Liz Kathiomi Project 2017

FACTORS THAT DETERMINE MANAGEMENT OF FUNDS IN
PARASTATALS IN KENYA
A CASE OF KENYA PORTS AUTHORITY, NAIROBI COUNTY
MURUGI ELIZABETH KATHIOMI-KCA/08/00110
SUBMITTED IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE FINAL YEAR RESEARCH PROJECT
OF THE BACHELOR OF COMMERCE DEGREE PROGRAMME
KCA UNIVERSITY
APRIL 2017
DECLARATION
Declaration by the Student
This research project is my original work and has not been presented to any other
examination body. No part of this research should be reproduced without my consent or
that of the KCA University
Name: Murugi Elizabeth Kathiomi 08/00110
Signature: .. Date: .....
Declaration by the Supervisor
This research project has been submitted for defence with my approval as KCA
University Supervisor.
Name: Johnston Maina
Signature: ... Date: ......
Lecturer Supervising
This research project has been submitted with my approval as the University faculty
advisor.
Name: .
Signature: Date: ..
School of Business and Public Management
ii
DEDICATION
My sincere gratitude is extended to my most cherished family for giving their best
support towards the success of this research study and my education as a whole.
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ACKNOWLEDGEMENT
I acknowledge my supervisor Johnston Maina for the sincere commitment and keen to
details while developing the research study. The support has enabled me to come
up with an appropriate and acceptable research study. The administrators of
KCA University for providing tools towards carrying out this research study.
Finally the management at the Kenya Airport Authority for their acceptance to
have the studies done in their organization.
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ABSTRACT
The flow of funds is usually expected to be a straight forward process. However, this is
not the case. The process is much subjective and complex in nature thereby resulting in
delays in receipt of funds. The study seeks to examine factors that determine management
of funds in parastatals in Kenya on a case of Kenya Ports Authority. The specific
objectives were to establish the effect of financial reporting techniques, stakeholders
involvement and ethics on management of funds in parastatals in Kenya. This is
significant to The Administrators, Kenya Ports Authority, other related other related
Parastatals Offices and Other Researchers. The research design was descriptive research
design. The sampling design was purposive sampling. The sample size was drawn from a
total of 162 staff at the office. In the analysis, quantitative techniques were used and the
presentations were done by use of figures such as distribution tables, pie charts and bar
graphs. The findings on financial reporting techniques showed that reports such as
operating, investing and financing activities are usually accurate for the fund
management in parastatals. Stakeholders facilitate fund adjustments when necessary to
win parastatals support. In ethics the county has established boundaries that prevent
professional and personal interests from appearing to conflict with the interest of the
employer- parastatals on successful fund management in parastatals. The study
recommended that the management at the Kenya Ports Authority should ensure that
regular audits are carried out and that reporting frequency made regularly. This ensures
that total accountability of the funds for county government. The study recommended that
the management should ensure that ethics is highly observed. This can be achieved by
first, carrying out proper vetting of the individuals to be assigned in managing funds.
TABLE OF CONTENT
v
DECLARATION...............................................................................................................ii
DEDICATION..................................................................................................................iii
ACKNOWLEDGEMENT...............................................................................................iv
ABSTRACT........................................................................................................................v
TABLE OF CONTENT....................................................................................................vi
LIST OF TABLES..........................................................................................................viii
LIST OF FIGURES..........................................................................................................ix
LIST OF ABBREVIATION..............................................................................................x
DEFINITION OF TERMS..............................................................................................xi
CHAPTER ONE................................................................................................................1
INTRODUCTION OF THE STUDY...............................................................................1
1.0 Introduction....................................................................................................................1
1.1 Background of the Study...............................................................................................1
1.2 Statement of the Problem...............................................................................................5
1.3 Objectives of the Study..................................................................................................6
1.5 Justification of the Study...............................................................................................7
1.6 Significance of the Study...............................................................................................7
1.7 Scope of the Study.........................................................................................................8
CHAPTER TWO...............................................................................................................9
LITERATURE REVIEW..................................................................................................9
2.1 Introduction....................................................................................................................9
2.2 Theoretical Review........................................................................................................9
2.3 Empirical Review........................................................................................................10
2.4 Conceptual Framework................................................................................................18
CHAPTER THREE.........................................................................................................20
RESEARCH DESIGN AND METHODOLOGY.........................................................20
3.1 Introduction..................................................................................................................20
3.2 Research Design..........................................................................................................20
3.3 Population....................................................................................................................20
3.4 Samples and Sample Procedures.................................................................................21
3.5 Instrumentation............................................................................................................22
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3.6 Data Collection Procedure...........................................................................................23
3.7 Data Analysis Technique.............................................................................................23
CHAPTER FOUR...........................................................................................................24
DATA PRESENTATION AND INTERPRETATION OF FINDINGS........................24
4.1 Introduction..................................................................................................................24
4.2 Presentation of Findings..............................................................................................24
4.3 Financial Reporting Techniques..................................................................................27
4.4 Stakeholder Involvement.............................................................................................31
4.5 Ethics...........................................................................................................................36
CHAPTER FIVE.............................................................................................................40
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION...........40
5.1 Introduction..................................................................................................................40
5.2 Summary of the Major Findings..................................................................................40
5.3 Conclusions..................................................................................................................42
5.4 Recommendations........................................................................................................43
5.6 Suggestions for Further Research................................................................................45
REFERENCES................................................................................................................46
APPENDIX I: INTRODUCTION LETTER.....................................................................49
APPENDIX II: RESEARCH QUESTIONNAIRES.........................................................50
LIST OF TABLES
Table 3.1 Target Population...............................................................................................21
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Table 3.2 Sample Size........................................................................................................22
Table 4.1 Response Rate....................................................................................................24
Table 4.2 Gender of the Respondents................................................................................24
Table 4.3 Age Bracket of the Respondents........................................................................25
Table 4.4 Highest Education Level....................................................................................25
Table 4.5 Length of Service of the Respondents...............................................................26
Table 4.6 Whether operating, investing and financing activities are usually accurate to
enhance the management of funds in parastatals...................................................27
Table 4.7 Whether a statement of comprehensive income, statement of revenue and
expense are highly used to enhance management of funds...................................28
Table 4.8 Management relies on a bookkeeper and an outside accounting firm...............29
Table 4.9 Whether annual reports does not provide a comprehensive report about true
state of management of funds in parastatals..........................................................30
Table 4.10 Whether Management facilitates fund adjustments when necessary to win
parastatals support.................................................................................................31
Table 4.11 Whether the willingness of stakeholders to perform the activities assigned to
them during the financial planning process ..........................................................32
Table 4.12 Whether the stakeholders prefer the hands on approach by directly assuming
management positions to dictate management of funds in parastatals..................33
Table 4.13 Whether Stakeholders can take over certain departments such as finance to
micromanage the organization which is against management of funds................34
Table 4.14 Whether the roles of external stakeholders are limited to that of consultants
rather than team members......................................................................................35
Table 4.15 Whether the parastatals has established boundaries on professional and
personal interests from appearing to conflict.........................................................36
Table 4.16 Whether financial managers rarely act responsibly and with good faith when
handling funds during management of funds in parastatals..................................37
Table 4.17 Legal ramification on individuals with negative financial records..................38
Table 4.18 Whether ethical policies provide clear guidance on management of funds in
parastatals..............................................................................................................39
LIST OF FIGURES
Figure 2.1 Conceptual Framework....................................................................................18
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Figure 4.1 Whether operating, investing and financing activities are usually accurate to
enhance the management of funds in parastatals...................................................27
Figure 4.2 Whether a statement of comprehensive income, statement of revenue and
expense are highly used to enhance projects management of funds....................28
Figure 4.3 Whether management relies on a bookkeeper and an outside accounting firm
to maintain the parastatalss records and provide guidance on management of
funds......................................................................................................................29
Figure 4.4 Whether annual reports does not provide a comprehensive report about true
state of management of funds in parastatals..........................................................30
Figure 4.5 Whether Management facilitates fund adjustments when necessary to win
organizational support............................................................................................31
Figure 4.6 Whether the willingness of stakeholders to perform the activities assigned to
them during the financial planning process determines success or failure of the
management of funds.............................................................................................32
Figure 4.7 Whether the stakeholders prefer the hands on approach by directly assuming
management positions to dictate management of funds in parastatals..................33
Figure 4.8 Whether Stakeholders can take over certain departments such as finance to
micromanage the organization which is against management of funds................34
Figure 4.9 Whether the roles of external stakeholders are limited to that of consultants
rather than team members......................................................................................35
Figure 4.10 Whether the parastatals has established boundaries on professional and
personal interests from appearing to conflict.........................................................36
Figure 4.11 Whether financial managers rarely act responsibly and with good faith when
handling funds during management of funds in parastatals..................................37
Figure 4.12 Whether there is any legal ramification on individuals with negative financial
records responsible for management of funds in parastatals.................................38
Figure 4.13 Whether ethical policies provide clear guidance on management of funds in
parastatals..............................................................................................................39
LIST OF ABBREVIATION
GOK Government of Kenya
KCA Kenya College of Accountancy
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PMO Project Management Office
QCED Queens Centre for Enterprise Development
SSA Sub-Saharan Africa
DEFINITION OF TERMS
Auditing Tools that auditors use to collect audit evidence on
the reliability of a computer-based application
system at the same time.
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Ethics It is the application of a code of behavior for
financial professional, financial managers have
certain obligations and expectations from society
that is, they must act responsibly and with good
faith when handling funds for clients
Financial Reporting Techniques It is defined as the approaches that an organizations
accounting personnel uses to report all the financial
transaction and the flow of cash within the
organization
Government budgeting The process of creating and planning the systematic
approach to expenditure by the State.
Stakeholders Involvement It is the decision to involve all the people that

