AN ASSESSMENT OF THE EFFECT OF ACCOUNTING PRACTICES ON THE MANAGEMENT OF FUNDS IN PUBLIC SECONDARY SCHOOLS: A Study of Kisii Central District, Kenya

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Asian Journal of Business and Management Sciences

Vol. 2 No. 8 [34-50]
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: finyanyi@yahoo.com
Dr. Charles Okioga
Dr. Patrick Ojera
School of Business and Economics. Maseno University.
P.O. Box 333 Maseno.
E-mail: pbojera@gmail.com
Robert Nyamao Nyabwanga
Corresponding author: nyamaonyabwanga@gmail.com
Tom Onsare Nyamwamu
Kisii University College, Department of Business Administration
P.O. Box, 408-40200, Kisii.
E-mail:tnyamwamu@yahoo.com
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, Pearsons 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.
Society for Business Research Promotion
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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 schools 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 inservice 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 schools
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 Kenyas 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 principals 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 schools financial transparency could be improved through increasing
parental activities on schools 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 (schools 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
Accounting Practices
Book keeping.
Trial Balance.
Financial Statements.
Internal controls.
Fund Accounting.
Computerized Accounting
Dependent Variable
Management of funds
Nature of Audit Reports.
Effectiveness of Financials Reports.
Satisfaction Level of Budget

Management.
Satisfaction Level in School project

Investment
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
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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. Pearsons 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
Rarely
Sometimes
Often
Very
often
5
Cash Book
0
Ledger Book
2
Receipt Book
0
Journal Voucher
8
Book
General Ledger Book 6
Source: Survey data,2011
0
2
0
7
5
10
5
11
10
10
7
10
64
55
67
43
79
79
79
79
375
351
378
310
4.75
4.44
4.78
3.92
10
47
79
322
4.08
wi
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

Never
Rarely
Aspect
1
2
Sometimes
Often
Very
often
5
wi
Reconciling cash and bank

accounts
17
14
45
79
336
4.25
Accounting for money

received from fees and
other sources
18
54
79
61
4.57
Payment of creditors and

other payables
10
19
47
79
345
4.37
Journalization of
transactions
13
12
43
79
319
4.04
13
13
45
79
332
4.20
school
Making
entries
for
purchase or disposal of
fixed assets
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 semiannually 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%
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
Not at
all
Less
extent
Moderate
extent
Large
extent
1
6
2
3
3
24
Debt and credit entries totals

balance
Search and correct errors
12
Events
Debt
and
classification.
credit
entry
4
30
Very
large
extent
5
16
79
284
3.59
19
32
22
79
304
3.85
14
29
20
79
286
3.62
wi
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
Less extent
Moderate
extent
Large
extent
Very large
extent
For comparison purposes.
10
15
26
26
79
301
3.81
In preparing financial
reports to stakeholders
12
27
30
79
311
3.94
wi
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 parentalteacher 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

Not at all
1
Item
Recording cash receipts

and payments.
Ordering, receiving and
issuing materials from
store.
Payment of salaries and
wages.
Safeguarding of fixed
assets of the school.
Less
satisfactory
2
Moderately
satisfactory
3
Satisfactory
4
Most
satisfactory
5
12
30
36
79
340
4.30
12
41
21
79
315
3.99
10
25
39
79
335
4.24
14
30
31
79
325
4.11
wi
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 selfbalancing set of accounts, segregated for specific purpose in accordance with regulations or
specific restrictions and limitations.
Table 7: Fund Accounting
Not
Aspect
all
segregation of
accounts into specific
vote heads
Allocation of funds to
specific vote heads.
Less
extent
Moderate
extent
Large
extent
Very
large
extent
5
19
23
31
79
315
3.99
17
28
28
79
314
3.97
19
26
29
79
313
3.96
Accounting of funds
allocated to specific
1
vote heads.
at
wi
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

Never
Accounting activities
1
Rarely
2
Sometimes
3
Often
4
Always
5
Generating source documents
35
10
10
16
79
199
2.52
Making entries in ledger

accounts
37
10
10
16
79
199
2.52
Preparation of financial
statements
Issuance of periodical fees
balances
37
12
17
79
203
2.57
10
20
79
214
2.71
33
wi
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: Auditors opinion.
2007
2008
2009
Average
Adverse opinion
9 (11%)
9(11%)
14(18%)
7(9%)
5(6%)
4(5%)
12(15%)
18(23%)
12(15%)
21(27%)
20(25%)
24(30%)
30(38%)
27(35%)
25(32%)
Disclaimer opinion
Except opinion
Subject to opinion
Unqualified opinion
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.
Not at all
Less
Aspect
effective
1
2
Moderately
effective
3
Effective
4
Most
Effective
5
wi
Accuracy.
13
37
23
79
314
3.97
Timeliness.
18
32
21
79
303
3.84
16
27
32
79
324
4.10
Decision
0
making.
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.
Not at
Indicator
all
Involvement of
stakeholders in budget
preparation.
Approval of budgets on
yearly basis.
Adherence to budget
6
estimates.
Source: Survey data,2011
Less
Satisfied
2
Moderately
Satisfied
3
Satisfied
Most
Satisfied
12
13
33
12
5
10
19
22
23
28
27
13
wi
79
264
79
305
79
269
3.34
3.86
3.41
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.
Not at Less
Aspect
all
satisfactory
1
2
Prioritization
of
projects in the school.
Allocation of funds to 2
school projects.
Completion of projects
within the scheduled 3
time.
Moderately
satisfied
3
Satisfactory
4
Most
satisfactory
5
18
31
21
79
299
3.78
17
34
21
79
304
3.85
18
15
29
14
79
270
3.42
wi
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 Pearsons 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
Funds
.960
Accounting Practices
Pearson Correlation
Management of Funds
Sig. (2-tailed)
Pearson Correlation
.960
.000
1
Sig. (2-tailed)
N
.000
79
79
of
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 R 2 = 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
.921
.920
1.75608
.960
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
Sum of
Model
Squares
1
df
Mean Score
Sig.
899.091
.000
Regression
2772.623
2772.623
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
Beta
B
Std. Error
T
Constant
5.258
1.286
4.089
Accounting
.338
.011
.960
29.985
practices
Source: Survey data, 2011
Sig.
.000
.000
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 schools 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 schools
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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