FINANCIAL MONITORING PRACTICES AND PUBLIC FINANCIAL MANAGEMENT COMPLIANCE OF NAIROBI CITY COUNTY GOVERNMENT, KENYA
Keywords:
Financial monitoring practice, Public financial management compliance, Budget implementation, financial reporting and integrated financial management information systemAbstract
Adherence to PFM regulations is vital for guaranteeing accountability, transparency and public resources efficient use. However, Nairobi City County faces persistent challenges in implementing effective PFM practices, as evidenced by low budget utilization rates, discrepancies in financial reporting, misappropriation of funds, and non-compliance with procurement regulations outlined in Auditor General’s disclosures. The study aimed to assess how these monitoring practices impact the overall compliance with PFM regulations, particularly in terms of improving accountability, transparency, and the effective allocation of resources. The study explored three key financial monitoring practices; budget implementation, financial reporting and audits and their impacts on PFM compliance. Theories anchoring the research included agency, institutional and public choice theories. Descriptive research design was adopted, where 76 employees in finance and accounting departments of Nairobi City County formed the target populace. Primary data was collected by a questionnaire. Data collected was analyzed by descriptive techniques (mean, median & standard deviation) and inferential statistics (multiple regression). The study found that budget implementation, financial reporting and audit significantly positively affected public financial management compliance of the Nairobi City County government. A significant advantage is concluded when the County invests in better budgetary practices such offering training to financial staff, improvement on reporting systems and making the procurement process transparent. The manner in which the County gives its financial information to the citizens is critical in complying with PFM practices. Audit also strongly correlates with compliance of financial management of the County which ensures that public finances are managed with greater accountability and transparency. The review recommends investment in training the county’s finance staff to enable them acquire the required skills and knowledge. The County should leverage technology through digital platforms to simplify the collection of data and the process of reporting its financial information with accuracy and efficiency. The County is also recommended to strengthen the process of documenting its financial transactions through improvement on IFMIS implementation to ensure recording of each transaction in real time and easy access during audit.
DOI: https://doi.org/10.5281/zenodo.17456166
Citation: Abdullahi, G., & Musau, S. (2025). FINANCIAL MONITORING PRACTICES AND PUBLIC FINANCIAL MANAGEMENT COMPLIANCE OF NAIROBI CITY COUNTY GOVERNMENT, KENYA. Journal of Accounting and Finance Research, 2(1). https://doi.org/10.5281/zenodo.17456166
References
Abubakar, M. A., & Omwenga, J. Q. (2021). Effect of internal audit function on financial performance in county government of Lamu, Kenya. The Strategic Journal of Business & Change Management, 8 (3), 814 – 820.
Babayanju, A. G. A., Animasaun, R. O., & Sanyaolu, W. A. (2017). Financial reporting and ethical compliance: The role of regulatory bodies in Nigeria. Account and Financial Management Journal, 2(2), 600-616.
Ball, R. (2021). Infrastructure requirements for an economically efficient system of public financial reporting and disclosure. Brookings-Wharton papers on financial services, 2001(1), 127-169.
Benedek, P. (2022). Compliance management–A new response to legal and business challenges. Acta Polytechnica Hungarica, 9(3), 135-148.
Cheboi, E. K. (2019). Budget implementation and financial performance of the county government of Elgeyo Marakwet, Kenya (Kenyatta University)
Churi, M. A. (2023). Internal audit practices and financial performance of Nairobi City County Government, Kenya (Doctoral dissertation, Kenyatta University).
Deorri, P. K., & Poda, N. (2023). Public Financial Reporting Practices, Regulations and Accountability for State-Owned Enterprises in Kenya. Journal of global economy, business and finance, 2(1), 8 – 13
Dollery, B., & Graves, N. (2019). An analysis of budget compliance measurement in South African local government best‐practice financial management technical assistance programs, 2001—2003. Public Administration and Development: The International Journal of Management Research and Practice, 29(2), 101-116.
