Factors Influencing the Quality of Financial Reporting in Selected Local Government Authorities in Tanzania

Abstract

The study was carried out to assess the factors affecting quality of financial reporting of LGAs taking Katavi region as the major case study. More specifically, this study ascertained the influence of CEO and senior management attributes on the quality of financial reporting in local government authorities. This study used a quantitative approach and descriptive research design was used as research design. The type of data collected was primary data and the collection tool was a self administered questionnaire given to selected sample respondents from several regions. Data was analysed and presented in tables and figures with the help of descriptive and inferential statistics under SPSS. The findings revealed the existence of a negative relationship between senior/CEO and perceived quality of financial reporting. These findings were also found to be statistically insignificant as it has a high probability value of 0.8. On the other hand, the study found a positive and significant relationship between corporate governance and quality of the financial reporting in the local government authority. That is to say, when there is improvement of corporate governance, the perceived quality of the financial reporting will increase by 55.1 percent, holding other factors constant. This relationship is statistically significant as it has a probability value of 0.000 which is less than 0.05 level of significance. Lastly, the study findings also indicate the existence of a positive and significant relationship between the audit committee and quality financial reporting in the local government authority. The findings have presented that, for any improvement in the committee of the audit, will increase the quality of financial reporting at 45.1 percent holding other factors constant. This result was also significant at 0.05 level. The study recommends that Local Government Authorities in Tanzania should prominently focus on strengthening internal audit and embrace follow up on audit recommendations for better financial disclosures, accountability, and transparency in financial reporting of Local Government Authorities in Tanzania.