly agreed that external auditors visit the school frequently, 18.3% of the respondents were neutral while 14.5% disagreed or strongly disagreed. The overall results imply that in majority of the national public schools, the external auditors visit the school frequently. However in some few schools, external auditors do not visit the school frequently.
The study also sought what the respondents perceived of the question that external auditors are committed and give objective reports. Majority (43.3%) of the respondents agreed, 76% of the respondents agreed or strongly agreed that external auditors are committed and give objective reports, 15.4% of the respondents were neutral while 8.7% disagreed or strongly disagreed. From the overall results, many external auditors are committed and give objective reports. But there is a small percentage of external auditors who are not committed to their work and do not give objective reports. Such external auditors may ask for bribed to cover-up fraud Respondents were also asked their view on whether timely review of audit reports assist in improving financial accountability. Majority (46.2%) of the respondents agreed that timely review of audit reports assist in improving financial accountability while 8.7% of the respondents were neutral. Some 80.8% of the respondents agreed or strongly agreed that timely review of audit reports assist in improving financial accountability while 10.6% of the respondents disagreed or strongly disagreed. These results depict that many respondents support the fact that timely review of audit reports assist in improving financial accountability.
The results also determined the distribution of the indicator that the BOM monitor the actual uses of funds budgeted and approved. Majority (42.3%) of the respondents agreed, 79.8% of the respondents agreed or strongly agreed that the BOM monitor the actual uses of funds budgeted and approved, 8.7% of the respondents were neutral while 11.5% disagreed or strongly disagreed.
From the results it can be concluded that in majority of the schools, the BOM monitor the actual uses of funds budgeted and approved. Nevertheless in about 10% of the schools, BOM does not monitor the actual uses of funds budgeted and approved.
Respondents were also asked their view on whether internal reviews of internal controls are conducted periodically. Majority (44.2%) of the respondents agreed that internal reviews of internal controls are conducted periodically while 19.2% of the respondents were neutral. Some 68.2% of the respondents agreed or strongly agreed that internal reviews of internal controls are conducted periodically while 12.5% of the respondents disagreed or strongly disagreed. These results indicate that in majority of the schools, internal reviews of internal controls are conducted periodically. However in some few schools, internal reviews of internal controls are not conducted periodically thus in such schools new technological development of improving internal controls will not be implemented and fraudsters may develop better ways of leakages that cannot be detected.
The respondents were also asked about whether the BOM undertake regular comparison of actual with budgeted expenditure. Majority (44.2%) of the respondents strongly agreed, 82.7% of the respondents agreed or strongly agreed that the BOM undertake regular comparison of actual with budgeted expenditure. 5.8% of the respondents were neutral while 11.6% disagreed or strongly disagreed. From the foregoing results, in majority of the national public schools, the BOM regularly undertake regular comparison of actual with budgeted expenditure. However in about 10% of the schools, the BOM do not undertake regular comparison of actual with budgeted expenditure.
The study also sought what the respondents perceived of the question that the BOM verify all financial approvals and monitors use of funds. Majority (47.1%) of the respondents agreed, 80.8% of the respondents agreed or strongly agreed that the BOM verify all financial approvals and monitors use of funds, 11.5% of the respondents were neutral while 7.7% disagreed or strongly disagreed. The results confirm that in majority of the national public secondary schools, the BOM verify all financial approvals and monitors use of funds. However in some few schools, the BOM does not verify all financial approvals and do not monitor use of funds.
The respondents were also asked their view on the fact that the frequency and objectivity of internal audits determines level of financial accountability. Majority (49%) of the respondents strongly agreed that the frequency and objectivity of internal audits determines level of financial accountability while 7.7% of the respondents were neutral. Some 76.9% of the respondents agreed or strongly agreed that there are independent process checks of controls activities on ongoing basis while 15.4% of the respondents disagreed or strongly disagreed. From the results it can be concluded that majority of the respondents believe that the frequency and objectivity of internal audits determines level of financial accountability. Factor analysis was used to generate factor scores that were used as latent variables to assess the influence of Monitoring on financial accountability using simple linear regression. A scatter plot of financial accountability against Monitoring in figure 4. 1 shows an increasing pattern which is an indication of a positive linear relationship between Monitoring and financial accountability.  Vol.10, No.18, 2019 generally significant. This is means that the coefficient of Monitoring in the model is at least not equal to zero. Diagnosis of this bivariate model showed that the classical assumptions are also not violated in the simple regression model. The normality assumption was met as shown by the JB statistic which has a p-value of 0.421 that is greater than 0.05. The BP chi-square statistic for also had a p-value of 0.646 which is greater than 0.05 implying that the residuals to this model also exhibit homoscedasticity. The DW statistic generated for this model is also greater than the relative upper limit of the tabulated DW value at 0.05 implying independence of the residuals.
The regression estimates of the regression model show that Monitoring has a significant effect on financial accountability. The table shows a significant regression coefficient estimate of Monitoring (β =0.616, t=5.020, pvalue = 0.000). The P-value of the coefficient estimate is less than 0.05 implying significance at 95% level of confidence. This significant estimate shows that a unit increase in the levels of Monitoring in the national school set-up would increase the levels of the financial accountability index by 0.616 units through current ratio, debt collection rate, debt ratio and change in public equity. The P-value of the t-statistic of the coefficient estimate of Monitoring was 0.000 which was less than 0.05 implying a significant effect of Monitoring on financial accountability. The null hypothesis was therefore rejected and a conclusion drawn that Monitoring has a significant effect on financial accountability in national public secondary schools in Kenya. The equation below is generated from the model. ……………………………………………………………………….......Equation 4.1

Conclusions and recommendation 5.1 Conclusion
The results leads to a conclusion that there exists a positive and significant relationship between Monitoring and financial accountability in national public secondary schools in Kenya. This implies that when monitoring improves, financial accountability will improve. Monitoring, may be improved through, frequent internal audit by BOM, objective external audits by school auditors and improved BOM oversight. Financial accountability will improve through, internal audit trail of all revenues and expenditure, verification of actual and budgeted expenditure, finances will be used for the intended purpose and unauthorized expenditure and opportunity and rationalization of fraud will be eliminated

Recommendations
The government should employ a permanent internal auditor in each national public secondary school. Such an auditor should be independent and report directly to the government on monthly basis Monitoring. The BOM should also carry out regular internal audits to monitor use of finances. There should be frequent external audits by county auditors. Such audits should be objective and reflect the true financial status of the school. Auditors should be scrutinized frequently so that those with self-interest to benefit financially from the audit activities are rooted out.
The Principal and bursar should be allowed to evaluate the work done by the auditors and post to the central website. This rating will enable the government to identify effective and less effective auditors. It will also ensure that the auditors carry out their duties objectively, accurately and with the due diligence it deserves.
The BOM should take their oversight role seriously. They should frequently visit the schools to monitor implementation of projects and verify budgeted and actual expenditures. BOM should not have vested interest in school finances as this will derail their oversight role.