Ekiru, D. E., Chelogoi, S., & Kitur, L. (2024). Effectiveness of internal audit control in public financial management: Case of Turkana County, Kenya. Journal of Business, Economics and Management Research Studies, 2(2), 65-80.
Ekiru, D. E., Chelogoi, S., & Kitur, L. (2024). Effectiveness of internal audit control in public financial management: Case of Turkana County, Kenya. Journal of Business, Economics and Management Research Studies, 2(2), 65-80.
Ewang, A. T. (2019). Reforming Public Finance Management in Kenya: Implementational Challenges on the Principle of Openness and Accountability in Public Finance Management (Doctoral dissertation, University of Nairobi)
Fedelino, A., & Smoke, P. (2022). Bridging public financial management and fiscal decentralization reforms in developing countries. Public financial management and its emerging architecture, 363-388
Gorgon, M., Raczkowski, K., & Kraft, F. (2019). Compliance Risk Management in Polish and German Companies. Journal of Intercultural Management, 11(4), 115-145.
Guthrie, J., Olson, O., & Humphrey, C. (2020). Debating developments in new public financial management: the limits of global theorising and some new ways forward. Financial Accountability & Management, 15(3‐4), 209-228.
Gwiza, A., & Jarbandhan, D. B. (2022). Public expenditure management challenges in Zimbabwe: Critical considerations. Administratio Publica, 30(1), 93-115.
Hawo, C. M. (2023). The effect of integrated financial management information system on the financial management of public sector in Kenya (Doctoral dissertation, University of Nairobi)
Heinemann, F., Janeba, E., Schröder, C., & Streif, F. (2022). Fiscal rules and compliance expectations–Evidence for the German debt brake. Journal of Public Economics, 142, 11- 23.
Hendriks, C. J. (2022). Integrated Financial Management Information Systems: Guidelines for effective implementation by the public sector of South Africa. South African Journal of Information Management, 14(1), 1-9.
Holynskyy, Y. (2022). The importance of financial management principles in the state budget execution. Annals of Spiru Haret University. Economic Series, 17(4), 19-28.
Hopkins, M. T. (2020). Pilot-testing of new software for measuring string players’ instrument tuning skills. Journal of Music, Technology & Education, 7(1), 5-21.
Kagali, J. A. (2019). Implementation of integrated financial management information system and the pending bills of County Governments in Kenya (Doctoral dissertation, UoN).
Kanda, M. J. (2023). The Effect of budget implementation on budgetary control in Elgeyo Marakwet County (Doctoral dissertation, Strathmore University).
Levytska, S., Pershko, L., & Kucherovskii, O. (2022). A risk-oriented approach in the system of internal auditing of the subjects of financial monitoring. International Journal of Applied Economics, Finance and Accounting, 14(2), 194-206.
Libala, P. (2023). A Critical Assessment of the Role of Eastern Cape Provincial Treasury in Enforcing Compliance with Public Finance Management Act for Public Entities, (South Africa) (Doctoral dissertation, University of Fort Hare). Lok, J. (2019). Why (and how) institutional theory can be critical: Addressing the challenge to
institutional theory’s critical turn. Journal of Management Inquiry, 28, 335–349
Maclean, S. (2021). Examining auditing as an essential element of financial management and good governance in local government. Africa’s Public Service Delivery & Performance Review, 2(2), 82-101.
Mbaruk, M. I. (2022). Internal audit practices and financial performance of county government of Mombasa, Kenya (Doctoral dissertation, Kenyatta University)
Mong’are, W., & Atheru, G. (2023). Public financial management practices and performance of selected County Governments in Kenya. American International Journal of Social Science Research, 14(1), 43-53.
Mugendi, J. (2023). Determinants of effectiveness of intergrated financial management information system of selected County Governments in Mount Kenya Region (Kenyatta University)
Musangi, M. T. (2024). Integrated Financial Management Information System and Financial Performance of Mombasa County Government, Kenya (Kenyatta University)
Mutai, P., Oketch, J., Namusonge, G., & Sakwa, M. (2017). Effect of public financial management practices on performance in Kericho County Government, Kenya: A critical review. International Journal of Education and Research, 5(12), 211-224.
