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International Journal of Advanced Research and Publications

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Financial Reporting Systems And Financial Performance Of Public Universities In Western Region, Kenya

Volume 5 - Issue 10, October 2022 Edition
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Author(s)
Lyndah Kahenda, Dr. Atieno Margaret, Dr. Kiganda Evans
Keywords
Financial reporting systems, Financial performance, Western region,
Abstract
Financial reporting systems are a subset of accounting information systems that are vital in managing entities; they put internal control mechanisms in place and enhance decision-making that improves efficiency and financial performance. Despite public universities increasing spending on financial reporting systems, challenges are still experienced concerning internal controls and decisions concerning payables and receivables. There is, therefore, a risk of misuse and wastage of public funds where for instance, funds amounting to over 60 billion shillings have been embezzled, misappropriated, and even invested in futile ventures. Several studies linking FRS and financial performance have been conducted though none focused on universities hence the lack of information on how they influence universities' performance. The purpose of this study therefore, was to establish the influence of financial reporting systems on the financial performance of selected public universities in Western region, Kenya. The technology acceptance model, diffusion of innovation theory, and balanced scorecard theories guided the research. The study targeted 215 respondents from 10 selected public universities in Western region, Kenya, where simple random sampling was used to obtain a sample of 138 respondents. A correlational research design was adopted, and data was collected using questionnaires and analysis of audited financial statements. Data were analyzed via descriptive and inferential statistics. Multiple regression analysis results showed that financial reporting systems had a significant negative influence on financial performance (net surplus/deficit) with coefficients of -0.214. The study concluded that the improvement of financial reporting systems would improve financial performance by reducing the net deficit of public universities in Western region, Kenya. The study, therefore, recommends that the management of public universities should enhance their systems to incorporate international financial reporting standards in the preparation of reports, enable automatic tracking of debtors and creditors to improve their liquidity position, and solidify their internal controls to diminish the probability of financial loss.
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