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ISSN: 2047-2528 Vol. 2 No. 8 [34-50]

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AN ASSESSMENT OF THE EFFECT OF ACCOUNTING PRACTICES ON THE

MANAGEMENT OF FUNDS IN PUBLIC SECONDARY SCHOOLS:

A Study of Kisii Central District, Kenya

Nyakundi Nyanyuki

Faculty of Commerce, Department of Finance & Accounting,

Kisii University College. P.o. Box, 408-40200, Kisii.

E-mail: [email protected]

Dr. Charles Okioga



Dr. Patrick Ojera

School of Business and Economics. Maseno University.

P.O. Box 333 Maseno.

E-mail: [email protected]

Robert Nyamao Nyabwanga



Corresponding author: [email protected]

Tom Onsare Nyamwamu

Kisii University College, Department of Business Administration

P.O. Box, 408-40200, Kisii.

E-mail:[email protected]

ABSTRACT

In Kenya, Secondary education expenditure has over the years increased with the Ministry of Education statistics indicating that the expenditure increased from 21.7% to 27% of total education budget in the financial years 2004/2005 and 2007/2008 respectively. Despite this increased funding, concerns over the accuracy of fees arrears continue to be raised, questioning the management of funds in public secondary schools. By 2008, public secondary schools’ arrears from fees collection had accumulated to kshs.15.5 billion. This study therefore sought to establish the effect of accounting practices on the management of funds in public secondary schools in Kisii Central District, Kenya. The study employed a survey design using 90 respondents, consisting of 45 Principals and 45 Bursars. Closed-ended questionnaires were used to collect primary data which were analyzed using frequency distributions, weighted means, Pearson’s correlation coefficient and regression analysis. The study revealed that the level of Management of Funds in public secondary schools is positively correlated to the extent of use of Accounting Practices at 0.01 significance level. The coefficient of determination (R2) indicated that

92.1% of the variations in Management of Funds could be explained by changes in accounting practices with the F-Statistic (899.091) significant at 95% confidence level indicating that management of funds is influenced by the accounting practices. The study concluded that accounting practices have an influence on management of funds in public secondary schools and recommends the use of such accounting practices to a very large extent and recommends the mandatory use of accounting practices so as to improve the general management of funds in public secondary schools in Kenya.

Keywords: Accounting Practices, Management of Funds, Schools.

[email protected]

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1.1 INTRODUCTION

The growing demand for education and increased literacy has led to massive expenditure on education all over the world. Education in developing countries is the key to any meaningful

socio-economic development and reduction in poverty level. According to UNESCO (1961),

African countries resolved to provide free, universal and compulsory primary education,

increase secondary education by 30% of the children who complete primary education,

increase higher education by 20% of students who complete secondary education, and

improve the quality of schools and universities. In order to provide education opportunities to their citizens, developing countries have had to increase their public expenditure on

education, which at times exceeds the overall growth in gross national product. This

normally exerts a lot of strain on other sectors of the economy. It is therefore important to

control the expenditure on education so as to achieve a balanced growth in all sectors of the

economy.

Since independence in 1963, the secondary school financing has been increasing with an

expansion in enrolment. For example, student enrollment in secondary schools increased

from 30,000 in 1963 to 926,149 in 2004 with government spending up to 29 percent of

total government budget on education sector in 1998 and has remained high at 27 per cent

in the fiscal year 2004/2005 (Republic of Kenya,2006). The expenditure on secondary education alone in 2004/2005, as a percentage of GDP and total education budget was 1.6

percent and 21.7 percent respectively (KIPPRA, 2007). Through the Bursary Scheme, which

was introduced by the government, disbursements to secondary education have been on an

increasing trend. In the FY1998/1999, Kshs.0.25 billion were disbursed and by the

FY2005/2006, this had been increased to Kshs.1.428 billion (Oyuke, 2007). Between 2003 and 2008, donors and the government paid Kshs.28.3 billion for infrastructural

improvement in schools (Republic of Kenya,2008). The parents and communities too have

been meeting a substantial proportion of the cost of secondary education. For example,

before 2008, parents contributed up to 55 percent of the cost of secondary education

(Ngware et al, 2007).

The secondary school enrollment is expected to increase to 2.7 million in 2015 (KIPPRA,

2007). At this projected enrollment, the expenditure in education is expected to increase

further requiring increased resource mobilization and efficient use of the available funds.

With the increased secondary school financing and possible financing prospects from the

government and other stakeholders, the secondary education in Kenya stands a big challenge on account of accountability and effective utilization of funds (KIM, 2010). The

problem with Kenyan school’s management systems is its `anarchic’ nature (KIM, 2010).

Teachers and board of governors (BOG) without relevant skills have been left in charge of

important management processes like accounting, planning, procurement and project

management (KIM, 2010).

