INTERNAL CONTROL PROCEDURES AND THE QUALITY OF FINANCIAL REPORTING IN MOMBASA AND KILIFI COUNTY GOVERNMENTS
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Abstract
The purpose of this study was to evaluate the relationship between the practices of internal control and the quality of financial reporting in the County Governments of Mombasa and Kilifi. Descriptive research design was applied. It involved a sample population of 117 participants, 62 of them in the Mombasa County, and 55 in the Kilifi County. A census methodology was used where all the respondents were employees of the finance, accounting, audit, and procurement units in the two County Governments. Structured questionnaires were used to collect data. Descriptive statistics were employed to examine the quantitative data. The average values within the dataset were determined by calculating measures of central tendency, which include mean, median, and mode. To illustrate the spread of the data, we utilized variability measures like range and standard deviation. Both the Mombasa and Kilifi County Governments' financial reporting quality was positively and significantly correlated with internal control measures, according to the study. Transparency, accountability, correctness, and reliability in financial reporting are more common in County Governments with robust and efficient systems of internal controls, according to the data. The study recommends institutionalizing and strengthening internal control procedures through proactive compliance enforcement, structured risk management, digital approval systems, and participatory budgeting supported by staff capacity building. These measures enhance accuracy and integrity in financial reporting while fostering accountability, transparency, public trust, and effective service delivery in line with sound governance principles.
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References
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Ali, F. A., Hassan, H. B., & Kadir, M. R. A. (2023). Budgetary control and its influence on the performance of SMEs in Somalia. International Journal of Professional Business Review, 8(12), e04119. https://doi.org/10.26668/businessreview/2023.v8i12.4119
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Ekiru, D. E., Chelogoi, S., & Kitur, L. (2024). The effectiveness of internal audit controls in enhancing public financial management: The case of Turkana County, Kenya. Journal of Business, Economics, and Management Research Studies, 2(2), 65–80. https://doi.org/10.69897/jobemrs.v2i2.120
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Ilugbo, A. N., Josiah, M., & Ozele, C. E. (2024). IFRS compliance as a moderator between ownership structure and financial reporting quality. FUDMA Journal of Accounting and Finance Research (FUJAFR), 2(3), 84–97. https://doi.org/10.33003/fujafr-2024.v2i3.101.84-9
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Issah, O., & Agyei Baah, S. (2025). Adoption of International Public Sector Accounting Standards and its impact on the quality of financial reporting. Dama Academic Scholarly Journal of Researchers, 10(4), 90–106. https://doi.org/10.4314/dasjr.v10i4.5
Kawira, L. K. (2025). Budgetary control and its influence on financial performance among public universities in the Mount Kenya Region, Kenya. Proceedings of the Meru University of Science and Technology International Conference (MUSTIC), 3(1). https://conference.must.ac.ke/index.php/mustic/article/view/94
Kimathi, S. K. (2025). Internal accounting control and the accuracy of financial statements in Kenyan public sector organizations. East African Finance Journal, 4(2), 18–33. https://doi.org/10.59413/eafj/v4.i2.2
Kwanbo, M. L., Baba, E. A., Akanet, S., & Tanko, M. (2023). Financial reporting quality and internal control systems: A mixed-method assessment. International Journal of Management, Finance and Accounting, 4(1), 1–21. https://doi.org/10.33093/ijomfa.2023.4.1.1
Lnenicka, M., & Nikiforova, A. (2021). Transparency-by-design: The role and function of open data portals. Telematics and Informatics, 61, 101605. https://doi.org/10.1016/j.tele.2021.101605
Madugba, J. U., Ben-Caleb, E., Okpe, I. I., Oludare, S. F., Ogochukwu, B. J., & Mbamara, K. I. (2020). Risk management committees, financial reporting quality, and performance of deposit money banks in Nigeria. Research in World Economy, 11(5), 288. https://doi.org/10.5430/rwe.v11n5p288
Mahdavian, S. E., Lashgari, Z., Khosravipour, N., Esmaelzadeh Moghari, A., & Yeganegi, M. (2021). The influence of internal control regulations on accrual quality. Journal of Management Accounting and Auditing Knowledge, 11(44), 231–245. http://www.ijfma.ir/article_23552_c601ff74c228aa9ba336a6c717fb6642.pdf
Metlej, G., Zalzali, Y., & Farhat, M. (2021). The effect of financial risk management implementation on the quality of financial disclosure. International Journal of Economics and Finance, 13(9), 61. https://doi.org/10.5539/ijef.v13n9p61
MIP. (2024, March 12). A guide on understanding 3 key activities of internal control. MIP Fund Accounting Software. https:>http://www.mip.com/blog/managing-nonprofit-internal-controls/
Morris, J. (2021). Five Pillars of Effective Internal Control for Managers. The publisher involved manufacture of books and other materials of Harvard Business Review.
