Relationship Between Risk Based Audit and Corporate Governance of State Corporations in Kenya

Abstract

The emergence of new business risks has compelled many organizations to reformulate strategies and to elevate the status of internal auditing. Thus, risk-based internal auditing has emerged as an important contributor to effective risk management and improvement of Corporate Governance of state corporation. The Corporate Governance effectiveness requires appropriate risk based audit practices hence effective and efficient internal audit. For the purpose of this study, the researcher sought to find out how Risk Based Auditing relate with Corporate Governance of state corporations in Kenya. This study adopted descriptive research design. Simple random sampling technique was adapted to select sample size of 40 respondents from 40 selected state corporations. Descriptive statistics such as mean, standard deviation and frequency distribution were used to analyze the data. Data presentation was done by the use of percentages and frequency tables for easy of understanding and interpretation. The study found that there is a strong positive relationship between Corporate Governance and Risk Based Audit Practices such as Risk Assessment, Risk Management, Annual Risk Based Planning, Internal Auditing Standards and Internal Auditing Staffing. These practices should be enhanced to be able to detect risks on time and concentrate on high risk areas leading to increased transparency and accountability. From the findings the study recommends that management in state corporations should adopts effective risk based audit practices to enhance effective and efficient Corporate Governance in State Corporation.