Although secondary school Principals are regarded as financial controllers and accounting

officers at school levels, most of them have no professional qualifications to enable them

execute their duties effectively (Langat, 2008). They therefore require initial and regular in-

service course in financial management so as to be fully conversant with school accounting

and book-keeping procedures and must be capable of supervising and controlling the work of the bursar and the accounts clerk (secondary schools Heads’ manual, 2005). School

bursars and accounts clerks are expected to give principals assistance in handling

accounting or financial matters (Langat, 2008). They are supposed to use the accounting

instructions issued by the MOE to maintain proper accounting records for all the school’s

revenues and expenditure (Republic of Kenya,2003).

With the increased funds being channeled to secondary schools by the MOE through such

schemes as FSE, bursary scheme and other infrastructural funding programmes,

incompetence and unaccountability at the dissatisfaction of parents and students continue

to be an area of concern. School creditors and debtors continue to accumulate at an

increasing trend. For example, by 2008, secondary school creditors had accumulated to

Kshs.5.5 billion against the schools’ arrears from fees collection and other debtors of


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Kshs.15.5 billion (Republic of Kenya, 2008). In Kisii Central District (KCD) alone, secondary

schools’ arrears from fees had accumulated at percentage increases of 7.28, 8.90, 12.60

and 15.18 in 2005,2006,2007 and 2008 respectively (KCD Audit Unit, 2009). Complaints have been raised by parents, form four leavers and the government over the accuracy of

such fees arrears leading to retention of KCSE certificates. According to the study

conducted by KIPPRA (2007), in some cases school leavers were denied their KCSE

certificates over non-existent arrears, with some parents accusing the schools of making

fictitious fee balance claims. The study indicated that day schools were overcharging

parents by an average of Sh.3, 200 annually. This brings into sharp focus the operation of accounting practices in Kenya’s public secondary schools. It is not clear if the existing

accounting practices are operating effectively in the provision of accurate financial

information for proper decision making by the school principals. Studies have been done on

the effects of decentralization of school funds, parental contribution and the impact of

government instructions on financial management in public secondary schools in Kenya, but little empirical literature does exist done on the effects of accounting practices on the

management of funds in public secondary schools.

It is against this background that this study sought to establish the effects of accounting

practices on the management of funds in public secondary schools in Kisii Central District.

More, specifically, the study sought to determine the extent of use of accounting practices in public secondary schools, the level of management of funds in public secondary schools,

and the relationship between the extent of use of accounting practices and the level of

management of funds in public secondary schools.

1.2 LITERATURE REVIEW

Cadwell (1994), was concerned with the effects of schools’ resource management on the

learning outcome. Principals interviewed reported that with decentralization of authority,

responsibility and accountability to schools, the management of schools improved and

consequently an improvement in the learning outcomes. He also researched on the links

between elements of reforms and learning outcomes. He noted that of importance are the paths of indirect effects, illustrated for planning and resource allocation benefits which are

mediated in respect to its effect on curriculum and learning benefits through personnel and

professional benefits and confidence in attainment of school of the future (SOF) objectives.

Therefore realizing the expected benefits of better resource management, clearer sense of

direction, increased accountability and responsibility, greater financial and administrative flexibility, and improved long – term planning, will have no direct effect on curriculum and

learning benefits but will have an indirect effect on the extent they impact on personnel and

professional benefits which in turn have a direct effect on curriculum and learning benefits.

Winkler et al (2007) reviewed literature from Chile, where the central government started a

policy to fund school development project as a strategy of activating greater management and parental participation at the school level. A study of 50 Chilean school found that

schools with school development projects had better student performance, but those in

municipalities that fund a higher share (less participatory) of total education expenditure

did worse.

Ikoya (2005) carried out a study on centralization and decentralization of schools’ physical

facilities management in Nigeria and from his findings he concluded that decentralization is

a more efficient method of managing schools infrastructure because it promotes

accountability and reduces official corruption in schools administration. His study shows

that non-availability of physical facilities in many schools may not necessarily be due to

inadequate funds, but to inefficient management of available funds. With decentralization of the Principals’ roles accounting books are likely to be continuously reviewed by an

independent organ through increased frequency of extraction and application of the trial

balance making them more accountable to their staff, parent, community as well as the

ministry of Education thus enhancing judicious use of school funds.

Galiani et al (2004), did a study in Argentina, on secondary school education and tested the


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relationship between educational outcomes, measured by test scores, and decentralization.

The findings show that the provinces exhibiting good public sector management, which was

proxied by size of the fiscal deficit, experienced significant and positive gains in test scores. The reverse was true for provinces with poor public sector management. This led to the

conclusion that decentralization increased school performance but at the cost of greater

inequality.