Musalimwa, L. M., & Sangoro, O. (2023). Effects of internal audit capacity on quality of financial reporting in county governments in Western Kenya. Journal of Business, Economics, and Management Research Studies, 1(3), 32–47. https://doi.org/10.69897/jobemrs.v1i3.75
Mwanjaa Said Lyezia, and Asha Katamba. 2024. “The Influence of Financial Reporting Quality and Efficiency in Resources Utilization on Public Sector Financial Performance: Evidence from Tanzania”. Asian Journal of Economics, Business and Accounting 24 (7):135–146. https://doi.org/10.9734/ajeba/2024/v24i71398.
Nichita, M. (2018). Risk reporting as a mechanism for improving the quality of information presented in financial statements. Proceedings of the International Conference on Business Excellence, 12(1), 671–682. https:>10.2478/picbe-2018-0060
Njenga, P. (2021). The regulation of the general adoption of financial reporting standards by the CMA in Kenya. Vol 15, No 3, pp. 205 – 220 Journal of Financial Regulation and Compliance.
Noella, I. V. (2024). Effect of budgetary control measures on financial performance of the County Government of Kajiado [Unpublished master’s project, Mount Kenya University]. MKU Repository. https://erepository.mku.ac.ke/handle/123456789/6678
Office of the Auditor-General. (2021, December 8). Audit report on the Mombasa County Executive for the financial year ending 30 June 2020. OAG Kenya. https://www.oagkenya.go.ke/wp-content/uploads/2022/01/County-Executive-of-Mombasa-2019-2020.pdf
Office of the Auditor-General. (2023a, March 14). Audit report on the Municipality of Kilifi for the financial year ending 30 June 2021. OAG Kenya. https://www.oagkenya.go.ke/wp-content/uploads/2023/10/County-Executive-of-Kilifi-2021-2022.pdf
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Office of the Auditor-General. (2024b, May 25). Consolidated audit report on County Governments’ Revenue Funds for the 2023 financial year. OAG Kenya. https://www.oagkenya.go.ke/wp-content/uploads/2024/07/Combined-Consolidated-Report-County-Governments-Revenue-Funds-2023.pdf
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Selickaitė, D., Hutzler, Y., Pukėnas, K., Block, M. E., & Rėklaitienė, D. (2019). The analysis of the structure, validity, and reliability of an inclusive physical education Self-efficacy instrument for Lithuanian physical education teachers. SAGE Open, 9(2), 215824401985247. https://doi.org/10.1177/2158244019852473
Sutton, R. (2021). Fundamentals of internal control systems. Academic Press.
Taylor, S. (2022). Compliance and internal control risk management strategies. CRC Press.
Wanja, M., & Ibrahim, A. (2023). Internal auditing approaches and the quality of financial reporting in Kenyan county governments. Strategic Journal of Business and Change Management, 10(4). https://doi.org/10.61426/sjbcm.v10i4.2797
Warren, C. (2021). A complete handbook on internal control and risk management. Wiley.
