Corporate Governance Practices Within Kenya Revenue Authority

Abstract

Good Corporate Governance has become a critical success factor for any successful organization. The world focus has turned to the management of organizations and in particular to the board of directors. This is because all the stakeholders want their interests safeguarded in the organization. Shareholders want value for their capital, society wants quality services, employees want higher salaries, natural environment want to be exploited in a sustainable manner, while suppliers of finances want perpetual returns and good relationship. This is a case study of Kenya Revenue Authority (KRA). The objective of this study was to establish the governance practices within KRA and determine the factors that lead to such practices. The KRA board of directors is mandated to oversee the revenue collection, accounting for it and general administration of tax laws in Kenya. The efficiency and effectiveness of executing its mandate depends highly on corporate governance practices adopted. The data for the study was collected from both secondary and primary sources. Primary data was collected though personal interviews while secondary date was from documents and records available. The content analysis method was used to analyze the data collected. The study established that the Board of Directors in KRA has adopted practices of good corporate governance. The Board of Directors are involved in formulating three years corporate plan, allocation and monitoring the utilization of resources, have put in place internal controls, appoint and regularly monitor the top management performance, holds regular board meetings, have five standing committees and effectively reports to the stakeholders. The board members are well mixed in terms of professional skills as required by KRA Act. However, board succession plan needs to be legislated in order to allow retirement by rotation to avoid a situation whereby 50% of the members would retire in one financial year. Adequate funding from Treasury and integration of departmental ICT systems needs to be enhanced. Most of the respondents also identified KRA strategic direction, Political, technological advancements, economic developments and the need to enhance efficiency and effectiveness in service delivery as the most prevalent factors that influence the corporate governance.