Koross et al (2008) conducted a study on the principal’s and students’ perceptions on

parental contribution to financial management in secondary schools in Kenya. Financial management outcomes basically involved looking at whether finances had been well

managed with no or minimal cases of financial misappropriation. Most of the principals

were of the opinion that parental involvement in the area of finances in secondary schools

had strong influence on financial management outcomes. They noted that parental

involvement will not have direct effect on academic performance of schools but will directly affect financial transparency in schools through the preparation and application of financial

statements. The school’s financial transparency could be improved through increasing

parental activities on school’s financial management such as development of budget, budget

execution, fund raising planning and project implementation among others.

Liang (1996), noted that parent – teacher and school – monitoring committee meetings held on regular basis provide support in addressing school issues and they succeed in enforcing

some level of accountability in the system. In Armenia, he identified the role of parents in

education finance and management to be that of raising funds for different purpose and

support in after – school activities and also support the progress of children in school like

increasing supplies that support learning. He also conducted a study in Bangladesh, on a female secondary school assistance project used mechanisms to encourage direct

involvement of both parents and community members in the process of changing

community mindsets towards the education of women. From this project, it emerged that

assignment of meaningful responsibilities and control over project resources to parents and

community members led to accountable systems that had long term sustainability. Such

accountable systems results to improved maintenance of books of accounts, extraction of trial balances, preparation of financial statements and improved budgeting process in

schools.

Langat (2008), conducted a study on the impact of government instructions on financial

management in public secondary schools in Kenya, a case study of Nakuru Municipality,

using an ex post facto research design. His objectives were to asses the impact of

government financial management instructions on: financing physical facilities, investment

activities, financing staff training, recurrent expenditure and establish the challenges facing public secondary schools in implementing the government financial instructions. He

targeted 18 public secondary schools' head teachers within Nakuru municipality. His

findings were that the government financial instructions had limited the power of the school

heads to arbitrarily determine and control the financing of physical facilities. However the

instructions had regulated investment activities in the schools to avoid wastage of resources

and ensure high returns and accountability. He also found that the government instructions had well regulated staff training in the schools to match their needs and

resources. They also facilitated the processing and update of information in the financial

statements as evidenced by improved management, transparency and accountability in the

schools’ recurrent expenditures. Langat noted that lack of adequate resources and flexibility

was the major challenge to the implementation of government financial management instructions and fees guidelines in the schools. He recommended for the need to properly

educate and train the head teachers (school’s chief executives) on the importance and

implementation of government financial management instructions and fees guidelines.

Okumbe (1998), dealt with the cost of education and sources of income to meet the

educational costs. He was also concerned with spending of income in an objective, efficient

and effective manner in order to adhere to educational objectives and beliefs. From his

study he established that budget preparation was common in most schools but was not

strictly adhered to. In 1988, the government of Kenya under the structural adjustment


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programme implemented the cost-sharing policy in the provision of the social services

including education (Okumbe 1998). Although the policy was meant to revitalize planning

and management of education, it created many problems including the determination of the amount of fees to be charged in schools.

Although many parents complained of mismanagement of school funds, very few corrupt or

inept head teachers were disciplined. The result was that most finances raised from parents

did not in the final analysis improve the quality of teaching or students welfare (TIQET,

1999). In secondary schools, an annual turnover of ten million Kenyan shillings is managed by accounts clerks and some head teachers have little knowledge in financial management.

The same managers may not have skills in project management, though they are charged

with planning and implementing expensive projects in schools (Okumbe,1998). These

projects normally collapse due to poor supervision and misappropriation of funds. To this

end the government in 2003, reviewed and released financial management instructions for educational institutions to manage their resources efficiently. Despite this, an impact on

financial transparency and accountability in the management of secondary schools finances

is yet to be felt.

In summary, from the review of the existing literature, it is clear that various aspects of

improving transparency and accountability in the management of school finances have been explored. However, such transparency and accountability in the management of

school finances have not been attained to the satisfaction of stakeholders. Little research

has been done on the effects of accounting practices on the management of funds in public

secondary schools in Kenya. It was against this background, that this study sought to

establish the effects of the extent of use of accounting practices on the management of funds in public secondary schools in Kisii Central District, Kenya.

1.3 CONCEPTUAL FRAMEWORK

It was conceptualized that, the extent of use of accounting practices was expected to cause

an effect on the level of management of funds in public secondary schools. Where adequate accounting practices are in place and extensively used, the level of management of funds is

likely to be higher in such schools and vice versa. The various elements of accounting

practices have to interplay with the various elements of management of funds for

meaningful relationship to be interfered between the two variables. The interplay among the

elements of the two variables is as shown in the figure below:

Independent variable Dependent Variable

Source: Self -Conceptualization, 2011

1.4 RESEARCH METHODOLOGY

The study adopted a survey design to investigating into the effects of accounting practices

on the management of funds in public secondary schools. The target population was 45

Principals and 45 bursars in the 45 public secondary schools in Kisii Central District.