Wright, S., & Moore, A. (2023). The strategic value of compliance as a driver for competitive advantage. Strategic Management Journal, 44(1), 99–116. https://doi.org/10.1002/smj.3287
Youssef, N., & Alharbi, H. (2022). Testing the reliability and validity of the English version of the Student Evidence-Based Practice Questionnaire among Arabic-speaking undergraduates in health sciences: A cross-sectional analysis. Nurse Education Today, 118(105525), 105525. https://doi.org/10.1016/j.nedt.2022.105525
Abraham, R., El Chaarani, H., & Tao, Z. (2024). The influence of audit oversight quality on the financial performance of firms in the United States: A subjective evaluation. Journal of Risk and Financial Management, 17(4), 151. https://doi.org/10.3390/jrfm17040151
Ademola AO: Ben-Caleb E: Madugba JU: Adegboyegun AE: Eluyela DF (2020). An empirical study on the implication of international public sector accounting standards (IPSAS) adoption and implementation in Nigerian public sector. International Journal of Financial Research, 11(1), 434–446. https:>[Online]. Available from: https://www.aimsciences.org/article/doi:10.5430/ijfr.v11n1p434
Ademola, O., Adeyemi, O., & Akintoye, I. R. (2023). Financial technology as a remedy for risks in financial reporting. ResearchGate. https://www.researchgate.net/publication/370760796_FINANCIAL_TECHNOLOGY_AS_A_PANACEA_FOR_FINANCIAL_REPORTING_RISKS
Adisa, M., Maingi, M., & Lyani, M. N. (2024). Legislative budgetary control and its impact on financial accountability in Nairobi County, Kenya. Journal of Accounting and Finance in Emerging Economies, 10(2), 287–296. https://doi.org/10.26710/jafee.v10i2.3050
Ali, A. H., & Mgadmi, N. (2024). A proposed model for preparing public sector financial reports using International 22 accounting standards: Practical evidence from selected government facilities in Iraq. International Journal of Religion, 5(11), 5476–5501. https://doi.org/10.61707/s4eahy15
Ali, F. A., Hassan, H. B., & Kadir, M. R. A. (2023). Budgetary control and its influence on the performance of SMEs in Somalia. International Journal of Professional Business Review, 8(12), e04119. https://doi.org/10.26668/businessreview/2023.v8i12.4119
Anto, L. O., & Yusran, I. N. (2023). Determinants influencing the quality of financial statements. International Journal of Professional Business Review, 8(3), e01331. https://doi.org/10.26668/businessreview/2023.v8i3.1331
Bujang, M. A. (2025). The dilemma and wisdom in translating p values: A collaborative approach to strengthening scientific validity. BioMed Research International, 2025(1), 6703756. https://doi.org/10.1155/bmri/6703756
Biasaha, S. G., & Wekesa, M. (2025). Internal control systems and the quality of financial reporting in Kenya’s coastal county governments. Strategic Journal of Business & Change Management, 12(2), 1051–1069. http://dx.doi.org/10.61426/sjbcm.v12i2.3257
Bierstaker, J., Holan, C., & Wright, A. (2020). Internal control: A manager’s journey. Routledge.
