Influence of Classification of Expenses Technique on Quality of Financial Reporting in Public Universities in Kenya: The Moderating Role of University Size

Purpose: The quality of financial reports is of paramount importance to both end users and society, since it influences economic choices that may directly affect the community. This has prompted several institutions to use inventive accounting practices. This research aimed to assess the influence of classification of expenses technique and to evaluate the moderating influence of university size on the link between expense classification and the quality of financial reporting in public universities in Kenya. Design/Methodology/Approach: The study used a positivist research philosophy and utilized a causal research methodology. The study population was 36 public universities in Kenya. The study target population was 866 respondents, from which a sample of 274 was realized based on a stratified random sampling approach. Data were collected through questionnaires, interview schedule and secondary data collection schedule. Data was analyzed with the use of descriptive and inferential statistics. Findings: The study found that expenses classification has a negative impact on the quality of financial reporting, with university size being a successful moderating factor in the relationship. Implications/Originality/Value: The larger universities must leverage their resource advantage to set up best practices, while smaller universities require special capacity-building efforts to reduce exposure to misclassification.