FACTORS INFLUENCING THE PREPARATION OF FINANCIAL REPORTS IN INSURANCE COMPANIES IN KENYA
Abstract
It has been argued that financial reporting is a major factor in the information dissemination to the stakeholders of any particular company. Financial reports aid the various stakeholders in making investment decisions. Financial reports are like the eyes through which the external stakeholders are able to see whether management makes good use of the company’s resources to maximize shareholder wealth. Financial reports must therefore be accurate, consistent, comparable and reliable. This will eliminate the possibility of having to restate financial statements after investors have already made investment decisions based on previously already published financial statements. This project looked at the factors influencing the preparation of financial reports in insurance companies in Kenya. The factors included disclosures related to the adoption of International Financial Reporting Standards (IFRS), integrity of the data used in financial report preparation, competence of the preparers of the financial reports and the regulatory framework of the environment in which the company is operating. Using descriptive research data was collected from five leading insurance companies in Kenya by market share. These were Britam Insurance Company Kenya Limited, Liberty Life Assurance Kenya Limited, ICEA – Lion Insurance Company Limited, Jubilee Insurance Kenya Limited and Sanlam Kenya Plc (formally Panafrica Life Insurance Company Kenya Limited). The data was then analyzed in order to identify how these factors influence the preparation of financial reports of insurance companies. Findings reveal a positive correlation between the each aspect constituent. The strongest correlation was obtained between Staff Competence and preparation of financial reports (r = .798), and the weaker relationship found between Regulatory Framework and preparation of financial reports (r = .436). IFRS and Data Integrity are also strongly and positively correlated with preparation of financial reports at correlation coefficient of .716 and .708 respectively. All the independent variables were found to have a statistically significant association with the dependent variable at 0.01 level of confidence.
KEY WORDS: Financial Reports, IFRS, Data Integrity, Staff Competence, Regulatory Framework
Full Text:
PDFReferences
Aboody, D., & Baruch, L. (2000). Information asymmetry, R&D and insider gains. Journal of finance, 2765.
Association of Kenya Insurers. (2014). Insurance Industry Annual Report. Nairobi: Association of Kenya Insurers.
Australian Accounting Research Foundation (2012), Qualitative Characteristics of Financial Information.
Babbie, E. (2013). The basics of social research. Belmont, USA: Wadsworth.
Bakare, K. O. (2012). Training needs of hotel employeesas correlate of job satisfaction in Ile-Life, Osun State. Osun State: JABU international journal of social and management sciences.
Bassanini, A., & Ernst, E. (2002). Labour Market Institutions, Product Market Regulation, and Innovation: Cross-Country Evidence. Paris: OECD Publishing.
Bhansali, N. (2009). Strategic Data Warehousing: Achieving Alignment with Business. London: CRC Press.
Bogdan, R. C., & Biklen, S. K. (2003). Qualitative Research for Education: An introduction to Theories and Methods. New York: Pearson Education group.
Bogdanowcz, M.S. & Bailey, E.K. (2002). The value of knowledge and the values of knowledge worker. Generation X in the new economy. Journal of European industrial training. 26/2/3/4. Pp. 125-129
Britam. (2015). Investor and Analysts round table. Nairobi: Britam.
Bryson, J. (2004). What to do when stakeholders matter. Public Management Review, 13 - 15.
Canadian Financial Executives Research Foundation. (2010). The disclosures in financial statements. Toronto: Canadian Financial Executives Research Foundation.
Carlson, P. (1997). Advancing the harmonisation of international accounting standards: Advancing an alternative path. Illinois: University of Illinois.
Carpenter, V. L. (2008). Institutional Theory and Accounting Rule Choice: An Analysis of the Four U.S. State Governments' Decisions to Adopt Generally Accepted Accounting Principles. Accounting, Organisations and Society, 565 -596.
CfC Life. (2014). Annual Report and Financial Statements 2013. Nairobi: CfC Life Assurance Limited.
Chartered Institute of Public Finance and Accountancy. (2015, 7 15). effective communication in financial reporting. London: Chartered Institute of Public Finance and Accountancy. Retrieved from www.cipfa.org: https
Cooper, D. R., & Schindler, P. S. (2013). Business Research Methods, 12th Edition. Kent: McGraw-Hill Education.
Craig, D. (2014). Financial Accounting Theory. Sydney: McGraw-Hill Education.
Creswell, J. (2003). Research Design: Qualitative, Quantitative and mixed method approaches. London: Sage Publications Inc.
Deloitte. (2011). Key factors shaping financial reporting: The decade ahead. London: Deloitte.
Dollery, B. (2003). The political economy of the voluntary sector: A reappraisal of the comparative institutional advantage of voluntary organizations. Massachusetts, USA: Edward Edgar Publishing.
Financial Reporting Council. (2009). Principles and actions for making corporate reports less complex and more relevant. Financial Reporting Council, 39.
Fisherman, R. (2011, 4 12). Portugals unnecessary bailout. Indiana: University of Notre Dame.
Gale L. C. (2010), California Non-profit Quality Reporting Project, Retrieved 15 November 2015.
Gallo, C., & Michelangelo, B. (2010). Data Warehouse Design and Management. Foggia: University of Foggia.