directly or in directly have interest in a particular
activity and that without their participation, the
success of the named project may not be realized.
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CHAPTER ONE
INTRODUCTION OF THE STUDY
1.0 Introduction
This section of the study provides the introduction of the research study, the
background of the study, the statement of the problems, specific research objectives,
research questions, justification and the scope of the study.
1.1 Background of the Study
In government, a fund is established authority provided by law. Each fund is a
separate legal entity. The law provides for deposit of revenues to specific funds and
expenditures are made there from only pursuant to appropriations made by law which
are identified to specific funds. Each fund has its own set of books and financial
statements (Mulwa and Nguluu, 2013).
The regional governments all over the world operate under the purview of public
finance. According to Junichi (2010) the purview of public finance entails effects of
government on efficient allocation of resources. It is further noted that, the
government expenditures comprise of cost of operations government corporation and
income distribution. Choe (2010) states that there are four major ways of financing
the government expenditures including taxation, debt and also public finance through
state enterprises. Notably, when a government parastatals fails to raise funds through
any or all of the aforementioned avenues, then, it results in constrains in financing the
government operations.
Objectivity in use of funds is concerned with the managing of funds into and out of
the parastatals. There is a consensus among authors on the reasons for maintaining
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some level of cash balances. This may be attributed to the following three motives:
the transactions motive, the precautionary motive and the speculative motive (Wilcha,
2010).
A study done in 2011 of rapid-growth in Ontario revealed that the three top challenges
for financial administrators at government corporation are managing funds during
growth, obtaining employee buy-in and choosing strategic partners. The study,
conducted by the Queens Centre for Enterprise Development (QCED), identified 12
challenges for rapid-growth. Each of these challenges has a particular impact on how
these corporations develop and manage funds, a critical component in their growth
(Firzli, 2013).
The Governor, the Legislature, central control agencies (such as the Department of
Finance, State Controllers Office, and State Treasurers Office) and operating
departments all participate in the management of state funds. The ultimate goal is to
manage the funds in a manner that will provide maximum benefit to the general
public and constituent groups who contribute resources to specific funds as stated in
GoK (April Issue, 2014). Funds through disbursement is a critical aspect of a
corporation projects and financial management since projects are modelled on capital
budgeting principles and as such, all relevant funds associated with the undertaking
must be ascertained with a fair degree of accuracy so that the desirable returns are
achieved within the set time periods (Ackerman, 2010).
Glover (2013) assert that in making capital expenditure of any magnitude, GOK just
like a business entity considers funds as a critical component that must be properly
analyzed for objective use in planning reasons. Funds must be clearly designated and
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committed to the project so as to ensure successful implementation of activities
without the possibility of stalling and subsequent abandonment. Prior arrangement for
procurement of finances both internally; such as appropriation-in aid and externally,
in form of loans and grants, must be done.
Nyaguthi (2012) says parastatals today are confronted with unique challenges caused
by rapidly changing economic conditions. The rapid growth of economic conditions
experienced during the 1990s have been replaced with financial and market
uncertainty. The business models of the 1990s are not applicable which can lead a
business into rapid decline if its management does not understand the signals of the
business decline. It was noted by Price Waterhouse (2010) that to survive in todays
business economic environment, a corporation management team must be able to
react to changes in the internal and external environment. But each turnaround
situation demands a different strategy supported by specific practices.
Lall (2011) notes that watching the cash inflows and outflows is one of the most
pressing management tasks for any county government business. The outflow of cash
includes those checks one writes each month to pay salaries, suppliers, and creditors.
The inflow includes the cash received from customers, lenders, and investors. Poor
cash management could end up putting a profitable corporation out of business.
Finance managers in many government corporations currently face huge challenges in
managing transactions across multiple locations and time zones while working with
many outside branches due to the fact that the greater the geographic stretch, the more
difficult it is to access and track accurate and timely funds information. Centralization
of finance activities then offers the ability to achieve higher efficiencies, greater
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transparency and access to real time information across an extensive geographic area
with different time zones and entities (Cooksey, Mullei & Mwabu, 2015).
Lall, (2011) provided surveys that were conducted constantly of failed corporations.
Most failed corporation or most of their failure are due to fund poor management of
funds. Businesses need to have as their guide another old saying, nothing matters
more than cash. Making a profit is nice, funds is necessary. Cash management is the
key to success. By centralizing fund Management procedures, counties are able to
effectively manage internal funds, and trim its operating costs, among other things.
In-house accounting and finance departments provide the best level of cash
centralization since they oversee and control the operations of the internal accounts of
corporations (Dirk, Matten, and Moon 2012).
Kenya is considered to have the largest, most diversified and innovative economy in
East Africa region. The country has made significant strides in enhancing the overall
economic environment with a performance index always above that of the sub-
Saharan Africa (SSA) average. It is observed that, the Government of Kenya (GoK,
2014) plans to continue the growth trajectory and has as such prioritized among
others, governance and public finance management reforms to enhance transparency,
accountability, service delivery and cost efficiency in the management of funds.
Heath and Norman (2012) indicates that, Kenya is in the critical process of
implementing the devolved governance as espoused in the Constitution of Kenya of
2010. It is pinpointed that, with the object of meeting the enlarged financing demands
of both the national and the 47 counties, there is a dire need of increased efficiency
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and effectiveness in utilization and management of scarce public resources both at the
national and county levels.
1.2 Statement of the Problem
The management of funds and proper management of funds goes beyond economic or
business planning (Mahoney, 2011). The flow of funds is usually expected to be a
straight forward process. However, this is not the case in selected government
organizations considering that the process is much subjective and complex in nature
thereby resulting in delays in receipt of funds and this was a study focusing on
Bureaucratic and Political Corruption in Africa by (Mukum and Mbaku, 2010).
Kimenyi, (2015) studied Efficiency and Efficacy of Kenyas Public funds in
Government Enterprise Firms. In the face of the foregoing, there are several public
organizations such as Kenya Airways that have faced cash flow challenges and have
been slammed with labor strikes and go-slows among their workforce due to delayed
salaries and/or poor remuneration of employees.
Ireri & Chitere (2013) focused on District Focus for Development Fund in Kenya
and found that inadequacy of finances is bound to affect delivery of services to the
public and also derail development at county levels. Virtually all counties in Kenya
are hampered by inadequacy of vital financial resources; this is in spite of many
government functions having already been devolved to the counties by the national
government. Indeed, there are authenticated allegations that the larger percentage of
the monies disbursed to the counties is employed in the recurrent expenditure to the
detriment of development projects such as infrastructure (GoK, 2014) which begs the
question of financial management skills amongst the staff entrusted to oversee the
objective use of government funds.