Census sampling technique was used to include all the principals and bursars in the

Accounting Practices

Book keeping.

Trial Balance.

Financial Statements.

Internal controls.

Fund Accounting.

Computerized Accounting

Management of funds

Nature of Audit Reports.

Effectiveness of Financials Reports.

Satisfaction Level of Budget

Management.

Satisfaction Level in School project

Investment


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sample. A structured questionnaire was used to collect primary quantitative data. The

questionnaire was piloted to ten public secondary schools in the adjacent Masaba North

District. Pearson’s Product Moment Correlation Coefficient was used to test the reliability of the questionnaire items and a coefficient of 0.73 was obtained and considered adequate

enough. Data was analyzed using descriptive statistics such as weighted mean, percentages

and frequency distributions. It was presented by use of tables. A simple regression analysis

was used to establish the relationship between the extent of use of accounting practices

and the level of management of funds in public secondary schools. The regression model

used was: Y= a+bx

where: Y= level of management of funds in public secondary schools.

x=accounting practices used in public secondary schools.

a, b are constants.

1.5 RESULTS AND DISCUSSION

1.5.1 Extent of use of Accounting Practices in Public Secondary Schools.

This section summarizes the findings on the extent of use of accounting practices in public

secondary schools in terms of book-keeping, update of the books of accounts,

1.5.1.1 Bookkeeping

With regard to book-keeping, the results of the analysis as shown in Table 1 established

that cash books and the receipt books were maintained very often as indicated by

their weighted averages of 4.75 and 4.78 respectively. The ledger book, the journal

voucher book and the general ledger book are often maintained as shown by their weighted averages of 4.44, 3.92 and 4.08 respectively. The finding shows that public

secondary schools often do maintain adequate books of accounts an indication that

book-keeping is being used to a larger extent in secondary schools. This finding is in line

with the finding of Liang (1996) who established that assignment of meaningful

responsibilities and control over project resources to parents and community members improved maintenance of books of accounts in schools.

Table 1: Book-keeping

Accounting books

Never

1

Rarely

2

Sometimes

3

Often

4

Very

often

5

wi

Cash Book

0

0

5

10

64

79

375

4.75

Ledger Book 2 2 10 10 55 79 351 4.44

Receipt Book 0 0 5 7 67 79 378 4.78

Journal Voucher

Book

8 7 11 10 43 79 310 3.92

General Ledger Book 6 7 9 10 47 79 322 4.08

Source: Survey data,2011

With regard to update of books of accounts, results of the analysis as shown in Table 2

below show that accounting for money received from fees and other sources was found to

be used very often in updating the books of accounts as indicated by its larger weighted average of 4.57. Journalization of the school transactions was found to be

least used as indicated by its lower weighted average of 4.04. This finding shows that

public secondary schools in Kisii Central District do often update their books of

accounts, an indication that the information contained in the books of accounts is

accurate and reliable. This finding was in line with Langat (2008) who asserted that

update of information in the financial statements led to improved management, transparency and accountability in the schools’ recurrent expenditure.


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Table 2: Update of Books of Accounts

Aspect

Never

1

Rarely

2

Sometimes

3

Often

4

Very

often

5

wi

Reconciling cash and bank

accounts

2

1

17

14

45

79

336

4.25

Accounting for money

received from fees and

other sources

1 0 6 18 54 79 61 4.57

Payment of creditors and

other payables

2 1 10 19 47 79 345 4.37

Journalization of school

transactions

5 6 13 12 43 79 319 4.04

Making entries for

purchase or disposal of

fixed assets

1

7

13

13

45

79

332

4.20

Source: Survey data, 2011.

1.5.1.2 Trial Balance

Table 3 below, summarizes responses on how periodic secondary schools extract the trial

balance from the ledger books. A greater percentage, 33% (26), of the respondents indicated

that they did extract the trial balance on quarterly basis. This was followed by yearly 28%

(22), monthly 21% (17) while the remaining 18% (14) extracted the trial balance on semi-annually basis. As such, the quarterly period was most frequently used in the extraction of

trial balances in schools. The findings shows that trial balance extraction, as a tool to

management of funds in schools is rarely used to test for completeness of accounting

records amongst public secondary schools in Kisii Central District. This was in

contradiction with Ikoya (2005)’s finding that decentralization increases the frequency of

trial balance extraction and therefore continuous review of books of accounts. Table 3: Trial Balance Extraction

Period Frequency Percentage

Not at all 0 0%

Monthly 17 21%

Quarterly 26 33%

Half yearly 14 18%

Yearly 22 28%

TOTALs 79 100%


Further, respondents were requested to indicate the extent to which they applied the trial

balance in proving the authenticity of the records in the books of accounts- to search for

and correct errors. The results of the analysis as shown in table4 below show that the trial

balance is applied in authenticating the entries in the books of accounts to a large extent. However, the equality test of debt and credit totals of the trial balance was commonly used

in authenticating entries in the ledger books as indicated by its larger weight of 3.85.

