Effect of Financial Reporting Practices on the Financial Performance of Non-Governmental Organizations in Narok County, Kenya

Abstract

The focus of this research project was on the finance reporting practices of these funds and specifically in the area of financial performance measurement. The general objectives of the study was to determine the influence of financial reporting practices on the financial performance of NGOs in Narok County, Kenya. The specific objectives was to establish the influence of disclosure, presentation, revenue recognition and measurement on the financial performance of NGOs at Narok County in Kenya. The study faced the challenge of hesistance by the respondenst to divulge budgetary information however, this was adrressed to informing them that the study was for academic puposes only and the researcher would ensure non disclosure of such information. Moreover, the study relied on the signaliiong theory, voluntary sidclosyre theory, recognition and measurement theories to intrepret the finidng. Questionnaires were primary data collection tools and secondary data sheet for secondary data collection was used in data collection process and the data collected was analyzed using Multiple regression analysis (standard), descriptive analysis (means and standard deviations) and inferential statistics. A census study was used to pick respondents and in this case all personnel in the accounts department were picked for this study. The regression coefficient indicates the magnitude of relationship between the dependent and independent variables. The finding show that financial performance was strongly influenced by disclosure (β₁=1.264) as well as presentation (β₂=5.021). Financial recognition (β₃=-2.025) and measurement (β₄=-2.766) however did not affect financial performance. A chi square test was done to test the level of significance with the level of confidence at 95% (0.05). The sig value for disclosure (p=.015), presentation (p=.015), recognition (p=.047) and measurement (p=049). These values were less than 0.05 hence were statistically significant.