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A study by Mulwa & Nguluu (2013) Participatory Monitoring and Evaluation showed
that majority of Kenyans do not know how much money has been channeled to their
respective parastatals and government project. The survey reveals that only 17 per
cent of Kenyans are aware of the amount of cash disbursed, where to get information
on the funds disbursed for both recurrent and development expenditure. Nyaguthi,
(2009) found that in parastatals challenges have been experienced regarding the
management of funds and disbursement. It has been observed that the major problems
to management of funds and accountability are culture of political patronage, wanting
citizenry capacity to demand accountability. Thus, an effective participation of the
Kenyan people in decentralized fund remains an elusive mirage owing to a number of
factors including inadequate information on the devolved funds.
Therefore, despite studies done by Mukum and Mbaku, (2010), Kimenyi, (2015),
Ireri & Chitere (2013) and Mulwa & Nguluu (2013) no major studies have fully
addressed the specific aspects regarding management of funds parastatals in Kenya
resulting to a research gap. Therefore, there was need to undertake a conclusive
research on factors that determine management of funds in parastatals in Kenya.
1.3 Objectives of the Study
This section provides the general and specific objectives for this study.
1.3.1 General Objective
To examine the factors that influences the management of funds in parastatals in
Kenya on a case of Kenya Ports Authority.
1.3.2 Specific Objectives
The following specific objectives guide the study.
i. To assess the effect of financial reporting techniques on management of funds
in parastatals in Kenya.
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ii. To evaluate the effect of stakeholders involvement on management of funds in
parastatals in Kenya.
iii. To assess the effect of ethics on management of funds in parastatals in Kenya.
1.4 Research Questions
The research questions guided the study.
i. How do financial reporting techniques affect management of funds in
parastatals in Kenya?
ii. To what extent does stakeholders involvement affect management of funds in
parastatals in Kenya?
iii. What is the effect of ethics on financial reporting techniques on management
of funds in parastatals in Kenya?
1.5 Justification of the Study
A fund that is not managed effectively could end up paralyzing operations of a
parastatal. Mulwa and Nguluu, (2013) without cash on hand, a parastatal may not be
able to invest in projects that can generate revenues. Revenues are good, but are worth
nothing if cash is not coming in. Finance managers in many parastatal entities face
huge challenges in managing transactions and having proper accountability from the
concerned parties. Therefore, as result of the observation made in parastatals, there
was need to undertake a study on factors that determine management of funds in
parastatals in Kenya.
1.6 Significance of the Study
1.6.1 The Administrators, Kenya Ports Authority
This research study is significant to the administrators of Kenya Ports Authority as
they stand a chance to obtain quite valuable information on the appropriate funds
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management techniques. Therefore, informative ideas that will be generated from this
research will be of help to the management in order to continue to address matters
regarding the effectiveness of management of funds.
1.6.2 Other Related Parastatals
This study is considered useful to other related parastatals. Just the same way Kenya
Ports Authority will benefit, it is considered that other related government parastatals
will benefit. They stand a chance to obtain informative findings and recommendations
as to how they can improve techniques that involve management of funds.
1.6.3 Other Researchers
The research study is also going to be useful to other researchers; the compiled
secondary data will be of great use when other researchers develop related research
studies. Other researchers also stand a chance to improve or have an opportunity to
carry out other related areas as a continuation to this current research by filling the
gaps to be observed.
1.7 Scope of the Study
The study was limited to examining the factors that determine management of funds
in parastatals in Kenya. This was on a case of Kenya Ports Authority. It is situated at
mainland port Off-Msa road Nairobi. The study targeted the staff working at Kenya
Ports Authority Offices to participate in the study. They were expected to contribute
data on management of funds. This was carried out within a period of three months
from February to April 2017.
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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter provides literature which is considered necessary in helping to
understand the research study. It addresses theoretical orientation, empirical review
and the conceptual framework.
2.2 Theoretical Review

2.2.1 Contingency Theory in Auditing
Organization Theory and Design by Richard Daft writes: Contingency means: one
thing depends on other things and Contingency theory means: it depends. Audit
functions are task-oriented and can be loosely structured. The functions also can vary
considerably, depending on the area of a government under audit and the type of
business model, so auditors must carefully manage their inspections and take
variables into account to get the job done. The contingency theory also can be applied
to an audit teams structure. Typically, audit team managers receive audit projects.
They then create ad hoc audit teams for the projects, selecting auditors based on
expertise and experience in the subject areas, and on auditor availability, all of which
add up to contingencies for any given audit project. Audit teams use a mix of structure
and contingency to get the output rolling quickly. The subject of auditing projects can
include such diverse areas as evaluation of production processes, inspection of
government accounts, and assessment of compliance with industry standards
(Cannon, 2012).. This related to the study being done in the context that through
auditing, there is financial accountability considering that records on expenditure have
to be provided.
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2.2.2 Prospect Theory
A theory that incorporates such framing effects was proposed by Kahneman and
Tversky. Termed prospect theory, it is extraordinarily influential. It is based on the
idea that people evaluate gains or losses in prospect theory from some neutral or
status quo point, an assumption consistent with the adaptation-level findings that
occur not just in perception but in virtually all experience. That is, one can adapt to a
constant level of virtually any psychological dimension and find it to be neutral. A
loss function that is steeper than a gain function. Such preferences are helpful for
thinking about a number of problems in finance (Heath and Norman, 2012).
2.2.2 Finance Theory
According to Abrie and Doussy, (2010) finance theory is a broad field of both
speculation and mathematical measurements used to determine investing strategies
and monetary value estimates. Theories of finance are also used to create fundraising
and capital creation plans and manage financial risk. Billystom and Shell (2010)
further indicated that each area of finance may have dozens of associated concepts of
finance theory; understanding all of them could take a lifetime of study. Some types
of finance theory help determine concrete items such as how much money was paid
over time for services. These theories measure the initial investment, and the amount
of payments in government.
2.3 Empirical Review

