Internal Audit, Environmental Audit and Perforamnce of State Corporations in Kenya: a Case of Nyayo Tea Zones Development Corporation of Kenya
Abstract
Environmental audit measurement systems have been revered as a way of ensuring
that public institutions continuously improve in performance. An environmental
audit system is a contract that is enforceable setting measurable targets for
governmental organizations to attain. The purpose of the study was to determine the
outcome of internal audit on the relationship between performance and environmental
audit of Nyayo Tea Zones Development Corporation in Kenya. The study employed
descriptive research design. The target population was 19 nineteen branches of Nyayo
Tea Zones Development Corporation, three regional offices, Kipchbo tea factory and
Head office covering the period 1989-2018. Data was analyzed using descriptive
analysis, trend analysis, correlation analysis and regression analysis. Descriptive
results indicate that the average expenditure on internal audit was 6075711 KES. The
correlation showed that expenditure on internal audit and financial performance of
Nyayo Tea Zones Development Corporation are negatively and significantly
associated (r=-0.1629, p=0.0386). Model results showed that internal audit (measured
as expenditure on board allowance, external audit fees, internal audit monitoring fees
and monitoring espenses) and financial performance of Nyayo Tea Zones
Development Corporation are negatively and significantly related (β=-0.311839,
p=0.0043). It was further established that the average expenditure on environmental
audit was 19107198.58 KES. The correlation results indicated that expenditure on
environmental audit expenditure asset quality and financial performance of Nyayo
Tea Zones Development Corporation are negatively and significantly associated (r=-
0.2164, p=0.0295). Regression of coefficients findings indicated that environmental
audit (measured as expenditure on legal and professional fees, expenses on staff
uniforms, expenses on electricity manufacturing cost and expense on fuel wood cost)
and financial performance of Nyayo Tea Zones Development Corporation are
negatively and significantly related (β=-0.209712, p=0.0043). From the study
findings, there are several conclusions made which are noteworthy. Based on the
findings above, the study concludes that expenditure on internal audit has a negative
and significant relationship with financial performance of Nyayo Tea Zones
Development Corporation. The study also concludes that expenditure on
environmental audit has a negative and and significant relationship with financial
performance of Nyayo Tea Zones Development Corporation. The study recommends
close monitoring of expenses on board allowance, external audit fees and internal
audit monitoring expenses . This will ensure that the costs do not jeopardize the
actual task of doing internal auditing. Internal audit plays an important role in deterring
fraud through monitoring operations, carrying out checks on internal controls and
reporting independently to the audit committee of the board and administratively to the
executive management. It was established that environmental audit has inverse relation
with performance. The study recommends for a close monitoring of legal and
professional fees, staff uniforms expenses, electricity manufacturing cost and fuel
wood cost in order to make sure that they do not eat into large portions of the
corporation revenue. Environmental audit is an essential instrument providing a
stepping stone for competitive advantage for companies that embrace it.
Environmental issues in internal audit have demonstrated the usefulness of the
department in the overall performance of an institution and therefore one can
comfortably deduce that environmental audit plays a significance role of improving
performance of organization.
Publisher
university of nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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