Determinants Of Effectiveness Of Public Sector Audit In Kenya

Abstract

The purpose of this study was to investigate the determinants of effectiveness of public sector audit (PSA) in Kenya with a key focus on the national government and its entities. The dependent variable of the study was the effectiveness of public sector audits (EPSA). Four independent variables were identified including institutional corporate governance (ICG), professional and technical competence (PC), resources availability (R), and internal control process (ICP). The research used a descriptive research design and adopted a content analysis methodology to analyze secondary data obtained from annual audit reports of the Office of the Auditor General (OAG). The study used one-year cross-sectional data for the financial year 2021/2022. The population of the study comprised of 109 financial statements of the national government and 326 accounts of MDAs, donor funds, revenue statements, and other three funds of the national government. The sampling technique used was 15% of the population which amounted to a review of 43 statements. The non-disclosures or disclosures for the variables and their indicators were coded as a "0" or "1" based on the specificity of the detail. The disclosed details were recorded in a coding sheet. STATA version 16 software was used to analyze the significance of the determinants of EPSA. The study findings showed that all independent variables had positive coefficients and were statistically significant to EPSA. Professional and technical competence was found to have the highest coefficient (PC), followed by institutional corporate governance (ICG), Internal control process (ICP), and Resource availability (R) which had a negative correlation. The major findings of the regression were that ICP can be improved by ensuring sufficient training of the staff, to further improve competence levels and help employees identify system weaknesses. Further research can be conducted by adding a fifth variable of independence of the OAG which was found by other researchers to be influenced by political matters. The research adopted qualitative methodology; further research can be conducted using similar variables but use primary data.