2.3.1 Financial Reporting Techniques
Counties have internal accounting personnel and sophisticated records and systems to
guide management (Curtis, 2013). Curtis still notes that on the other hand, the
management usually relies primarily on a bookkeeper and an outside accounting firm
10
to maintain the counties records and provide guidance. Therefore, the managers
should be familiar with, and recognize the importance of, proper recordkeeping
requirements and cash flow planning
Bashein (2010) stated that the wide range of fund management services and
techniques available means that those who are in charge of a counties money have to
demonstrate a high level of financial literacy. They must be aware of the benefits and
drawbacks for each option the county considers and how those options interact to
form the business collective financial approach. New options become available over
time, so financial workers routinely must re-evaluate the techniques the county is
using to see if they are still effective given the context of the market and the counties
objectives.
The financial analysis and reporting techniques were observed by Choe, (2010) who
noted that there is horizontal analysis whereby with the help of horizontal
financial analysis, you can compare a business entity over different months or
defined periods within a fiscal year. For example, revenue generated over
different months of a year can be compared to analyze the overall performance
of business or a particular project. Vertical Analysis, This involves the
procedure of comparing different figures of separate entities to one specific
figure of an entity for one specific period of time. This type of analysis is of
great significance in carrying out the decision making process. An accountant
can also expand the vertical analysis by comparing the figures of one specific
period with those of another period.
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There is also percentage change financial statement analysis. Percentage change
financial statement analysis gets a little more complicated. When you use this form of
analysis, you calculate growth rates for all income statement items and balance sheet
accounts relative to a base year (Hubbard and Douglas, 2009). This is a very powerful
form of financial statement analysis. One can actually see how different income
statement items and balance sheet accounts grew or declined relative to grows or
declines in sales and total asset (Curtis, 2013). Ratio Analysis, this is the method in
which the ratio between two or more variables related to the business is compared.
There are many ratios used to analyze financial statements: Liquidity Analysis Ratio:
For example, the net working capital ratio is calculated between net working capital
and total assets (Curtis, 2013).
Many counties are very knowledgeable about their accounting procedures and quite
adept in analyzing their financial records and statements. Complete and accurate
financial record keeping is crucial to the business success for a number of reasons:
Good records provide the financial data that help operate more efficiently, thus
increasing the profitability. According to Hubbard and Douglas (2009) accurate and
complete records enable the accountant, to identify all the business assets, liabilities,
income and expenses. That information, when compared to appropriate industry
averages, helps to pinpoint both the strong and weak phases of the business
operations.
Colbert (2012) indicated that established that a successful county on sound
recordkeeping and reporting practices and solid cash flow. Without good records it is
impossible to determine the financial condition. Similarly, in order to survive, a
county must achieve a positive cash flow in the long term. This Financial Guide
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provides the basic information the stakeholders need to establish good recordkeeping
practices and to minimize cash flow problems. Kimberly, (2009) examined that the
specific records a county needs depends on a number of factors, such as the type of
operation, the counties goals, management's needs and interests, and cost factors.
Based on the relevant factors, the accountant determines what records to keep and
what information they should provide. In fact, one might want to update the record
keeping procedures to reflect the current business needs.
Internal auditors can form an opinion on their organizations fund management and
communicate their findings to interested stakeholders, including the board,
executives, external auditors, regulatory agencies, and investors, these opinions
should disclose all relevant information about the effectiveness of the organizations
fund management and focus on its sustainability performance in all areas of financial,
social, ethical, and environmental activity (Galtung, 2010).
Fund management analysis should show whether daily operations generate enough
cash to meet the obligations and how major outflows of cash to pay the obligations
relate to major inflows of cash from sales. As a result, one can tell if inflows and
outflows from the operation combine to result in a positive cash flow or in a net drain.
Any significant changes over time will also appear. Understanding this will lead to
better control of the cash flows and will allow adequate time to plan and prepare for
the growth of the business as stated by (Kimenyi, 2015).
2.3.2 Stakeholder Involvement
A stakeholder is an individual who is affected by or who can affect a project's
outcome. Stakeholders shape projects in the early stages, ensuring financial and other
13
resources are available to contribute to project success, and provide insight regarding
the probable reaction to a project's outcome, which facilitates fund adjustments when
necessary to win organizational support (Hamzah, 2011). However, Ackerman (2010)
indicated that the roles of stakeholders change throughout a project life cycle, the
willingness of stakeholders to perform the activities assigned to them during the
financial planning process determines the success or failure of the project and the
funds involved.
Galtung (2010) stated that in county operation, a stakeholder is usually an investor in
the county whose actions determine the outcome of the operations decisions. While
the board of directors is a more hands off approach to controlling a county, the
stakeholders prefer the hands on approach by directly assuming management
positions to dictate fund management. It was noted in African Union (2013) that
stakeholders can take over certain departments such as finance and human resources
or research and development to micromanage the business and ensure success.
Stakeholders are regarded as large investors, who will either increase or decrease their
stakes in the county according to the financial performance. Ideally, they act as
guardian angels for everyday project indulging poring over financial reports and
pressuring management to change tactics if necessary. Boockholdt, (2012) noted that
large stakeholders are generally high profile investors, and would like to steer clear of
counties that trample human rights and environmental laws. They monitor the
counties outsourcing activities and globalization initiatives, and may vote against the
county decisions if they are deemed harmful to the counties long-term goals.
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The stakeholder's project team leader, the project planning activities in which he
participates and his level of involvement in or responsibility for a particular activity,
depends on the project's mission and his reporting relationship to the project
management office, or PMO, which, in particular, leads to the classification as an
internal or external stakeholder. Internal stakeholders are accountable for or held
responsible for particular project planning activities and are required to participate in
certain activities, whereas external stakeholders generally are not. Like external
stakeholders, internal stakeholders are also incidentally involved in or consulted
regarding other activities for which they have no direct responsibility (Cannon, 2012).
According to Gruber and Elton (2013) planning activities in which internal
stakeholders participate with differing levels of involvement include project scope
estimation; definition of work product, task attributes and project life cycle; projection
of effort and cost; creation of budget and project schedule; identification of project
risks; planning for data management, project resources, personnel, stakeholder
involvement and training. Project planning activities in which external stakeholders
participate are frequently identical to those of internal stakeholders. However,
Mkandawire (2011), asserts that roles of external stakeholders are limited to that of
consultants rather than team members directly accountable for individual financial
planning activities.
The level of user involvement during the county projects will certainly fluctuate;
project managers should work hard to ensure that involvement is never nonexistent.
Ideas for involving people within the organization during policies implementation
include presenting the design, workshops, newsletters, open forums and recurring
agenda items in established departmental meetings managers who might not use the
15
system but are a customer of the systems information should also be consulted, as
should affected third parties such as customers, suppliers and external agents.
Keeping people involved will facilitate the change process by ensuring people
understand the why behind the change, not just the what of the change. Lack of
user involvement with the project can lead to huge resistance to change (Nyamute,
2013).
Mulwa & Nguluu (2013) suggest that limited involvement leads to a lack of
understanding, which results in costly mistakes in early system operations. Within
each organization reactions to change will vary between individuals and was
dependent on a range of factors, including personal upbringing and previous
experiences of change. The community was unsure about how the new projects will
affect them in terms of their day to day activities. In order for people to feel secure
about change, they must have an appreciation of what their world will look like after
the project has been implemented.
2.3.3 Ethics
Ethics in financial management is the application of a code of behavior for financial
professionals. Like other people with professional certifications, financial managers
have certain obligations and expectations from society. They must act responsibly and
with good faith when handling funds for clients; these may include governmental
agencies, financial firms, and individuals who entrust their investments to financial
management consultants. Many professional certifications in the financial industry
come with their own codes of ethics, and people may have additional requirements
from individual employers with standards for their staff (Reynolds and Bowie, 2008).
16
Wilcha (2008) opines that ethics are principles based on doing the right thing. They
are the moral values by which an individual or business operates. In theory, a business
or individual can act ethically and still attain ultimate success. A history of doing the
right thing can be used as a selling point to heighten a person's or organization's
reputation in the community. Not only are ethics morally valued, they are backed by
legal repercussions for failure to act within certain guidelines.
Financial management professionals have a degree of obligation higher than a
member of the general public because of their training and professional standing. In
exchange for a higher degree of faith and trust from members of the general public,
financial professionals have to comply with higher ethical guidelines. Ethics in
financial management provide clear guidance (Cooksey et al. 2015). The ethics of a
finance manager should be above approach. This includes more than just acting in an
honest, above-board manner. It means establishing boundaries that prevent
professional and personal interests from appearing to conflict with the interest of the
employer. A finance manager must provide competent, accurate and timely
information that fairly presents any potential disclosure issues, such as legal
ramification. The manager is also ethically responsible for protecting the
confidentiality of the employer and staying within the boundaries of law (Curtis,
2013).
The honesty, including full disclosure of risks and benefits, is one aspect of the ethical
obligations placed on financial professionals. When advice is offered, it should
include a clear discussion of why a particular course of action is advised, and how
clients can find out more if they are curious (Firzli, 2013). In addition, Glover (2013)
says good faith dealings with funds are also a requirement of ethics in financial
17
management. People caring for money that does not belong to them need to maximize
returns, weigh risks with care, and represent all their clients with equal care and
respect. This can involve activities like balancing conflicting needs in an investment
fund when some people want to withdraw and others want to stay.
Respect for confidentiality is also an issue. This includes not disclosing personal
financial information to third parties, unless required by law. The manager of a fund
may need to prepare tax declarations for the government, for example, or turn records
over to regulators conducting an investigation. It is not uncommon for financial
institutions to develop a list of ethics in financial management that their personnel
must comply with at all times. This list may be published for the benefit of members
of the public who want to know more about how the county operates (Dirk, Matten,
and Moon, 2012).
2.4 Conceptual Framework

Independent Variables Dependent Variable
Financial Reporting Techniques
Stakeholder Involvement Management of funds in Parastatals
Ethics
Figure 2.1 Conceptual Framework
County managers must prepare for all future events and market changes. One of the
most important aspects of such preparation is cash flow planning. Failure to properly
18
plan cash flow is one of the leading causes for business failures. Experience has
shown that many business owners lack an understanding of basic accounting
principles and reporting. Knowing the basics will help to better manage the cash flow.
Firms cannot function independently of the stakeholder environment in which they
operate, making the effects of managerial decisions and actions on non-owner
stakeholders part and parcel of decisions and actions made in the interests of owners.
This view holds that managerial decisions and actions are intertwined with multiple
stakeholder interests in such a way that breaking shareholders apart from non-owner
stakeholders is not possible. Managers who, according to this approach, make
decisions in isolation of the multitude of stakeholders and focus singly on
shareholders overlook important threats to their own well-being as well as
opportunities on which they might capitalize.
2.4.3 Ethics
Policy statement should cover ethical and disclosure obligations for all officers, senior
management and financial or accounting personnel with financial reporting or
disclosure responsibilities. Organizations should be committed to maintaining high
ethical standards related to the financial reporting processes and internal controls. All
employees involved in the financial reporting and disclosure processes to take
responsibility very seriously and this commitment must be supported by the highest
level of ethical standards.
19
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1 Introduction
This section contains the research instruments which the researcher used in the study,
the target population and the sampling method, procedure of data collection and data
analysis.
3.2 Research Design

