An assessment of the effectiveness of internal audit systems in the management of decentralised funds in Kenya A study of local authority transfer fund in Kisii Municipal Council

Abstract

The purpose of this study was to assess the effectiveness of the internal audit systems in the management of LATF in Kisii Municipal Council. The study objectives were to determine whether the LATF disbursements were used in accordance with the objectives of LATF and to establish the effectiveness of internal audit systems in the disbursements and use of LATF. A descriptive study design (survey) was adopted in conducting this study. The researcher targeted the upper and middle cadre employees of the Kisii Municipal Council and the Councilors. The data were collected using structured questionnaires. The data analysis was undertaken using percentages and weighted averages. The study established that the internal audit systems were averagely effective in the management of LATF funds. This was a result of: the internal audit department not being fully independent; lack of enough trained personnel in the internal audit department; lack of division of duties in the department and lack of close supervision of projects. The study further established that there were delays in the release of LATF disbursements. The following recommendations were made. The Kisii Municipal Council should organize for the internal audit department to be fully independent. The department should not be a section of another department. This will enable the department to execute its duties well and with ease. The council should ensure that the department is well staffed with enough and trained personnel. This will enable division of duties and close supervision of projects. The managers of the council should organize for frequent meetings with the senior employees of internal audit department to formulate modalities of improving the effectiveness of the audit department. The Ministry of Local Government together with the Central Government should ensure that the LATF disbursements are released on time. The research offers the following suggestions for further study: a case study design should be applied so that we can find out whether it will give different results; further investigations can be done across industries to uncover the similarities and differences when using the internal audit systems in the management of finances; further research can be done by using other research instrument like the interview schedule or open ended questionnaire because this may give more information on this field of study; a further study should be carried out involving more than one LA because the present study focused on only one whose findings may not be generalized to all LAs and a replication of this study should be carried out in future to determine whether there are any notable changes.