| dc.description.abstract | This study sought to establish the factors affecting audit quality in listed manufacturing
and commercial services companies in Kenya. A cross-sectional approach was adopted in
the analysis in which a linear regression model was used to establish the impact of the
independent variables namely; auditor size, financial status of the company and the
logarithm of the auditor fees. The logarithm of audit fees was taken so as to make the data
normal. The independent variable was leverage ratio (total debts divided by total assets of
the company). This variable was used as a proxy for debt pressure by the companies. Debt
pressure by the companies can be used as a proxy for the audit quality because high debts
in relation to company assets can lead to bankruptcy. Ten manufacturing and commercial
service companies listed at Nairobi Stock exchange were used as the sample of the study.
The results of analysis indicated that logarithm of audit the fees, financial status of the
company, and auditor size were significant in influencing the leverage of the companies
and thus audit quality. The size of audit firm had a positive impact on audit quality, while
the companies that were struggling financially were more likely to have poor audit quality.
The logarithm of audit fees was negatively related with the audit quality. The
recommendations made is that there should be regulation of audit fees as well as taking
action on the audit companies that does not adhere to auditing standards and the officials
of companies who take part in misstating the financial statements and other financial
records so as to conceal the actual financial position of the company. | en_US |
