Financial Accountability and Sustainability of Microfinance Institutions in West Pokot County, Kenya
In the recent past, there has been a constant demand for timely accountability reports due to increased awareness, devolution of funds and establishment of various new institutions. Financial sustainability of microfinance institutions in West Pokot County in Kenya has been highlighted as a major concern. The main purpose of the study determined the effects of financial accountability on the sustainability of the microfinance institutions in the West Pokot County. The specific objectives were to: determine the effect of audit efficiency on the sustainability of Micro Finance Institutions (MFIs) in West Pokot County; establish the effect of fraud detection on the sustainability of microfinance institutions in West Pokot County; determine the effect of financial reporting on the sustainability of microfinance institutions in West Pokot County; and determine the effect of financial regulation on the sustainability of microfinance institutions in West Pokot County. The study was based on Agency theory, stakeholder theory, and stewardship theory. The study applied explanatory research design. The target population was the 6 MFIs in West Pokot County. A census was taken since the population is small. The researcher used a semi-structured questionnaire administered to each member of the respondents to collect the data. The collected data was analyzed using descriptive statistics and regression and correlation analysis by the help of SPSS. The results were presented in tables, pie charts and bar charts. From the findings, when financial accountability factors are held at zero, sustainability of microfinance institution will be negative (-0.257). At the same time, an increase in audit efficiency, fraud detection, financial reporting, and financial regulations each by one unit leads to an increase in sustainability of microfinance institutions by 0.276, 0.313, 0.453, and 0.036 units respectively the p-values were also less than 0.05 (that is 0.025 for audit efficiency, fraud detection (0.002), financial reporting (0.005) and financial regulations (0.038). This implies that all financial accountability factors considered in this study have a positive relationship with sustainability. The study concludes that financial accountability is to a great extent observed in MFIs particularly through audit efficiency, fraud detection, financial reporting, and financial regulations. The study recommends that the government through the relevant agents should ensure existing financial accountability regulatory framework is adhered to ensure sustainability of microfinance institutions. Microfinance institutions also should ensure they pay focus on audit efficiency, fraud detection, financial reporting, and financial regulations.
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