Budianto, R., Susanto, D., Ginanjar, S., & Suyono, E. (2024). Factors influencing the quality of financial reports in SMEs. Risk Governance and Control: Financial Markets & Institutions, 14(2), 15–24. https://doi.org/10.22495/rgcv14i2p2
Burke, G., & Riley, L. (2025). Equity crowdfunding compliance with continuous financial reporting requirements in weak enforcement environments. SSRN. https://doi.org/10.2139/ssrn.5463161
Christensen, B., Lei, L. (Gillian), Shu, S. Q., & Thomas, W. (2023). The impact of audit regulation on managerial information quality: Evidence from PCAOB inspection access and forecast precision. Accounting, Organizations and Society, 106(101403), 101403. https://doi.org/10.1016/j.aos.2022.101403
Ekiru, D. E., Chelogoi, S., & Kitur, L. (2024). The effectiveness of internal audit controls in enhancing public financial management: The case of Turkana County, Kenya. Journal of Business, Economics, and Management Research Studies, 2(2), 65–80. https://doi.org/10.69897/jobemrs.v2i2.120
Fekete, I. (2022). Decision-making support through risk management tools. Public Finance Quarterly (Pénzügyi Szemle). https://real.mtak.hu/138299/1/A_FeketeI_2022_K1.pdf
Groves, R., Fowler J., F., Couper, M., lepkowski, J., singer, E. and Tourangeau, R. (2011) Survey Methodology. John Wiley & sons. - references - scientific research publishing. (n.d.). Scirp.org. Retrieved November 2, 2025, from https://www.scirp.org/(S(351jmbntv-nsjt1aadkposzje))/reference/referencespapers?referenceid=3783239
Hasbullah, H., Tullah, R. H., & Farhan, R. (2023). Factors shaping financial reporting quality: A systematic literature review. International Journal of Trends in Accounting Research, 4(1), 59–68. https://doi.org/10.54951/ijtar.v4i1.498
Ilugbo, A. N., Josiah, M., & Ozele, C. E. (2024). IFRS compliance as a moderator between ownership structure and financial reporting quality. FUDMA Journal of Accounting and Finance Research (FUJAFR), 2(3), 84–97. https://doi.org/10.33003/fujafr-2024.v2i3.101.84-9
International Monetary Fund, Statistics Department. (2024). Papua New Guinea: Technical assistance report—Government finance statistics and public sector debt statistics mission (August 2–15, 2023). IMF eLibrary. https://doi.org/10.5089/9798400269929.019.A001
Issah, O., & Agyei Baah, S. (2025). Adoption of International Public Sector Accounting Standards and its impact on the quality of financial reporting. Dama Academic Scholarly Journal of Researchers, 10(4), 90–106. https://doi.org/10.4314/dasjr.v10i4.5
Kawira, L. K. (2025). Budgetary control and its influence on financial performance among public universities in the Mount Kenya Region, Kenya. Proceedings of the Meru University of Science and Technology International Conference (MUSTIC), 3(1). https://conference.must.ac.ke/index.php/mustic/article/view/94
Kimathi, S. K. (2025). Internal accounting control and the accuracy of financial statements in Kenyan public sector organizations. East African Finance Journal, 4(2), 18–33. https://doi.org/10.59413/eafj/v4.i2.2
Kwanbo, M. L., Baba, E. A., Akanet, S., & Tanko, M. (2023). Financial reporting quality and internal control systems: A mixed-method assessment. International Journal of Management, Finance and Accounting, 4(1), 1–21. https://doi.org/10.33093/ijomfa.2023.4.1.1
Lnenicka, M., & Nikiforova, A. (2021). Transparency-by-design: The role and function of open data portals. Telematics and Informatics, 61, 101605. https://doi.org/10.1016/j.tele.2021.101605
Madugba, J. U., Ben-Caleb, E., Okpe, I. I., Oludare, S. F., Ogochukwu, B. J., & Mbamara, K. I. (2020). Risk management committees, financial reporting quality, and performance of deposit money banks in Nigeria. Research in World Economy, 11(5), 288. https://doi.org/10.5430/rwe.v11n5p288
Mahdavian, S. E., Lashgari, Z., Khosravipour, N., Esmaelzadeh Moghari, A., & Yeganegi, M. (2021). The influence of internal control regulations on accrual quality. Journal of Management Accounting and Auditing Knowledge, 11(44), 231–245. http://www.ijfma.ir/article_23552_c601ff74c228aa9ba336a6c717fb6642.pdf
Metlej, G., Zalzali, Y., & Farhat, M. (2021). The effect of financial risk management implementation on the quality of financial disclosure. International Journal of Economics and Finance, 13(9), 61. https://doi.org/10.5539/ijef.v13n9p61
MIP. (2024, March 12). A guide on understanding 3 key activities of internal control. MIP Fund Accounting Software. https:>http://www.mip.com/blog/managing-nonprofit-internal-controls/
Morris, J. (2021). Five Pillars of Effective Internal Control for Managers. The publisher involved manufacture of books and other materials of Harvard Business Review.