The study adopted descriptive research design; it is the most applicable for the study,
as the study focused on describing independent variables. This scientific method of
investigation involves collection and analysis of data in order to describe a
phenomenal in its current condition or status, Kothari (2011) continues to indicate that
this design is preferred because it is possible and easy for the researcher to obtain
current factual information from the respondents in an accurate way.
3.3 Population
3.3.1 Target Population and Sample Frame
Target population is defined by Mugenda & Mugenda (2003) as a universal set of the
study of all members of a set of people, events or objects to which an investigator
wishes to generalize the result. The target population of this study was the staff of
Kenya airport Authority, Nairobi mainland Port as presented on the table 3.1 where
the population comprises of Finance, Accounts, Procurement and supply chain, IT,
Human resource and Training and planning department and Clerks.
3.3.2 Sample Frame

According to Williamson (2011) a research population is also known as a well-
defined collection of individuals or objects known to have similar characteristics
20
therefore, all individuals or objects within a certain population usually have a
common, binding characteristic or trait. The total population at the main 162 staff.
The sample frame constitutes, the study narrowed to specific department directly
concerned or partakes in fund management. The department constituted Finance,
Accounts, Procurement and Supply Chain Staff, IT Staff, Human Resource and
Training department and Department of Planning. Therefore 162 staff at Kenya
airport Authority, Nairobi mainland Port were involved. The details about the target
population were presented on the table 3.1.
Table 3.1 Target Population

Category Target Percentage
Population
Finance 12 7
Accounts 10 6
Procurement and Supply Chain Staff 18 11
IT Staff 24 16
Human Resource and Training department 12 7

Department of Planning 35 22
Clerks 51 31
Total 162 100
Source: HRM Kenya Airport Authority (2017)
3.4 Samples and Sample Procedures

A sample is a small group obtained from the accessible population (Trochim, 2006).
Respondents were chosen from the study through the use of stratified random
sampling technique because it enables the researcher to achieve fair representation
from various respondents to be chosen from the study. In order to select the sample
size, the study adopted probability random sampling method so as to ensure that
every members was given equal chance. A sample size of 30% was selected because
21
it was easily accessible and convenient for the researcher to select the target
population that was manageable. According to Mugenda and Mugenda (2003) argues
that a sample 20% and above was appropriate representative of the target population.
The sample size was presented on the table 3.2 as follows.
Table 3.2 Sample Size

Category Target Sample Size
Population 30% of
population
Finance 12 4
Accounts 10 3
Procurement and Supply Chain Staff 18 5
IT Staff 24 7
Human Resource and Training department 12 4

Department of Planning 35 11
Clerks 51 15
Total 162 49
Source: Author (2017)
3.5 Instrumentation
A questionnaire is a collection of questions to which a research subject is expected to
respond. Mugenda & Mugenda, (2003) this instrument can be administered orally as
the researcher records the responses to each item independently. In the study, the
researcher drafted several questions in the questionnaires. The questionnaires were
structured/closed ended questions providing options to answers being sought.
Questionnaires were unstructured/open ended questions whereby respondents was
given chance to respond by giving personal opinion. These were given to respondents
who thereafter gave back the necessary information and details.
Williamson, (2011) indicated the advantage of using this method includes; the method
is inexpensive to some because once the questionnaires were given to willing
22
respondents; the researcher had to wait for the respondents to give information back
in their own time. Some respondents gave the feedback immediately; it also enabled
the researcher to make extensive inquiry which could put on the questionnaires and
respondents who are not easily approachable could easily be contacted.
3.6 Data Collection Procedure

The researcher phrased the questions clearly in order to make clear dimensions along
which responses was analyzed. In open ended questions, space was provided for
relevant explanation by the respondents, thus giving them freedom to express their
opinion, as questionnaires was administered, they was hand-delivered to the
respondents and thereafter get collected after a period of one week.
3.7 Data Analysis Technique

The data analysis was quantitative method. The collected data was coded and
classified so as to present the results of the data analysis in a systematic and clear
way. Data analysis as stated by Bray & Maxwell, (2010) is the process of evaluating
data using analytical and logical reasoning to examine each component of the data
provided, this form of analysis was among the many steps that must was completed
when conducting a research experiment, as data from various sources is gathered,
reviewed, and then analyzed to form finding or conclusion. Quantitative techniques
involve use of mean, standard deviation and percentage aided by excel software
package to analyze data. The analyzed data was presented by use of diagrams such as
pie charts and bar graphs.
23
CHAPTER FOUR
DATA PRESENTATION AND INTERPRETATION OF FINDINGS
4.1 Introduction
This chapter addresses the data as per each objective in order to obtain the relevant
results which are presented in the tables and figures. In addition the contents of the
chapter are as follows introduction, quantitative and qualitative data analysis.
4.2 Presentation of Findings

4.2.1 Response Rate
Table 4.1 below shows the number of questionnaires that were returned by the
respondents and those that were not returned by respondents.
Table 4.1 Response Rate

Category Frequency Percentage
Responded 42 86
Did not Respond 2 16

Total 49 100
From the above table 4.1 out of 44 questionnaires distributed 42 were responded to and
this was equivalent to 95% while 5 questionnaires were never responded to which was
equivalent to 5% of the questionnaires. This shows that the respond was good.
4.2.2 Gender of the Respondents
The responses in respect to the gender of the respondent is shown in table 4.2 below
Table 4.2 Gender of the Respondents

Male 25 60
Female 17 40
Total 42 100
24
From the table 4.2 shows that 60% of the respondents were male, while 40% of the
respondents were female. This indicates that most of the respondents were male. This is
an indication for fair representation of the gender.
4.2.3 Age Bracket of the Respondents

Table 4.3 Age Bracket of the Respondents
18 24 years 11 26
25 30 years 10 24
31 40 years 17 40
41 years and above 4 10
Total 42 100
Table 4.3 provided the findings regarding the age brackets of respondents involved in the
study, it was found that 24% of the respondents were in the age bracket of between 25
30 years, 26% aged between 18 - 24 years, 40% were between the age of 31 - 40 years
and 10% of the respondents said that they were aged between 41 years and above. This
showed that most of the respondents were aged between 31 - 40 years. This is an
energetic work force in the parastatal.
4.2.4 Highest Education Level
Table 4.4 below gives the highest education level of the respondents in Kenya Ports
Authority.
Table 4.4 Highest Education Level
Secondary 10 24
College 12 29
University 14 33
Post Graduate 6 14
Total 42 100
From the above table 4.4 give the highest educational level of the respondents and it was
as follows, 33% who were majority had university level of education, 14% of the
respondents had post graduate level of education, 29% of the respondents had college
level of education while 24% of the respondents in Kenya Ports Authority had secondary
25
level of education. This showed that most of the respondents in Kenya Ports Authority
had university level of education. This is an indication that the administrators had good
background education to run parastatals operations.
4.2.5 Length of Service of the Respondents
The responses in respect to the length of service of the respondent is shown in table 4.5
below
Table 4.5 Length of Service of the Respondents
Less than 1 year 3 7
2-6 years 15 36
7-11 years 9 21
12-16 7 17
Over 16 years 8 19
Total 42 100
From the table 4.5 it shows that 7% of the respondents indicated that they had worked at
Kenya Ports Authority for a period of less than 1 year, 36% of the respondents indicated
that they had worked for a period between 2-6 years, 21% of respondents had a period
between 7-11 years whereas 17% of the respondents indicated that they had worked for a
period 12-16 years and 19% rated over 16 years. This indicates that majority of the
respondents said that they had worked in the parastatals for 2-6 years. This was an
indication that they had knowledge about management of funds in parastatals.
26
4.3 Financial Reporting Techniques
Table 4.6 Whether operating, investing and financing activities are usually
accurate to enhance the management of funds in parastatals
Strongly Agree 13 31.0
Agree 16 38.1
Undecided 9 21.4
Disagree 4 09.5
Strongly Disagree 0 00.0
Total 42 100
Figure 4.1 Whether operating, investing and financing activities are usually
accurate to enhance the management of funds in parastatals
ge
enta
Perc
Category
From the table 4.6 it and figure 4.1 was about a study on whether operating, investing
and financing activities are usually accurate, it was found that 38.1% of the
respondents agreed followed by 31.0% of the respondents who strongly agreed to that
statement and 21.4% of the respondents were undecided on whether operating,
investing and financing activities are usually accurate, 9.5% of the respondents
disagree. This showed that majority of the respondents agreed that a statement of cash
flows (that is operating, investing and financing activities) may enhance management
of funds fund in parastatals where the reports were usually accurate.
27
Table 4.7 Whether a statement of comprehensive income, statement of revenue
and expense are highly used to enhance management of funds
Category Frequency
Percentage
Agree 19 45.2
Undecided 5 11.9
Disagree 2 04.8
Total 42 100
Figure 4.2 Whether a statement of comprehensive income, statement of revenue

