A Survey of the Opinions of Management and External Auditors of Publicly Quoted Companies on the Need for a Corporate Governance Audit in Kenya

Abstract

This research was carried out to examine whether or not there is a need for a corporate governanceaudit in Kenyan publicly quoted companies. The motivation to carry out the research was as a result of the increasing dominance of corporate governance issues both in the local and international financial press. The debate has had increasing popularity due to recurring management ineptness and lack of accountability leading to the collapse of various organisations. Faced by these collapses, communities around the world have mounteda search for good governance in an effort to combat business failures and ensure responsiblecompany governance but little success, if any, appears to have been achieved giventhe increasingly high number of business failures over the last few years.

The research used predesigned questionnaires to collect information relating to the need for such an audit. From the two categories of the selected research respondents (chief executive officers of publicly quoted companies and external auditors of the publicly quoted companies) the research findings indicates that there is a need for a corporate governance audit in Kenyan publicly quoted companies. Also, the research went further to obtain the respondents' suggestions on who might be more preferred to carry out the audit. External auditors were voted to be the most preferred candidates in carrying out such an audit. The other popularly suggested names included the Private Sector Corporate Governance Trust, independent management consultancy firms, audit committees and internal auditors. It is, therefore, imperative that the suggested names would need to consider expanding their current services so as to include some aspects of a corporate governance audit. This obviously calls for an improvement in their service

delivery processes and infrastructures so as to ensure that they can be able to competently offer the additional service.

The research findings provides a new useful dimension on how to improve corporate accountability as well as providing suggestions on who might be more preferred to carry out the audit. It also serves as an early warning to the suggested corporate governance auditors and all the other corporate governance stakeholders to evaluate their future business direction. It is hoped that the research findings will go along way in provoking

further research and discussions in this direction which would result into the long awaited solutions to corporate failure.