The Effects of Internal Audit Quality on Financial Performance of Firms Listed at the Nairobi Securities Exchange

Abstract

Internal auditing is a vital aspect of all organizations for the efficient and effective management of resources, addition of value and improvement of operations for them to realize their financial goals. The internal audit department is a neutral source of information for smooth management of resources, thus stakeholders have a level of confidence in the financial reports of the firm which reflect the quality of the department. The study employed a descriptive research design. The population was made up of all the firms listed on the Nairobi securities exchange. Data used was both primary and secondary. Questionnaires were used to collect relevant information. The audited and published financial statements of firms listed at the NSE provided data on the financial performance. Quantitative and qualitative analyses were used to analyze the data obtained. The independent variables studied: Top management support, auditor’s independence, professional proficiency of auditors and auditor’s quality of work were found to have a significant relationship with financial performance.