Relationship Between Compliance Auditing and Financial Reporting Quality Among Commercial Banks in Kenya

Abstract

CA and FRQ were explored in this inquiry borrowing evidence from Kenya’s commercial banks. Correlational design was used targeting 39 commercial banks in Kenya. Census aided the inquiry. The period 2018-2022 guided the gathering of primary data. SPSS guided the descriptive as well as inferential processing of evidence. The study noted that internal compliance audit (β=0.720, p<0.05) greatly affected FRQ of commercial banks in Kenya then followed by firm leverage (β=0.534, p<0.05), firm size (β=0.515, p<0.0) and lastly external CA (β=0.424, p<0.05). Hence, CA is a significant predictor of FRQ of commercial banks in Kenya. It was recommended that the management team working among commercial banks in Kenya should invest the returns generated from their use of debts into compliance auditing to improve on their financial reporting quality. The policy makers working with CBK in Kenya should enact strict regulations and guidelines to shape compliance auditing practices in these institutions