Determinants Of Internal Audit And Its Effectiveness In The Public Sector In Kenya: A Case Of The National Treasury

ABSTRACT

Governance and core business strategy view internal auditing as vital management tool. Essentially internal audit focused on internal controls and monetary assessment. The Kenyan government is grappling with inefficiencies, wastage of resources, fraud, corruption and non-achievement of value for money which calls into question the role of internal auditing in management of resources. The purpose of the study therefore, was to investigate the determinants of internal audit effectiveness in the public sector in Kenya, a case of the National Treasury. To achieve the above objective, the study assessed the effect of organization independence, training, top management support and management information systems on internal audit effectiveness in Kenya. Agency and system theories were adopted in an attempt to explain the phenomena under study using descriptive research design. A sample of 139 internal auditors were selected from a target population of Three hundred and ninety-five (395) internal auditors drawn from the National Treasury in Kenya using stratified random sampling technique. Data was collected through online questionnaires sent through emails. Descriptive and regression analysis were used to analyze the collected data with the help of SPSS. The Descriptive statistics and regression analysis showed that the four independent variables had positive significant effect on internal audit effectiveness (R=.75, P=0.00). Top management support had the highest effect (adjusted=.802) followed by management information system (adjusted R=.70), Organizational independence (adjusted R=.69) and training (R=.687) respectively. On the basis of these findings the study concluded that the component of technology in management information systems and top management support is a game changer in ensuring the effectiveness of internal auditors, hence recommending the need for support and total co-operation from the senior managers especially with regard to ensuring adequate budgetary provisions for a water tight management information system. Organization independence and training contributed marginally to the measured variable although at a significant level. On the basis of this conclusion the study recommends that the reporting structure should be improved to facilitate the independence of the internal audit function. The training efforts should be tailored towards the use of current technology as the descriptive results showed very low level of competence in the use of audit software. The study recommends that another study should be undertaken on the effect of electronic audits on the effectiveness of internal audit.