Influence Of Forensic Accounting Services On Financial Performance Of County Governments In Kenya

Abstract

This study undertook comprehensive analysis case studies and empirical data, to establish the positive impact of forensic accounting in ensuring efficient utilization of resources and in fostering the credibility of County governments in Kenya. The study sought to address the following: To assess the level of awareness on existing forensic accounting policies relating to financial management practices in the County governments ;to establish the extent to which Forensic Accounting Investigation is used to detect financial frauds in County governments; to examine the extent to which Litigation Support is used to prevent financial fraud and mismanagement ;to evaluate the effectiveness of reconstruction accounting and auditing in safeguarding public funds and assets and to assess how analysis of financial transactions is used to detect and prevent financial frauds in County governments.The study was guided by fraud triangle, deterrence and Fraud Diamond Theory. The study adopted a descriptive research design. The sample size was 30 percent of the targeted study regions (47 Counties) and one respondent each per cluster making the total number of respondents to be 45 (3 clusters). Purposive and convenience sampling was used in selection of each respondent per cluster. Data was collected by use of questionnaires and analyzed using descriptive and inferential statistics with the help of Statistical Package of Social Sciences Version 23. The findings of the study revealed that fraud hinders County governments from achieving their objectives through denial of critical resources that are meant to support such services. The inferential statistics showed that there was no statistically significant difference between fraud awareness and financial performance. However, there was average influence between awareness program and financial performance of county governments. The findings further showed that there was no significant difference between investigative aspect of forensic accounting and financial performance of county governments in Kenya. This implied that if investigative aspect as a forensic accounting service was enhanced, the incidences of fraud discoveries would have enhanced and appropriate action taken as a way of containing fraud in county governments. It was also established that though litigation of fraudulent cases has ability to deter involvement of employees in fraudulent activities as well as ability of forensic experts acting as prosecution witness, there were divergent views on the prosecution of past cases of fraud, conviction of fraud cases and recoveries from past beneficiaries of fraud. Inferential statistics however established that there existed a strong positive and statistically significant relationship between litigation support services.The result further revealed that financial reconstruction and auditing are important in fraud identification and control. Inferentially, it was found that there was no statistically significant difference between reconstruction accounts and auditing as a forensic accounting function and financial performance of county governments in Kenya. It was noted that forensic data analysis is a key forensic account strategy in fraud mitigation as it was revealed that there was no statistically significant difference between forensic analysis of financial and financial performance. Based on the findings of the study, the researcher recommended that; there was need for county governments to not develop comprehensive policies on fraud control and enforcement but also a program for creation of awareness on the same under induction program for new members as well as periodic sensitization of the of the staff. It was critical that investigative services within the organization should be enhanced through utilization of services of forensic accountants. There is need to have periodic reconstruction and auditing of financial operation as a way of establishing reliability of financial transactions and dependability of financial statements. Lastly, there is need to deeper analysis of financial transaction as away tracing the financial transaction in view of complexity in the dimension that financial transaction are assuming with advancement of technological innovation and globalization.