and expense are highly used to enhance projects management of funds
ge
enta
Perc
Category
The findings presented on table 4.7 and figure 4.2 showed whether a statement of
comprehensive income, statement of revenue and expense are highly used to enhance
projects management of funds in parastatals is shown above where 45.2% of
respondents agreed, 38.1% strongly agreed to that statement, 11.9% of the
respondents were undecided with the statement while only 4.8% of the respondents
who disagreed to the statement. This showed that most of the respondents agreed that
an income statement, also known as a statement of comprehensive income, statement
of revenue and expense, profit and loss report are highly used to enhance management
of funds in parastatals.
28
Table 4.8 Whether management relies on a bookkeeper and an outside
accounting firm to maintain parastatalss records and guidance on
management of funds
Category Frequency
Percentage
Agree 7 16.7
Undecided 7 16.7
Disagree 13 31.0
Total 42 100
Figure 4.3 Whether management relies on a bookkeeper and an outside

accounting firm to maintain the parastatalss records and provide guidance
on management of funds
ge
enta
Perc
Category
Table 4.8 and figure 4.3 showed whether the management relies on a bookkeeper and
an outside accounting firm to maintain the parastatalss records and provide guidance
on management of funds in parastatals it was noted that 31.0% of the respondents
disagreed, 16.7% of the respondents were undecided to that statement, another 16.7%
of the respondents agreed to the statement and 11.9% of the respondents strongly.
This showed that most of the respondents disagreed that the management relies on a
bookkeeper and an outside accounting firm to maintain the parastatalss records and
provide guidance on management of funds in parastatals.
29
Table 4.9 Whether annual reports does not provide a comprehensive report
about true state of management of funds in parastatals
Category Frequency
Percentage
Agree 9 21.4
Undecided 6 14.3
Disagree 10 23.8
Total 42 100
Figure 4.4 Whether annual reports does not provide a comprehensive report
about true state of management of funds in parastatals
ge
enta
Perc
Category
The response on table 4.9 and figure 4.4 showed whether the annual reports does not
provide comprehensive report about true state of management of funds in parastatals
was also 21.4% of the respondents agreed, 14.3% of the respondents were undecided
on the statement, 23.8% of the respondents disagreed to that statement, while 40.5%
of the respondents strongly disagreed that the annual reports does not provide
comprehensive report about true state of management of funds in parastatals. This
showed that majority of the respondents disagreed that the annual reports does not
provide comprehensive report about true state of management of funds in parastatals.
30
4.4 Stakeholder Involvement
Table 4.10 Whether Management facilitates fund adjustments when necessary to
win parastatals support
Category Frequency
Percentage
Agree 16 38.1
Undecided 5 11.9
Disagree 3 07.1
Total 42 100
Figure 4.5 Whether Management facilitates fund adjustments when necessary to

win organizational support
ge
enta
Perc
Category
From the table 4.10 and figure 4.5 the response on whether the respondents have ever
thought that management facilitates fund adjustments when necessary to win
organizational support where 42.9% of the respondents strongly agreed, 38.1% of the
respondents agreed as 11.9% of the respondents were undecided while only 7.1% of
the respondents disagreed that management facilitates fund adjustments when
necessary to win organizational support. From the finding it was seen that majority of
the respondents strongly agreed that management facilitates fund adjustments when
necessary to win organizational support.
31
Table 4.11 Whether the willingness of stakeholders to perform the activities
assigned to them during the financial planning process determines the
success or failure of the management of funds
Agree 18 42.8
Undecided 1 02.4
Disagree 0 00.0
Total 42 100
Figure 4.6 Whether the willingness of stakeholders to perform the activities

assigned to them during the financial planning process determines success or
failure of the management of funds
ge
enta
Perc
Category
Table 4.11 and figure 4.6 was on a response as to whether the willingness of
stakeholders to perform the activities assigned to them during the financial planning
process determines the success or failure of the management of funds as shown by
54.8% of respondents who strongly agreed, 42.8% of the respondents agreed while
2.4% of the respondents were undecided. This showed that majority of the
respondents strongly agreed that the willingness of stakeholders to perform the
activities assigned to them during the financial planning process determines the
success or failure of the management of funds.
32
Table 4.12 Whether the stakeholders prefer the hands on approach by directly
assuming management positions to dictate management of funds in
parastatals
Category Frequency
Percentage
Agree 7 16.7
Undecided 5 11.9
Disagree 13 31.0
Total 42 100
Figure 4.7 Whether the stakeholders prefer the hands on approach by directly
assuming management positions to dictate management of funds in
parastatals
ge
enta
Perc
Category
Table 4.12 and figure 4.7 showed findings on whether stakeholders prefer the hands
on approach by directly assuming management positions to dictate management of
funds in parastatals. It was established that 7.1% of the respondents strongly agreed,
11.9% were undecided, 31% of the respondents disagreed while 33.3% of the
respondents strongly disagreed. This showed that most of the respondents strongly
disagreed that stakeholders prefer the hands on approach by directly assuming
management positions to dictate management of funds in parastatals.
33
Table 4.13 Whether Stakeholders can take over certain departments such as
finance to micromanage the organization which is against management of
funds.
Category Frequency
Percentage
Agree 6 14.3
Undecided 4 09.5
Disagree 18 42.9
Total 42 100
Figure 4.8 Whether Stakeholders can take over certain departments such as
finance to micromanage the organization which is against management of
funds.
ge
enta
Perc
Category
Table 4.13 and figure 4.8 showed whether Stakeholders can take over certain
departments such as finance to micromanage the organization which is against
management of funds were as follows 14.3% of the respondents agreed, 9.5% were
undecided, 42.9% of the respondents disagreed while 33.3% of the respondents
strongly disagreed. This showed that majority of the respondents disagreed that
stakeholders can take over certain departments such as finance and human resources
or research and development to micromanage any project and ensure management of
funds.
34
Table 4.14 Whether the roles of external stakeholders are limited to that of
consultants rather than team members
Category Frequency
Percentage
Agree 12 28.6
Undecided 6 14.3
Disagree 8 19.0
Total 42 100
Figure 4.9 Whether the roles of external stakeholders are limited to that of
consultants rather than team members
ge
enta
Perc
Category
Table 4.14 and figure 4.9 showed the roles of external stakeholders are limited to that
of consultants rather than team members directly accountable for individual financial
planning activities and responses showed 38.1% of the respondents strongly agreed
28.6% of the respondents agreed to that statement, 14.3% were undecided while 19%
of the respondents disagreed. This showed that majority of the respondents strongly
agreed that roles of external stakeholders are limited to that of consultants rather than
team members directly accountable for individual financial planning activities.
35
4.5 Ethics
Table 4.15 Whether the parastatals has established boundaries on professional
and personal interests from appearing to conflict
Category Frequency
Percentage
Agree 16 38.1
Undecided 6 14.3
Disagree 8 19.0
Total 42 100
Figure 4.10 Whether the parastatals has established boundaries on professional

