Effects of Information Technology on Internal Auditing in Commercial Banks in Kenya

Abstract

Information technology is the use of systematic appliances to store and transmit data. It entails the automation of processes by utilizing machines or software to work efficiently with minimal human intelligence involvement. Internal audit is an independent, objective, and advisory activity aimed at adding value and improving a company's operations. Internal audits examine a company's internal controls, including corporate governance and accounting. The use of IT in internal auditing is important as it improves auditing efficiency and effectiveness within organizations. There have been very few studies that have explored the effectiveness of IT on internal auditing in private sector which has led to insufficient knowledge on the use of IT in internal auditing specifically in private sector. This study sought to determine the effects of IT on internal auditing in private sector. To achieve this aim, the study answered the following research questions: How does IT promote integrity in internal auditing processes? What is the effect of IT on time spent and cost incurred in internal auditing? What are the challenges of adopting and implementing IT in internal auditing? The descriptive research design was used in this study. This study required this design because it enabled the author to explore and describe the distribution of one or more variables independently of any causal or other hypotheses. The data was collected using a questionnaire designed as per the objectives of the study. The collected data was decoded in excel, then imported to SPSS for analysis. Diagnostic tests were carried out to test the reliability and validity of the data. Correlation and regression analysis were carried out to establish the relationship between the variables of the study. The frequencies, mean score, standard deviations and percentages of the variables were determined. Tables, charts and graphs were used to present the data analyzed. The findings of the study, indicates that the use of IT in the commercial banks strengthened integrity, reduced the cost and time taken to execute internal audit processes. The findings also indicated that through the use of block-chain, cybersecurity, big data, and data analytics technologies, the auditing process was efficient, transparent, and accurate. The study also found that the cost of acquiring, implementing and updating the CAATs applications was quiet high thereby scaring away some entities. The study recommends that policy makers review and design policies that will make CAATs affordable for all organizations.