Assessment of Internal Audit Practices on Financial Performance of County Government of Mandera, Kenya

Abstract

The key goal of this study was to assess internal audit practices on financial performance of county government of Mandera. The investigation also sought to institute the influence of audit schedule, audit planning, financial reporting, and competence on financial performance of county government of Mandera, Kenya. The theories included; agency theory, shareholder, and stewardship theory. The study utilized a descriptive design. The study was conducted in the county government of Mandera and the target population was 432 staff working in finance and accounting, procurement, and human resource departments including the director for internal audit, internal auditing officers, accountants, and clerks in accounting and finance department. Using stratified sampling techniques, the study sampled 207 respondents. The study gathered data using structured and semi-structured questionnaires. The reliability of these tools was measured at r=0.7. The collected data was analyzed through SPSS version 22 where descriptive statistics which include frequencies, means, and standard deviations were used. Inferential statistics such as correlation was also used to establish the relationship between variables. The study found that audit planning, audit schedule, financial reporting, and audit competency had a positive and significant effect on financial performance of county government of Mandera (β=0.422, p=0.000). The study also found that audit schedule had a positive and significant effect on financial performance of county government of Mandera (β=0.224, p=0.002). Further results indicated that financial reporting had a positive and significant effect on financial performance of county government of Mandera (β=0.181, p=0.002). Results also indicated that audit competency had a positive and significant effect on financial performance of county government of Mandera (β=0.259, p=0.002). The study recommends that the Management of county governments in Kenya should implement effective internal audit practices to enhance performance. It also recommends that the management of the county governments in Kenya should bear the responsibility of equipping their firms’ internal audit functions with adequate resources to enable them to develop effective annual risk-based audit plans.