International Journal of Business & Law Research 3(1):15-33, Jan-Mar 2015 (ISSN: 2360-8986)
© SEAHI PUBLICATIONS, 2015 www.seahipaj.org
ROLE OF INTERNAL AUDIT FUNCTION IN PROMOTING EFFECTIVE CORPORATE GOVERNANCE
OF COMMERCIAL BANKS IN KENYA
Michael Kipkurui CHANGWONY1* & Dr. Gladys ROTICH2
Faculty of Law,
1Msc Scholar Procurement & Logistics
Jomo Kenyatta University of Agriculture and Technology, Kenya
*Email of corresponding author:firstname.lastname@example.org
2Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya
Internal auditing function was traditionally designed to safeguard firm’s assets and
assist in the production of reliable accounting information for decision-making purposes.
Corporate failures in the past have raised concerns among the public over corporate governance.
Similar studies have hypothesized that the internal audit function had influence on the
corporate governance of an organization. The aim of this study was to determine the role
of internal audit function in promoting effective corporate governance of Commercial banks
in Kenya. This study adopted a descriptive research design. The study used stratified
random sampling in identification of 89 respondents. Structured questionnaire was used to
gather data from the respondents. Data collected was coded and analyzed with the aid of
the Statistical Package for Social Sciences (SPSS) version 21 for descriptive statistics
and inferential statistics. Presentation was by use of pie-charts, graphs and percentages
which enhanced a meaningful description. The study established that all the independent
variables that is positioning of the internal audit function, risk identification, measurement
and prioritization approach adopted by the bank, internal audit independence and staffing of
the internal audit department have a positive and significant influence on effective corporate
governance. The study therefore concluded that the internal audit function plays a positive
and significant role in promoting effective corporate governance of commercial banks in Kenya.
This study recommends further studies on the role of other major players such as Central Bank
of Kenya, the Government of Kenya, the bank’s Board of Director, the bank’s Board Audit
Committee, banks Senior Management and the External Auditors.
Corporate Governance, adequacy of staffing, risk identification, level of Internal Audit