The Effect of Internal Audit on Financial Performance of Microfinance Institutions in Kenya
Year: 2017
Type: dissertation
Abstract: This current study's objective was to determine the effect that internal audit has on financial \nperformance of microfinance institutions in Kenya. The study measured internal audit \nusing internal audit standards, independence, professional competence and internal audit \ncontrol. A descriptive research design was adopted. The study’s population constituted of \n55 microfinance institutions and a census approach was adopted. Data was collected from \nboth primary and secondary sources. Questionnaires were administered to collect primary \ndata while secondary data was obtained from the annual financial statements of the \nmicrofinance institutions. From the questionnaires distributed, there was a response rate of \n83.64%. \nStatistical Package for Social Sciences (SPSS), was used to analyze the data gathered. \nMean and standard deviation were the descriptive statistics used to analyze the data. \nRegression analysis and correlational analysis were the inferential statistics utilized to \nestablish the relationships between the dependent and the independent variables. Tables \nand graphs were used to present the findings. \nThe research findings showed that independence of internal audit, internal audit standards, \nand professional competence had a positive relationship with MFI’s financial performance. \nIt was established that internal audit accounted for 28.4% of the financial performance of \nMFIs. At 0.05 significance level, only independence of internal audit was statistically \nsignificant. The study therefore concluded that internal audit had an effect on MFI’s \nfinancial performance as supported by a significance value of 0.007. The study \nrecommended that MFIs should be sensitized on the importance of internal audit \nindependence in order to improve financial performance and to have reliable financial \nreports. MFIs should also employ competent internal auditors and remunerate them fairly \nto improve the quality of the internal audit reports. The study recommends that a similar \nstudy be carried out in commercial banks offering microfinance services so that there can \nbe comparison and generalization of the findings in this study.
Author: Ilham A Suraj
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2786825966