A survey of the role of internal audit in promoting good corporate governance in Saccos

Abstract

The importance of corporate in ensuring sound financial reporting and deterring fraud has received growing recognition in the recent past. Internal auditing is one of the means of enhancing corporate governance in organizations. This is especially true if an organization adequately structures and provides resources to the internal audit function. This study sought to establish the role of internal audit in promoting good corporate governance in SACCOs. The study used exploratory research and primary data was collected using a questionnaire. The population comprised of all the 4,200 SACCOs registered in Kenya with a sample of 20 employee based SACCOs based in Nairobi being used. Twelve responses were received representing sixty percent of the sample size. Most large SACCOs have set up internal audit functions and established audit committees. The study found that to promote the independence of the internal audit functions it should report to the board audit committee and that the head of internal audit is dismissed after the approval of the audit committee. The study found out that the main activity of internal audit is evaluating the adequacy of internal controls, providing assurance about the achievement of the organization's objectives with regard to reliability of financial reporting and compliance to applicable laws and regulations. However, limited resources and inadequate structures impact negatively on internal audit's role towards promoting good corporate governance. The study concluded that internal audit function plays a role in promoting good corporate governance in SACCOs.