The Relationship Between Risk Based Internal Audit and Financial Performance of Commercial State Corporations in Kenya
Abstract
Risk based internal auditing influences a firm’s use of its internal audit function to
enhance risk management and control as well as governance which in turn influences
accountability and enhances accuracy of financial statements thereby influencing
financial performance in financial institutions.
To understand the relationship between risk based internal audit and financial
performance, the study examined whether use of risk based internal audit practices such
as risk management, internal audit planning, internal audit capacity and internal audit
standards affected financial performance of commercial State Corporations in Kenya.
The study adopted descriptive survey research with a view to obtaining information that
describes existing phenomena. The target population for the proposed study was the 53
commercial State Corporations operating in Kenya and a census survey of all the 53
commercial State Corporations was undertaken. Primary data was collected using
questionnaires that were self-administered after which the researcher used quantitative
techniques to analyse the data. After receiving questionnaires from the respondents, the
collected data was examined and checked for completeness and comprehensibility.
Inferential statistical regression and correlation was done to establish the impact of risk
based internal audit on financial performance of commercial State Corporations. The
study concluded that there existed a positive relationship risk management, internal audit
planning, internal audit capacity and internal audit standards on financial performance
and therefore recommends that management in Commercial state corporations should
embrace risk based internal auditing practices.
From the findings, the study recommends that managers in commercial state
corporations in Kenya should adopt risk based internal audit practices such as risk
management, internal audit planning, internal audit capacity and internal audit standards
in order to enhance financial performance of their organisations.
Publisher
University of Nairobi