The Impact of Corporate Governance on Financial Management of Public Secondary Schools in Kenya: A Case of Siaya County

Abstract

This study sought to investigate the impact of corporate governance on financial management of public secondary schools in Kenya. The specific objectives of the study were to: To establish the impact of the board composition on financial management of secondary schools, to establish the composition of board skills on the financial management of public secondary schools, and to analyze how the application of corporate governance principles impacts the financial management of public secondary schools. This study was undertaken among the 41 secondary schools in Siaya County the target population comprised of 205 respondents who were either Chairman. Treasures, parent teacher association member, board of governor member or auditor in the respective institution. Using stratified sampling a sample size of 137 was arrived at although only 110 responded giving an 80% response rate which was considered sufficient. Questionnaires was used as a data collection tool and using SPSS version 20, the descriptive and inferential statistics was computed. The analysis revealed that majority were aware of budgeting practices in schools and as board member, they oversee supply chain management, movable asset management and control. It was also noted that the members prioritize on use of scarce resources to ensure effective stewardship over public money and assets and most of the respondents were actively involved in planning and implementation of the financial plan, accounting and reporting on funds management. A positive correlation was established thus a positive change in board composition led to a positive change in financial management. The findings also revealed that presence of accounting knowledge was vital in order to improve financial management in schools and the board had illustrated governance expertise in the last five year. It was also established tenure of board member affected financial management and all members had information on projects undertaken by the school. Positive correlation revealed that with every positive change in board skills there is a positive change in financial management. Lastly the findings revealed that management and board of director’s are efficient and have capacity to perform their duties properly and it was also established that there are set rules and policies that generate information on roles and responsibilities. The members were also found to be able to effectively manage issues of procurement, allocation and control of financial resources although there was no clear response on difficulties in managing large volumes of paper work. Positive correlation revealed that with every positive change in corporate governance there is a positive change in financial management.