Musalimwa, L. M., & Sangoro, O. (2023). Effects of internal audit capacity on quality of financial reporting in county governments in Western Kenya. Journal of Business, Economics, and Management Research Studies, 1(3), 32–47. https://doi.org/10.69897/jobemrs.v1i3.75
Mwanjaa Said Lyezia, and Asha Katamba. 2024. “The Influence of Financial Reporting Quality and Efficiency in Resources Utilization on Public Sector Financial Performance: Evidence from Tanzania”. Asian Journal of Economics, Business and Accounting 24 (7):135–146. https://doi.org/10.9734/ajeba/2024/v24i71398.
Nichita, M. (2018). Risk reporting as a mechanism for improving the quality of information presented in financial statements. Proceedings of the International Conference on Business Excellence, 12(1), 671–682. https:>10.2478/picbe-2018-0060
Njenga, P. (2021). The regulation of the general adoption of financial reporting standards by the CMA in Kenya. Vol 15, No 3, pp. 205 – 220 Journal of Financial Regulation and Compliance.
Noella, I. V. (2024). Effect of budgetary control measures on financial performance of the County Government of Kajiado [Unpublished master’s project, Mount Kenya University]. MKU Repository. https://erepository.mku.ac.ke/handle/123456789/6678
Office of the Auditor-General. (2021, December 8). Audit report on the Mombasa County Executive for the financial year ending 30 June 2020. OAG Kenya. https://www.oagkenya.go.ke/wp-content/uploads/2022/01/County-Executive-of-Mombasa-2019-2020.pdf
Office of the Auditor-General. (2023a, March 14). Audit report on the Municipality of Kilifi for the financial year ending 30 June 2021. OAG Kenya. https://www.oagkenya.go.ke/wp-content/uploads/2023/10/County-Executive-of-Kilifi-2021-2022.pdf
Office of the Auditor-General. (2023b, April 6). Audit findings on the County Assembly of Mombasa for the financial year ending 30 June 2022. OAG Kenya. https://www.oagkenya.go.ke/wp-content/uploads/2023/11/County-Assembly-of-Mombasa-2021-2022.pdf
Office of the Auditor-General. (2024a, February 27). Audit report on the County Assembly of Kilifi for the financial year ending 30 June 2023. OAG Kenya Repository. http://217.21.116.44:80/xmlui/handle/123456789/25821
Office of the Auditor-General. (2024b, May 25). Consolidated audit report on County Governments’ Revenue Funds for the 2023 financial year. OAG Kenya. https://www.oagkenya.go.ke/wp-content/uploads/2024/07/Combined-Consolidated-Report-County-Governments-Revenue-Funds-2023.pdf
Office of the Auditor-General. (2025, February 13). Comprehensive report of the Auditor-General on County Governments and County Executives for the 2023/2024 financial year. OAG Kenya. https://www.oagkenya.go.ke/wp-content/uploads/2025/02/County-Executives-2023-2024.pdf
Selickaitė, D., Hutzler, Y., Pukėnas, K., Block, M. E., & Rėklaitienė, D. (2019). The analysis of the structure, validity, and reliability of an inclusive physical education Self-efficacy instrument for Lithuanian physical education teachers. SAGE Open, 9(2), 215824401985247. https://doi.org/10.1177/2158244019852473
Sutton, R. (2021). Fundamentals of internal control systems. Academic Press.
Taylor, S. (2022). Compliance and internal control risk management strategies. CRC Press.
Wanja, M., & Ibrahim, A. (2023). Internal auditing approaches and the quality of financial reporting in Kenyan county governments. Strategic Journal of Business and Change Management, 10(4). https://doi.org/10.61426/sjbcm.v10i4.2797
Warren, C. (2021). A complete handbook on internal control and risk management. Wiley.
Wright, S., & Moore, A. (2023). The strategic value of compliance as a driver for competitive advantage. Strategic Management Journal, 44(1), 99–116. https://doi.org/10.1002/smj.3287
Youssef, N., & Alharbi, H. (2022). Testing the reliability and validity of the English version of the Student Evidence-Based Practice Questionnaire among Arabic-speaking undergraduates in health sciences: A cross-sectional analysis. Nurse Education Today, 118(105525), 105525. https://doi.org/10.1016/j.nedt.2022.105525