Classification of the transactions into debt and credit entries is least often used as indicated

by its lower weighted average of 3.59. As such the trial balance is used to a larger extent to

authenticate the information contained in the books of accounts among public secondary schools in Kisii Central District. This implies that the information contained in the books of


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accounts is accurate, correct and reliable for decision making. The finding was in line with

Ikoya (2005), who noted that the application of the trial balance will enhance the principals’

accountability to stakeholders.

Table 4: Trial Balance Application

Events

Not at

all

1

Less

extent

2

Moderate

extent

3

Large

extent

4

Very

large

extent

5

wi

Debt and credit entry

classification.

6 3 24 30 16 79 284 3.59

Debt and credit entries’ totals

balance

3 3 19 32 22 79 304 3.85

Search and correct errors

4 12 14 29 20 79 286 3.62

Source: Surveydata, 2011.

1.5.1.3 Application of Financial Statements.

Table 5 summarizes responses in regard to application of financial statements in public

secondary schools. The results shows that the financial statements are applied to a

large extent for comparison purposes and preparation of financial reports to

stakeholders. However, the statements are to a more large extent used in the preparation of

financial reports to stakeholders as indicated by its larger weighted average of 3.94. This

implies that financial statements are a basis for decision making in public secondary schools. This finding was in line with Koross et al (2005), who asserted that preparation

and application of financial statements enhances financial transparency in schools.

Table 5: Application of Financial Statements.

Aspect Not at

all

1

Less extent

2

Moderate

extent

3

Large

extent

4

Very large

extent

5

wi

For comparison purposes.

2

10

15

26

26

79

301

3.81

In preparing financial

reports to stakeholders

3

7

12

27

30

79

311

3.94

Source: Survey data,2011.

1.5.1.4 Internal Controls

Table 6 summarizes responses in regard to level of satisfaction in the use of internal

controls in executing the school operations. The findings were that the use of internal controls in executing schools operations is generally satisfactory. However, such internal

controls are more satisfactory in the recording of cash receipts and payments as

indicated by its larger weighted average of 4.30 and least satisfactory in ordering, receiving

and issuing materials from store as indicated by its lower weighted average of 3.99. This

finding implies that secondary school operations are executed in an efficient and orderly

manner. The finding was in line with Liang (1996), who noted that parental–teacher and school-monitoring committees' meeting held on regular basis provided support in

addressing school issues and they succeed in enforcing some level of accountability in

the system.


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Table 6: Internal Controls

Item

Not at all

1

Less

satisfactory

2

Moderately

satisfactory

3

Satisfactory

4

Most

satisfactory

5

wi

Recording cash receipts

and payments.

0

2

12

30

36

79

340

4.30

Ordering, receiving and

issuing materials from

store.

0

5

12

41

21

79

315

3.99

Payment of salaries and

wages.

0 5 10 25 39 79 335 4.24

Safeguarding of fixed

assets of the school.

0

4

14

30

31

79

325

4.11


1.5.1.5 Fund accounting

Table 7 below gives a summary of responses in respect to fund accounting. The results were

that fund accounting is used in public secondary schools to a large extent. However, the

segregation of accounts into specific vote heads is a commonly used fund accounting

aspect in public secondary schools as indicated by its larger weighted average of 3.99 whereas, accounting for funds allocated to specific vote heads is least used as indicated by

its smaller weighted average of 3.96. This finding implies that accounts are segregated into

specific vote heads without necessarily having funds allocated and accounted for in respect

of each vote head. This was in line with Leon (1970), who asserted that a fund is a self-

balancing set of accounts, segregated for specific purpose in accordance with regulations or specific restrictions and limitations.

Table 7: Fund Accounting

Aspect

Not at

all

1

Less

extent

2

Moderate

extent

3

Large

extent

4

Very

large

extent

5

wi

segregation of

accounts into specific

vote heads

3

3

19

23

31

79

315

3.99

Allocation of funds to

specific vote heads.

1

5

17

28

28

79

314

3.97

Accounting of funds

allocated to specific

vote heads.