Muzividzi, D. K. (2022). An evaluation of the effectiveness of public financial management system being used by government departments in Zimbabwe (2000-2011). Research Journal of Finance and Accounting, 4(4), 17-24.
Nakyeyune, G. K., Tauringana, V., Ntayi, J. M., & Nkundabanyanga, S. K. (2021). Public finance regulatory compliance among public secondary schools. International Journal of Social Economics, 43(11), 1135-1155.
Nassaji, H. (2019). Qualitative and descriptive research: Data type versus data analysis. Language teaching research, 19(2), 129-132
Nkoirishishe, L. (2018). Effect of Integrated financial management information system on public procurement implementation in County Government of Kajiado, Kenya (Doctoral dissertation, Kca University).
Nokisho, M., & Ndungu, A. (2020). Influence of performance appraisal assessments on performance of county funded development projects in Laikipia County, Kenya. International Academic Journal of Information Sciences and Project Management, 3(6), 181-198.
Nwaobia, A. N., Ogundajo, G. O., & Theogene, N. (2023). Internal audit practices and public financial Management in Rwanda and Nigeria: bridging the Transparency gap in public sector financial Reporting. International Journal of Advanced Academic Research Social & Management Sciences, 2(10), 55-77.
Odhiambo, O. E. (2022). Effect of Budgetary Compliance on Performance of County Governments in Kenya (Doctoral dissertation, University of Nairobi)
Onuorah, A. C., & Appah, E. (2022). Accountability and public sector financial management in Nigeria. Arabian Journal of Business and Management Review, 1(6), 7 – 13
Osman, A. H. (2017). Determinants of Compliance with international financial reporting standards by firms listed at the Nairobi Securities Exchange (Doctoral dissertation, University of Nairobi).
Pilcher, R., & Dean, G. (2023). Consequences and costs of financial reporting compliance for local government. European Accounting Review, 18(4), 725-744
Rahardja, U., Aini, Q., Graha, Y. I., & Lutfiani, N. (2019). Validity of test instruments. In Journal of Physics: Conference Series (Vol. 1364, No. 1, p. 012050). IOP Publishing.
Rao, R. R. (2023). A Study on Compliance Levels for Preventing Financial Frauds with Special Reference to Public Sector Banks in India. Institutions, 164(553), 2-048.
Rugutt, W. K., Naibei, I., & Cheruiyot, P. K. (2019). Relationship between Financial Reporting Reforms and Performance of Selected County Governments in Kenya. International Journal of Engineering and Management Research, 09(05):5-14
Ruhumuriza, B. (2021). Challenges in financial management of public development project case study of rural sector strategy project in Rwanda (Doctoral dissertation, Kampala International University (KIU)).
Salmond, S. S. (2021). Evaluating the reliability and validity of measurement instruments. Orthopaedic Nursing, 27(1), 28-30.
Schneider, A., & Ingram, H. (2023). Social construction of target populations: Implications for politics and policy. American political science review, 87(2), 334-347
Shakir, M., & Rahman, A. (2022). Conducting pilot study in a qualitative inquiry: Learning some useful lessons. Journal of Positive School Psychology, 6(10), 1620-1624.
Snedecor, G. W. (2019). Design of sampling experiments in the social sciences. Journal of Farm Economics, 21(4), 846-855.
Soobaroyen, T., & Vinesh S. R. (2019). An exploratory study of financial priorities, financial planning and control practices in voluntary organisations: Perceptions of treasurers in a developing country. Journal of Accounting & Organizational Change, 3(3), 270-301.
Tojib, D. R., & Sugianto, L. F. (2023). Content validity of instruments in IS research. Journal of Information Technology Theory and Application (JITTA), 8(3), 5 – 13
Willmott, H. (2015). Why institutional theory cannot be critical. Journal of Management Inquiry, 24, 105–111.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Guliye Abdullahi, Dr. Salome Musau
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0).
This license permits unrestricted use, distribution, and reproduction in any medium, provided the original author(s) and source are properly credited.
