An investigation of the effect of audit triangle on financial perfomance of parastatals in Kenya

Abstract

This study was on the effect of audit triangle on financial performance of parastatals in Kenya. The objectives of this study were to establish the impact of the quality of Auditor-Senior management relationship, Auditor-Audit Committee relationship and Audit Committee-Senior Management relationship on the financial performance of Parastatals in Kenya. The study may benefit the audit department, the audit committees, the senior management, and scholars. The study used descriptive research design. A survey was done to establish the effect of audit triangle on financial performance. The population of the study was 43 parastatals located in Nairobi. A sample size of 24 firms of the population was taken using systematic sampling. Data was collected by use of questionnaire method which had both structured and unstructured questions. It was analyzed mainly by use of descriptive statistics such as the mean and median measures of central tendency. In addition, an advanced statistical technique such as regression analysis was also used. At the end of the research exercise, the researcher expected to determine the impact of quality relationship on auditor, audit committee and senior management on financial performance of parastatals. The findings indicated that the audit triangle had a significant effect on financial performance. Results indicated that there was a positive and significant relationship between management, audit function, board audit committee ratings and financial performance.