1

4

19

26

29

79

313

3.96


1.5.1.6 Computerized Accounting.

Table 8 below summarizes responses in regard to computerized accounting in public

secondary schools. The results were that computerized accounting is sometimes used in

public secondary schools. However, the results of the study show that computers are mostly used in the preparation of periodical fees balances to students and parents as

indicated by its larger weighted average of 2.71. Such computers are least used in

generating source documents and making entries in ledger accounts as indicated by their

smaller weighted averages of 2.52 for each. This finding implies that computerized

accounting, like the use of such programmes as quick books, is not well established in

public secondary schools. The study established that schools using computerized accounting systems have a high level of management of funds. This finding was in line

with the finding of Koross et al (2008), who noted that parental involvement in school

finances will not have direct effect on academic performance of schools, but will directly

affect financial transparency in schools.


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Table 8: Computerized Accounting

Accounting activities

Never

1

Rarely

2

Sometimes

3

Often

4

Always

5

wi

Generating source documents 35 10 8 10 16 79 199 2.52

Making entries in ledger

accounts

37 6 10 10 16 79 199 2.52

Preparation of financial

statements

37 6 7 12 17 79 203 2.57

Issuance of periodical fees

balances

33

7

9

10

20

79

214

2.71


1.5.2 Management of Funds This section presents descriptive findings of the study, which is linked to the second

objective of determining the level of management of funds in public secondary schools.

1.5.2.1 Audit Reports

Table 9 summarizes responses in regard to the auditors’ opinion on the financial

statements and underlying books of account in the schools. The respondents indicated

that generally auditors have been expressing a ‘unqualified opinion’ on the financial

statements and books of accounts prepared in public secondary schools, over the last

three years as indicated by the 30 respondents for 2007, 27 for the year 2008 and 25 for

the year 2009. However, such an opinion was more expressed in the year 2007 as indicated by its larger frequency of respondents and less expressed in the year 2009 as indicated by

its lower number of respondents. The finding implies that financial statements prepared do

not agree with the underlying books of accounts and that there has been no

improvement in the preparation and presentation of financial statements, hence not

portraying a true and fair view of the financial position of public secondary schools. This finding implies that intensive auditing is not carried out in Secondary schools in Kenya

hence supporting assertions by Okumbe (1998), who indicated that intensive auditing of

school books of accounts is likely to improve the accounting systems in public

secondary schools hence improve financial management. .

Table 9: Auditor’s opinion.

2007 2008 2009 Average

Adverse opinion

9 (11%)

9(11%)

14(18%)

Disclaimer opinion

7(9%)

5(6%)

4(5%)

Except opinion

12(15%)

18(23%)

12(15%)

Subject to opinion

21(27%)

20(25%)

24(30%)

Unqualified opinion

30(38%)

27(35%)

25(32%)


1.5.2.2 Financial Reports

Table 10 below shows a summary of the responses on the effectiveness of financial reports.

The findings were that financial reports are effective in public secondary schools. However,

such reports were more effective in decision making as indicated by its larger weighted

average of 4.10 and least effective in timeliness as indicated by its smaller weighted average


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of 3.84. This implies that financial information produced by the existing accounting

practices can be relied upon by managers of public secondary schools. This finding was

in line with that of Langat (2008), who asserted that government instructions on financial management had improved decision making by management, transparency and

accountability in the schools’ recurrent expenditures.

Table 10: Financial Reports.

Aspect

Not at all

1

Less

effective

2

Moderately

effective

3

Effective

4

Most

Effective

5

wi

Accuracy. 0 6 13 37 23 79 314 3.97

Timeliness. 0 8 18 32 21 79 303 3.84

Decision

making.

0 4 16 27 32 79 324 4.10


1.5.2.3 Budget Management

Table 11 shows a summary of responses in regard to the level of satisfaction in respect of budget management in public secondary schools. The finding was that budget

management is satisfactory in public secondary schools with a high level of satisfaction

in the approval of budgets on yearly basis as indicated by its larger weighted average of

3.86 and low level of satisfaction in stakeholders’ involvement in budget preparation as

indicated by its lower weighted average of 3.34. This finding indicates that budget

estimates are on average adhered to in most public secondary schools in Kisii Central District. This finding was partly in line with Okumbe (1988) who had established that

budget preparation was common in most schools and partly in contradiction with his

finding that budget estimates were not strictly adhered to. The finding was also in

contradiction with Koross et al. (2008) who had established that parental involvement in

the area of finances in secondary schools had a strong influence on financial outcomes. On the contrary, stakeholders including parents were least involved in budget preparation

according to this study.

Table 11: Budget Management.

Indicator

Not at

all

Less

Satisfied

2

Moderately

Satisfied

3

Satisfied

Most

Satisfied

wi

Involvement of

stakeholders in budget

preparation.

9

12

13

33

12

79

264

3.34

Approval of budgets on

yearly basis.

3 5 19 23 27 79 305 3.86

Adherence to budget

estimates.