and personal interests from appearing to conflict
ge
enta
Perc
Category
Table 4.15 and figure 4.10 provided study findings in which there was need to
determine whether the parastatals has established boundaries that prevent professional
and personal interests from appearing to conflict with the interest of the employer. It
was established that 28.6% of the respondents strongly agreed, 38.1% of the
respondents agreed, 14.3% of the respondents were undecided while 19% of the
respondents disagreed This showed that majority of the respondents agreed that the
parastatals has established boundaries that prevent professional and personal interests
from appearing to conflict with the interest of the employer on management of funds
in parastatals.
36
Table 4.16 Whether financial managers rarely act responsibly and with good
faith when handling funds during management of funds in parastatals
Agree 9 21.4
Undecided 5 11.9
Disagree 10 23.8
Total 42 100
Figure 4.11 Whether financial managers rarely act responsibly and with good
faith when handling funds during management of funds in parastatals
ge
enta
Perc
Category
Table 4.16 and figure 4.11 showed findings on whether financial managers in this
organization rarely act responsibly and with good faith when handling funds during
management of funds in parastatals where 4.8% of the respondents strongly agreed,
21.4% of the respondents agreed, 11.9% of the respondents were undecided, 23.8% of
the respondents disagreed and 38.1% of the respondents strongly disagreed. This
showed that most of the respondents strongly disagreed that financial managers in this
organization rarely act responsibly and with good faith when handling funds during
management of funds in parastatals. This showed that they act responsibly and with
good faith when handling funds.
37
Table 4.17 Whether there is any legal ramification on individuals with negative
financial records responsible for management of funds in parastatals
Agree 12 28.6
Undecided 3 07.1
Disagree 7 16.7
Total 42 100
Figure 4.12 Whether there is any legal ramification on individuals with negative
financial records responsible for management of funds in parastatals
ge
enta
Perc
Category
Table 4.17 and figure 4.12 showed the response on whether there is any legal
ramification on individuals with negative financial records responsible for
management of funds in parastatals, it was found that 38.1% of the respondents
strongly agreed, 28.6% of the respondents agreed, 7.1% of the respondents were
undecided while 16.7% of the respondent disagreed to the statement and 9.5% of the
respondents strongly disagreed. This showed that most of the respondents strongly
agreed that there is legal ramification on individuals with negative financial records
responsible for management of funds in parastatals.
Table 4.18 Whether ethical policies provide clear guidance on management of

funds in parastatals
38
Agree 18 42.9
Undecided 3 07.1
Disagree 7 16.7
Total 42 100
Figure 4.13 Whether ethical policies provide clear guidance on management of

funds in parastatals
ge
enta
Perc
Category
Table 4.18 and figure 4.13 showed the response on whether ethical policies provide
clear guidance on management of funds in parastatals were as follows where 33.3% of
the respondents strongly agreed that ethical policies provide clear guidance on
management of funds in parastatals, 42.9% of the respondents agreed to that
statement, 7.1% were undecided while 16.7% of the respondents disagreed that ethical
policies provide clear guidance on management of funds in parastatals. This showed
that majority of the respondents agreed that ethical policies provide guidance on
management of funds.
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
5.1 Introduction
This section presents the major findings, conclusions, recommendation and
implications of further research on the study.
39
5.2 Summary of the Major Findings
5.2.1 Effect of Financial Reporting Techniques on management of funds in
parastatals in Kenya
The summary of findings from this study established that an income statement, also
known as a statement of comprehensive income, statement of revenue and expense,
profit and loss report are highly used to enhance management of funds in parastatals.
This implied that by application of such approach, there was possibility of
experiencing proper accountability of funds. These findings were in line with those of
Colbert, (2006) who noted that profit and loss reports are highly used to enhance
management of funds. The study found that respondents disagreed that the
management relies on a bookkeeper and an outside accounting firm to maintain the
parastatalss records and provide guidance on management of funds in parastatals.
This implied that book keeping is managed internally; as a result, the bookkeepers are
able to provide proper flow because they understand internal operations of the
parastatals. The findings further established that majority of respondents disapproved
that annual reports does not provide comprehensive report about true state of
management of funds in parastatals. This implied that it does provide, an indication
that comprehensive report helps to show the true state or progress of parastatals
projects.
5.2.2 The effects of Stakeholder Involvement on management of funds in
parastatals in Kenya
The summary of findings revealed that the management facilitates fund adjustments
when necessary to win organizational support. This implied that by being flexible,
challenging or tasking projects with limited funds are able to be managed as per
40
available funds. The analysis further revealed that willingness of stakeholders to
perform the activities assigned to them during the financial planning process
determines the success or failure of the management of funds. Based on these
findings, it implied that stakeholders were expected to get involved in all stages of
fund management in the parastatals in order to give green light on the progress of
usage of funds. These findings were in conformation with those of Reynolds and
Bowie, (2008) who found that the roles of stakeholders change throughout a project
life cycle, the willingness of stakeholders to perform the activities assigned to them,
the success or failure of the project and the funds involved. The study established that
respondents disagreed that stakeholders prefer the hands on approach by directly
assuming management positions to dictate management of funds in parastatals. Since
majority disagreed, it implied that the stakeholders appears to give absolute chance
for those managing funds in the parastatals to undertake their responsibilities as they
understand well with minimal interference from the stakeholders. This further agrees
with the findings which revealed that the roles of external stakeholders are limited to
that of consultants rather than team members directly accountable for individual
financial planning activities.
5.2.3 Effects of Ethics on Management of funds in parastatals in Kenya
The summary of findings revealed that that the parastatals had established boundaries
which prevents professional and personal interests from appearing to conflict with the
interest of the employer on management of funds in parastatals an indication that
ethics is highly observed. Therefore, it revealed that adhering to professionalism gives

41
better results in parastatals fund management. The analysis revealed that respondents
disagreed that financial managers in this parastatals rarely act responsibly and with
good faith when handling funds during management of funds in parastatals. The
findings were in agreement with those of Billystom and Shell, (2006) who found that
many professional certifications in the financial industry come with their own codes
of ethics, and people may have additional requirements from individual employers
with standards for their staff. This showed that they act responsibly and with good
faith when handling funds. The study found that there is legal ramification on
individuals with negative financial records responsible for management of funds in
parastatals. The results revealed that those implicated in scandals regarding the
parastatalss funds were likely to be subjected to legal process, therefore, policies
were provided to help enhance ethical practices. This revealed that ethical policies
provide clear guidance on management of funds in parastatals.
5.3 Conclusions
The study concluded that in financial reporting were highly used, this is guided by the
use of income statement, also known as a statement of comprehensive income,
statement of revenue and expense, profit and loss report are highly used to enhance
management of funds in parastatals. The responses in the study were expected to
affirm that these financial reporting tools were commonly used in this organization.
The analysis in the study showed that annual reports do not provide comprehensive
report about true state of management of funds in parastatals.
The study concluded that in stakeholders involvement it deduced from the study that
in order for the stakeholders to perform the activities assigned to them during the
financial planning process, it determines the success or failure of the project. The
42
analysis also showed that the finding it was seen that majority of the respondents
strongly agreed that there is regular adjustment in fund when necessary to win
organizational support. The analysis derived from the study showed that willingness
of stakeholders to perform the activities assigned to them during the financial
planning process determines the success or failure
The study on ethics and its relations to management of funds in parastatals was
concluded that financial managers in this organization rarely act responsibly and with
good faith when handling funds during management of funds in parastatals. The study
also noted that the parastatals has established boundaries that prevent professional and
personal interests from appearing to conflict with the interest of the employer on
management of funds in parastatals. The conclusion derived from the study also
showed that there is legal ramification on individuals with negative financial records
responsible for management of funds in parastatals.
5.4 Recommendations
The study recommended that the management at the Kenya Ports Authority should
ensure that regular audits are carried out and that reporting frequency made regularly.
This ensures that total accountability of the funds for parastatals is achieved. Reviews
on financial reported statements should be done by independent consultants in order
to ensure no errors or non disclosures of funds are made. This ultimately results in
total accountability and ensures funds are effectively managed.
The study recommends that that the management at the Kenya Ports Authority should
ensure that parastatals stakeholder engagement needs is reviewed and managed