Government of Kenya. (2015). Insurance Act Cap 487. Nairobi, Nairobi: Government Printer.
Gray, S. J. (2005). Towards a Theory of Cultural Influence on the Development of Accounting Systems Internationally. A journal of accounting, finance and business studies.
Guerreiro, M. S., Rodrigues, L. L., & Craig, R. (2007). The preparedness of companies to adopt International Financia lReporting Standards: Portuguese evidence. Memphis, USA: Elsevier Ltd.
Harter. (1978). Effectance motivation reconsidered: Toward a developmental model. Human development.
Inmon. (2002). Building the Data Warehouse. Wiley.
Institute of Chartered Accountants of India. (2007). Concept paper on the convergence with IFRS in India. New Delhi: Institute of Chartered Accountants of India.
International Accounting Standards Board. (2010). Conceptual framework for financial reporting. London: IFRS Foundation Publications Department.
Kabiru, J., & & Mwangangi, G. (2012). Financial reporting and disclosureby insurance companies: Review of contemporary practices. Nairobi: Policy Research and development, IRA.
Kerlinger, F. N. (2000). Foundations of behavioural research (4th Edition). New York: Harcourt College Publishers.
King'wara, R. A. (January 2015). Effect of IFRS Adoption on Reporting Quality in Kenya. IOSR Journal of Business and Management (IOSR-JBM), PP 82-84.
Kombo, D. K., & Tromp, D. L. (2006). Project and Thesis writing: An introduction. Nairobi: Paulines Publications.
Kothari, C. R. (2007). Research methodology - Methods and Techniques. New Delhi, India: New Age International Publishers.
Kotler, P., Armstrong, G., Saunders, P. J., & Wong, P. V. (2001). Principles of Marketing: European Edition. Free Press.
Liberty. (2015). Annual Report and Financial Statements year ended 2014. Nairobi: Liberty Life Assurance Kenya Limited.
Madu, & Jacob. (2009). International financial reporting standards: an indicator of high quality? International Journal of Quality & Reliability Management.
Mansfield, B. (2004). Competence in transition. Journal of European Industrial Training.
Mattila, & Freystatter, &. (2011). Retrospective and prospective economic voting: explaining support for coalition and opposition parties in the 2007 and 2011 Finnish parliamentary elections. Helsinki.
Meyer, J. W., & Rowan, B. (1977). Institutionalised organizations: Formal structure as myth and ceremony. American Journal of sociology 83, 340 - 363.
Mugenda, O., & and Mugenda, A. (2003). Research Methods - Qualitative and quantitative approaches. Nairobi: ACTS Press.
Munjiru, D. (2007). Investigating the role of human resource management on employee engagement in state corporations in Kenya. Nairobi: University press
Mutiso, A., & Kamau, C. (2013). Factors influencing Complexity in Financial Report preparation - Evidence from the Banking Sector in Kenya. Journal of Economics and Business Research.
Nairobi Securities Exchange. (2015). Listed companies. 2015: Nairobi Securities Exchange. Retrieved from www.nse.co.ke: https
Nicoletti, G., & Scarpetta, S. (2005). Regulation and Economic Preperation: Product Market Reforms and Productivity in the OECD. Paris: OECD Publishing.
Outa, E. R. (2012). The Impact of International Financial Reporting Standards (IFRS) Adoption on the Accounting Quality of Listed Companies in Kenya. Nairobi: International Journal of Accounting and Financial Reporting.
Policyholders Compensation Fund. (2013). The role of PCF in client compensation. Nairobi: Policyholders Compensation Fund.
Posner, R. A. (1974). Theories of Economic Regulation. Center For Economic Analysis Of Human Behavior And Social Institutions.
Pricewaterhouse Coopers. (2010). IFRS and GAAP: similarities and differences. London: PWC.
Robson, C. (2002). Real World Research: A Resource for Social Scientists and Practitioner-Researchers. Belmont, USA: Wiley.
Sajuyigbe, A. S., & Amusat, a. (2012). Staff training and development as managerial tools for organizational effectiveness: An appraisal of First Bank. JABU International journal of social and managementsciences 4(1), 100-109.
Sapienza, P., & and Zingales, L. (2009). Trusting the stock market.
Strober M.H (2005). Human Capital Theory: Implications for Human Resource Managers. Industrial relations, Vol 29. Pp 214-219
Tarca, A. (2005). International convergence of accounting standards: an investigation of the use of IAS options not acceptable under US GAAP. International Journal of Business Studies, 67–86.
Tyrral, D. W. (2007). The relevance of international financial reporting standards to a developing country: Evidence from Kazakhstan. The international Journal of accounting, 42,, 82-110.
United Nations. (2007). International accounting and reporting issues. New York: United Nations.
Weerakkody, Irani, Y. K., & Zahir. (2009). The diffusion and use of institutional theory: a cross-disciplinary longitudinal literature survey. Journal on Information Technology.
White, R. W. (1959). Motivation reconsidered: The concept of competence. Psychological Review.
Zeghal, D., & and Mhedhbi, K. (2006). An analysis of the factors affecting the adoption of international accounting standards by developing countries. Illinois: University of Illinois.
DOI: http://dx.doi.org/10.61426/sjbcm.v3i4.316
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.