The scope and Independence of internal auditing in publicly quoted companies in Kenya

Abstract

This research study was set up to examine issues relating to internal auditing in publicly quoted companies in Kenya. The study investigated into the scope and independence of internal audit function in the publicly quoted companies in Kenya. Internal auditing appeared to be a new issue in the Kenyan situation but it had existed without being subjected to any academic research. It had been researched on in other countries such as United States of America, Britain, and Germany. A structure questionnaire was used to tap information regarding the above issues from the heads of internal audit departments in the publicly quoted companies. The results of the study indicated that the scope of internal auditing is wide enough to cover not only financial/accounting data but also the data from the other operations of the organisation. Independence from operations or objectivity was found to be quite high in the companies that maintained internal audit function. Independence of function or organisation status was found to be moderately high. A lot of internal audit department heads still report to the head of finance/accounting department. A good number of the respondents said that they report to both the head of finance/accounting department and the chief executive officer. The study also concluded that the accounting discipline still remained the source of internal audit staff. The researcher recommended the employment of data processing specialists in the internal audit departments due to the high rate of computerisation in the areas of audit.