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

Purpose: Quality of any financial report is of high concern to both the final users and the society since it has an effect on the economic decisions that could have a direct impact to the society. This has led some institutions to use creative accounting. The objective of this study was to determine effect of revenues recognition as well as to determine the moderating effect of firm size on the relationship between revenues recognition 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: Regression showed that creative accounting in revenue recognition had a significant negative effect on quality of financial reporting in public universities in Kenya. Hierarchical regression results showed firm size had a significant moderating effect on the relationship between revenue recognition and the quality of financial reporting. Implications/Originality/Value: The study concluded that revenue recognition has a significant negative effect on the quality of financial reporting and university size plays significant moderating effect on this relationship. It is recommended that the management of the university should establish and enforce rigorous revenue recognition policies that adhere to international accounting standards