6 10 22 28 13 79 269 3.41

Source: Survey data,2011

1.5.2.4 Investment in School Projects

Table 12 below summarizes responses regarding the level of satisfaction in investment in

public secondary schools. The finding was that involvement in school projects was satisfactory in public secondary schools with such satisfaction being felt most in the

allocation of funds to school projects as indicated by its larger weighted average of 3.85

and less felt in the completion of projects within the scheduled time as indicated by its

smaller weighted average of 3.42. This finding implies that allocation of funds to school

projects could be perfect but not a guarantee to have such projects completed within the

scheduled time. This possibly explains the many incomplete projects in most public secondary schools. This further implies that accounting practices are not strongly felt in


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controlling and monitoring projects to completion. This finding was in line with Okumbe

(1998), who asserted that school managers have no project management skills, though

charged with planning and implementing expensive projects in schools. However, this finding is at variance with the findings of Langat (2008) who established that the

government financial instructions had limited the power of the school heads to arbitrarily

determine and control the financing of physical facilities and had regulated investment

activities in schools to avoid wastage of resources and ensure high returns and

accountability.

Table 12: Investment in School Projects.

Aspect

Not at

all

1

Less

satisfactory

2

Moderately

satisfied

3

Satisfactory

4

Most

satisfactory

5

wi

Prioritization of

projects in the school.

2

7

18

31

21

79

299

3.78

Allocation of funds to

school projects.

2

5

17

34

21

79

304

3.85

Completion of projects

within the scheduled

time.

3

18

15

29

14

79

270

3.42


1.5.3 Relationship between the use of Accounting Practices and the level of

Management of Funds

This section presents findings linking the third objective of establishing the relationship

between the extent of use of Accounting Practices and the level of Management of Funds in public secondary schools in Kisii Central District.

1.5.3.1 Pearson’s Correlation Analysis

Table 13 below shows that, Management of Funds has a very strong significant positive

relationship with Accounting Practices with a Pearson correlation coefficient of 0.960. This finding is in line with Langat (2008), who asserted that financial management had a positive

correlation with government instructions.

Table 13: Pearson correlation coefficient.

Accounting

Practices

Management of

Funds

Accounting Practices Pearson Correlation 1 .960

Sig. (2-tailed) .000

Management of Funds Pearson Correlation .960 1

Sig. (2-tailed) .000

N 79 79

Correlation is significant at the 0.01 level (2-tailed).

Source: Survey Data,2011

1.5.3.2 Regression Analysis

Table 14 below shows a coefficient of determination R2 = 0.921 which indicates that 92.1%

of the variation in the Management of Funds can be explained by the changes in

Accounting Practices. A variation of 7.9% remains unexplained, meaning this may be

explained by the intervening variables or other variables not under study.


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Table 14: Model Summary

Model R R Square Adjusted R Square Std. Error of the

Estimate

1 .960 .921 .920 1.75608

Predictors: (Constant), accounting practices. Dependent variable: management of funds.


Table 15 below reveals that the Accounting Practices can significantly predict the

Management of Funds in public secondary schools (F(1,77) = 899.091, P<0.05). This was in

line with Geller (2009), who asserted that ANOVA can be used to test the significance of variation in the independent variable that can be attributed to the regression of one or more

independent variables.

Table 15: ANOVA Summary

Model Sum of

Squares

df Mean Score F Sig.

1 Regression 2772.623

1 2772.623 899.091 .000

Residual 237.473 77 3.084

Total 3010.076 78



Table 16 below shows that the T-test values for the regression coefficient are significant at

95% confidence level (p<0.05). This implies that Accounting Practices were making a significant contribution to the Management of Funds model. The unstandardized regression

equation is therefore;

Management of Funds = 5.258 + 0.338*Accounting Practices

The standardized Beta coefficient indicates that a unit change in Accounting Practices

results to a change of 96.0% in the Management of Funds. These findings indicate that

Accounting Practices have influence on the Management of Funds in public secondary

schools. The simple regression findings show that the extent to which Accounting Practices

are used in public secondary schools, has a significant effect on the level of Management of

Funds in these schools. Table 16 Regression-coefficients

Model Unstandardized coefficients Standardized

Coefficients

B Std. Error Beta T Sig.

