Internal audit function as a tool to good corporate governance of Kenyan non governmental organization (a case study of Nairobi county)

Abstract

There has increasingly been pressure from donors, government and other official agencies for non-governmental organizations to show accountability, managerial competence and strong internal control system. The concerns are that they are actually behaving in unaccountable manner as regards their utilization of the fund budgeted by the donors, which is eroding their transparency,as a key requirement for good governance and successful feedback systems. Despite the extensive academic literature on internal audit function the non-governmental organization sector,there limited literature on internal audit as a tool for ensuring good corporate governance, a knowledge gap then needed to be filled, hence the present study.The study used descriptive research and at least 1883senior audit officers and other key personnel of the non-governmental organizations in Nairobi as target population. The study as sample size of the 15% of the target population. The selection of respondents was done through random sampling. Data was collected from the respondents using a structured questionnaire administered using drop and pick method. It will be analyzed using descriptive statistics and presented in tables and figures. Multiple regressions will be used to estimate a study model. The study concluded that corporate governance status of Kenyan non-governmental organizations, which was very high, was very highly influenced by; competence of internal auditors, follow-up mechanisms, and independence of internal audit function.There was a significant relationship between Competence of internal auditors (p-value = 0.000),follow-up mechanisms (p-value=0.018), and independence of internal audit function(p-value=0.050) and the corporate governance. Any increase in; competence of internal auditors, follow-up mechanisms, and independence of internal audit function would lead to an increase incorporate governance and vice versa.The study concludes that 39.50% of change in corporate governance in the Kenyan non-governmental organizations is explained by the; competence of internal auditors, follow-up mechanisms, and independence of internal audit function.The study recommends that the Kenyan non-governmental organizations and the related stakeholder such as non-governmental organization board and the National parliament should review the existing regulatory framework to widely address the issues of corporate governance and relate to accountability and transparency, other policies and regulations should be implemented by the non-governmental organization to ensure that the internal audit function staff make follow up of the internal audit function standards to ensure the independence of the internal audit functions of the Kenyan non-governmental organizations.