43
properly. This should be driven by a well-defined strategy and have a clear set of
objectives, timetable budget and allocation of responsibilities. All staff should be
made aware of the program and understand why it is being undertaken and what
implications it might have on management of funds.
5.4.3 Ethics
The study recommended that the management at the Kenya Ports Authority should
ensure that ethics is highly observed. This can be achieved by first, carrying out
proper vetting of the individuals to be assigned in managing funds. There is also need
to ensure that legal policies are enforced especially to those who are found to break
the laws regarding the unethical practices associated with misappropriating parastatals
funds.
5.5 Limitations of the Research
The challenges encountered in the study were as follows.
5.5.1 Data Confidentiality
Some of the data required were considered confidential. As a result the management
was initially not willing to provide such data due to fear that such information may be
exposed to wrong people for them to gain undue advantage. To overcome the
limitation, the researcher provided the introduction letter from KCA University so as
to be allowed to carry out the research without the cases of suspicion as to where the
data was meant for use.
5.5.2 Uncooperative Respondents
Some respondent were initially not willing to cooperate due to their busy schedules
that they were undertaking at the time when the researcher expected them to fill the
44
questionnaire. To overcome the challenge, the researcher visited the management
early enough and sought secure permission to be allowed to collect the data. This
enabled the researcher to overcome the challenge and managed to secure the chance
to collect data.
5.6 Suggestions for Further Research

The research majored on examining the factors that influences the management of
funds in parastatals in Kenya on a case of Kenya Ports Authority. However, for the
completeness of this research, not all areas were focused or encompassed in this
study. Therefore, there was need to undertake other research studies on factors
affecting cash management practices in organization in Kenya. The major area of
focus should therefore be on financial policies, auditing techniques, investment
decision and financial management skills on cash flow management.
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APPENDIX I: INTRODUCTION LETTER
REQUEST TO UNDERTAKE A STUDY
I am a student at KCA University Main campus. Currently pursuing a Bachelors of
Commerce Finance Option. For the purpose of fulfilling the bachelors degree
requirements, I am carrying out a study on Factors that determine management of
funds in Parastatals in Kenya on A Case of Kenya Ports Authority, Nairobi County
48
I am collecting information for the study by distributing questionnaires to staff within
this county office. You have been selected or included in the sample. Fill the
questionnaire to the best of your knowledge. Information was treated confidentially
and will only be used for this research.
Yours Sincerely
Murugi Elizabeth Kathiomi
KCA/08/00110
APPENDIX II: RESEARCH QUESTIONNAIRES
Kindly answer the questions by putting a tick in the appropriate box or by writing in
the space provided.
PART I: GENERAL INFORMATION
1. Gender:
Male { }
Female { }
2. Age:
18-24 years { }
49
25-30 years { }
31-40 years { }
41 years and above { }
3. Highest Level of Education
Secondary { }
College { }
University { }
Post Graduate { }
4. Length of Service
Less than 1 year { }
2-6 years { }
7 11 years { }
12-16 years { }
Over 16 year { }
The following constitutes questions rated on a scale of 1 to 5. Kindly tick on the

choice you agree with and in the boxes provided. Where
1-----Strongly agree
2-----Agree
3------Undecided
4-------Disagree
5-------Strongly disagree
PART II: FINANCIAL REPORTING TECHNIQUES

5. Operating, investing and financing activities are usually accurate to enhance
50
management of funds in parastatals.
Strongly agree
Agree
Undecided
Disagree
Strongly disagree
6. A statement of comprehensive income, statement of revenue and expense are

highly used to promote management of funds in parastatals.
Strongly agree
Agree
Undecided
Disagree
Strongly disagree
7. The management relies on a bookkeeper and an outside accounting firm to
maintain the finance records and provide guidance on management of funds in
parastatals.
Strongly agree
Agree
Undecided
Disagree
Strongly disagree
8. The annual reports does not provide comprehensive report about true state of funds
support management of funds in parastatals.
Strongly agree
Agree
Undecided
Disagree
Strongly disagree
PART III: STAKEHOLDER INVOLVEMENT
51
9. Management facilitates fund adjustments when necessary to win government
support needed in management of funds in parastatals.
Strongly agree
Agree
Undecided
Disagree
Strongly disagree
10. The willingness of stakeholders to perform the activities assigned to them during
the financial planning process determines the success in management of funds in
parastatals.
Strongly agree
Agree
Undecided
Disagree
Strongly disagree
11. The stakeholders prefer the hands on approach by directly assuming
management positions to dictate management of funds in parastatals.
Strongly agree
Agree
Undecided
Disagree
Strongly disagree
12. Stakeholders can take over certain departments such as finance to micromanage
the organization which is against management of funds.
Strongly agree
Agree
Undecided
Disagree
Strongly disagree
13. Roles of external stakeholders are limited to that of consultants rather than team
members directly accountable for individual in management of funds in parastatals.
Strongly agree
Agree
52
Undecided
Disagree
Strongly disagree
PART IV: ETHICS

14. This parastatal has established boundaries on professional and personal interests
from appearing to conflict in management of funds.
Strongly agree
Agree
Undecided
Disagree
Strongly disagree
15. Finance managers in this county government rarely act responsibly and with good
faith when handling funds to have an management of funds in parastatals.
Strongly agree
Agree
Undecided
Disagree
Strongly disagree
16. Is there any as legal ramification on individuals with negative financial records
responsible for management of funds in parastatals?
Strongly agree
Agree
Undecided
Disagree
Strongly disagree
17. Does ethical policies provide clear guidance on successful management of funds
in parastatals?
Strongly agree
Agree
Undecided
Disagree
53
Strongly disagree
Thank you for your Participation
54

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FACTORS THAT DETERMINE MANAGEMENT OF FUNDS IN

A CASE OF KENYA PORTS AUTHORITY, NAIROBI COUNTY

MURUGI ELIZABETH KATHIOMI-KCA/08/00110

SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE FINAL YEAR RESEARCH PROJECT

OF THE BACHELOR OF COMMERCE DEGREE PROGRAMME

examination body. No part of this research should be reproduced without my consent or

that of the KCA University

Name: Murugi Elizabeth Kathiomi 08/00110

Signature: .. Date: .....

Declaration by the Supervisor

Name: Johnston Maina

Signature: ... Date: ......

School of Business and Public Management

Stakeholders Involvement It is the decision to involve all the people that

INTRODUCTION OF THE STUDY

research questions, justification and the scope of the study.

1.1 Background of the Study

In government, a fund is established authority provided by law. Each fund is a

statements (Mulwa and Nguluu, 2013).

government on efficient allocation of resources. It is further noted that, the

government expenditures comprise of cost of operations government corporation and

for financial administrators at government corporation are managing funds during

conducted by the Queens Centre for Enterprise Development (QCED), identified 12

GoK (April Issue, 2014). Funds through disbursement is a critical aspect of a

achieved within the set time periods (Ackerman, 2010).

procurement of finances both internally; such as appropriation-in aid and externally,

in form of loans and grants, must be done.

by rapidly changing economic conditions. The rapid growth of economic conditions

business economic environment, a corporation management team must be able to

situation demands a different strategy supported by specific practices.

cash management could end up putting a profitable corporation out of business.

Finance managers in many government corporations currently face huge challenges in

key to success. By centralizing fund Management procedures, counties are able to

corporations (Dirk, Matten, and Moon 2012).

others, governance and public finance management reforms to enhance transparency,

accountability, service delivery and cost efficiency in the management of funds.

implementing the devolved governance as espoused in the Constitution of Kenya of

national and county levels.

1.2 Statement of the Problem

business planning (Mahoney, 2011). The flow of funds is usually expected to be a

Bureaucratic and Political Corruption in Africa by (Mukum and Mbaku, 2010).

Kimenyi, (2015) studied Efficiency and Efficacy of Kenyas Public funds in

salaries and/or poor remuneration of employees.

are hampered by inadequacy of vital financial resources; this is in spite of many

objective use of government funds.

to management of funds and accountability are culture of political patronage, wanting

citizenry capacity to demand accountability. Thus, an effective participation of the

Kenyan people in decentralized fund remains an elusive mirage owing to a number of

factors including inadequate information on the devolved funds.

addressed the specific aspects regarding management of funds parastatals in Kenya

resulting to a research gap. Therefore, there was need to undertake a conclusive

research on factors that determine management of funds in parastatals in Kenya.

1.3 Objectives of the Study

1.3.1 General Objective

To examine the factors that influences the management of funds in parastatals in

Kenya on a case of Kenya Ports Authority.

1.3.2 Specific Objectives

The following specific objectives guide the study.

i. To assess the effect of financial reporting techniques on management of funds

iii. To assess the effect of ethics on management of funds in parastatals in Kenya.

1.4 Research Questions

The research questions guided the study.

i. How do financial reporting techniques affect management of funds in