1 Constant

Accounting

practices

5.258

.338

1.286

.011

.960

4.089

29.985

.000

.000


Source: Survey data, 2011

1.6 SUMMARY, CONCLUSION AND RECOMMENDATIONS

1.6.1 Summary of Findings and Conclusions

The study established that adequate books of account were often maintained in public secondary schools and that they were often updated. It was concluded that book-keeping,

as an aspect of accounting practice is being practiced to a large extent in public

secondary schools and that the information contained in such books could be relied upon

for decision making as it is tested for absoluteness often. It was established that,


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public secondary schools extracted trial balances on quarterly basis and used it to

check the arithmetic accuracy of the books of accounts to a large extent. This finding

led to the conclusion that the information contained in the books of accounts was accurate and correct. Also it can be concluded that double entry system was

adequately used in making entries in the books of accounts. The study established

that the income and expenditure statement and the balance sheet were prepared

regularly and applied to a large extent in the preparation of financial reports to

stakeholders. It was concluded that the state of affairs and the financial position of

public secondary schools in KCD are reported regularly and that sources and applications of funds in KCD public schools are properly demonstrated. Internal

controls, in major operations of schools, were found to be satisfactory. From this finding, it

was concluded that school operations were being carried out in an efficient and orderly

manner. For fund accounting the study established that funds were segregated,

allocated and accounted for in respect of vote heads to a large extent. However, accounting for such funds in respect of specific vote heads was found to be a least practice

of all the fund accounting practices. From this finding it was concluded that funds are

seldom accounted for in respect of each vote head and that fund accounting has not

been fully implemented in public secondary schools in Kisii Central District. It only

exists on paper but not in practice. For computerized accounting, the study established

that it was sometimes used in most public secondary schools. However, this was found to be restricted to the issuance of fees balances to parents and students. It was concluded

that computerized accounting programs like quick books have either not been introduced

or fully integrated into accounting practices in public secondary schools in Kisii Central

District. Generally the study indicated that accounting practices were in use to a large

extent in public secondary schools in Kisii Central District.

As per the second objective of the study, the findings and conclusions made were as

discussed below: The study revealed that, the district auditors generally expressed a

‘subject to opinion’ on the financial statements and underlying books of accounts in the

majority of public secondary schools in Kisii Central District. Financial reports were

generally effective in respect to accuracy, timelessness and decision making in such schools. Further, the study established that budget management, in respect to preparation

and implementation, was satisfactory. It was also revealed that, investment in school

projects in respect to planning and completion was satisfactory. Generally, the study

established that to a high level funds were well managed in public secondary schools.

According to the third objective, the findings were that there was a positive, very strong and

significant relationship between the extent of use of accounting practices and the level of

management of funds in public secondary schools as measured by accounting practices at

0.01 level of significance. Variations in the level of management of funds could be explained

by changes in the extent of use of accounting practices. On the basis of these findings, the

study concluded that use of accounting practices to a large extent enhances the management of funds while use of accounting practices to a small extent lowers the level of

management of funds in public secondary schools. Hence there is need for public secondary

school principals to embrace extensive use of accounting practices as a tool to improving

management of funds in their schools.

1.6.2 Recommendations for policy and practice

First, the study recommends that the government through the Ministry of Education

(MOE) provides training programs, through seminars and workshops, in management

accounting practices for school principals and bursars to improve the extent of use of

accounting practices in their schools. Second, the MOE in collaboration with the Ministry of Energy should put in place measures that will ensure immediate supply of electricity to

not only public secondary schools, but also to all institutions of learning. This will facilitate

use of computers in public secondary schools and hence computerized accounting. To

improve on the presentation of financial statements that exhibit a true and fair view of the

state of affairs of public secondary schools, the Ministry of Education should consider

setting minimum qualifications in accounting for specifically Bursars and accounts clerks.


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This will inject professionalism and independence into public secondary school’s accounting

practices and therefore improve the management of school funds. Third, Secondary school

principals and bursars should consider extracting the trial balance on monthly basis. This will improve the authentication of records in the books of accounts. The study further

recommends that public secondary schools’ principals should be committed to the fund

accounting practice fully and allows independent accounting for funds allocated to each

vote head. The responsibility of accounting for funds in respect of each vote head should be

vested on the bursar and his suggestions on how to improve the practice be taken seriously.

They should also be encouraged to fully integrate computerized accounting into the school’s accounting practices. They should encourage their Bursars and the accounting clerks to

acquaint themselves with computerized accounting programs like quick books. This will

improve the recording of transactions in ledger books and preparation of financial

statements in public secondary schools.

1.6.3 Suggestions for Further Research.

First, data analysis was only based on the opinions of public secondary school principals

and bursars. For more realistic results, it is suggested that further research be done that

seeks the opinion of other stakeholders like parents, students, teachers and donors in both

private and public primary and secondary schools so as to establish a meaningful relationship between Accounting Practices and Management of Funds. Second, data

collection only provided cross-sectional data. Research of this nature would give clearer

understanding of the relationship between accounting practices if longitudinal analysis was

applied. It is suggested that further research studies that are of longitudinal in nature be

undertaken using a case study design, so as to better establish the cause-effect relationship between accounting practices and management of funds in public secondary schools. Third,

the research study was restricted to public secondary schools in Kisii Central District. For

more conclusive results, a similar study should be done in another district with a number

of national and provincial schools.

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