Influence of Audit Committee Meetings on the Quality of Audit Reports of Saccos in Homabay County, Kenya

Joel Okinyi Limonya; John Byaruhanga; Maniagi Musiega

doi:10.51867/ajernet.4.2.27

Authors

Joel Okinyi Limonya
limonyajoel49@gmail.com
Masinde Muliro University of Science and Technology, Kenya https://orcid.org/0000-0001-7425-1396
John Byaruhanga Masinde Muliro University of Science and Technology, Kenya
Maniagi Musiega Masinde Muliro University of Science and Technology, Kenya https://orcid.org/0000-0003-3248-6933

Keywords:

Audit Committee Meetings, Deposit taking Saccos, Quality of Audit Reports

Abstract

Every operating organization keeps tabs on its development by producing accurate financial statements at the conclusion of each fiscal year, which are subsequently distributed to various individual users who are concerned with the organization's development. The audit procedure then confirms the accuracy of the financial accounts, and the audit committee then provides the specific business with a transparent audit report to seal the deal. The main objective of this study was to examine the influence of audit committee meetings on the quality of audit reports at Sacco’s in Homabay County, Kenya. This was supported by the fact that there are numerous Sacco’s in Homabay County, many of which had apparently experienced audit problems in the past. The institutional theory served as the study's compass. This study adopted a descriptive causal research design; the target population was 104 audit committee members of deposit taking Sacco’s in Homabay County as of December 2021. Out of the target population determined using the Krejcie and Morgan formula, 82 members of the audit committee provided responses for the study. Primary data was collected using a research questionnaire that involved the drop-and-pick method. Descriptive statistics, including a frequency table, mean, and standard deviation, were used for data analysis, while inferential statistics included Pearson’s correlation analysis. The study found that audit committee meetings in Homabay County, Kenya, had a positive and significant impact on the caliber of audit reports on Sacco’s (r = 0.568, p<0.05). The study recommends that Sacco’s audit committee members should conduct the maximum number of meetings as much as they can. In extension, those meetings should be objectively aimed at attaining quality audits.

Dimensions

REFERENCES

Akhidime, A. (2018). Board Structure, Corporate Characteristics and Audit Quality of Nigeria Banks. International Journal of Economics, Commerce and Management, 3(6), 832-846.

Alex, B. & Stephen, F. (2019). Audit Committee Characteristics and Sustainability Performance of Listed Banks in Nigeria. Journal of Financial Reporting and Accounting, 14(2), 122-147.

Ambiyo, A. (2020). Effect of Audit Committee Characteristics on Fraud Detection and Prevention: A Study of County Governments in Western Region (Master's Thesis, University of Nairobi).

Ashfaq, K., & Rui, Z. (2019). The effect of board and audit committee effectiveness on internal control disclosure under different regulatory environments in South Asia. Journal of Financial Reporting and Accounting, 17(2), 170-200. https://doi.org/10.1108/JFRA-09-2017-0086 DOI: https://doi.org/10.1108/JFRA-09-2017-0086

Bananuka, J., Nkundabanyanga, S. K., Nalukenge, I., & Kaawaase, T. (2018). Internal audit function, audit committee effectiveness and accountability in the Ugandan statutory corporations. Journal of Financial Reporting and Accounting, 16(1), 138-157. https://doi.org/10.1108/JFRA-07-2016-0062 DOI: https://doi.org/10.1108/JFRA-07-2016-0062

BCBS. (2018). Guidance for national authorities operating the countercyclical capital buffer. Basel Committee on Banking Supervision

Bouaine, W., & Hrichi, Y. (2019). Impact of Audit Committee Adoption and its Characteristics on Financial Performance: Evidence from 100 French Companies. Accounting and Finance Research, 8(1), 92. https://doi.org/10.5430/afr.v8n1p92 DOI: https://doi.org/10.5430/afr.v8n1p92

Bukhari, S. A. R. (2020). Bukhari Sample Size Calculator. Research Gate Gmbh. DOI: 10.13140/RG.2.2.27730.58563

Chariri, A., & Januarti, I. (2017). Audit Committee Characteristics and Integrated Reporting: Empirical Study of Companies Listed on the Johannesburg Stock Exchange. European Research Studies Journal, 0(4B), 305-318. DOI: https://doi.org/10.35808/ersj/892

https://doi.org/10.35808/ersj/892

Chou, T. K., & Buchdadi, A. D. (2017). Independent Board, Audit Committee, Risk Committee, the Meeting Attendance level and Its Impact on the Performance: A Study of Listed Banks in Indonesia. International Journal of Business Administration, 8(3), 24. https://doi.org/10.5430/ijba.v8n3p24 DOI: https://doi.org/10.5430/ijba.v8n3p24

Dare, C. & Efuntede, A. (2021). Audit Committee Characteristics and Audit Quality: Exploratory and Empirical Analysis in Nigerian Oil Sector: European Journal of Accounting & Finance Research, 97-111.

Durand, G. (2019). The determinants of audit report lag: A meta-analysis. Managerial Auditing Journal, 34(1), 44-75. https://doi.org/10.1108/MAJ-06-2017-1572 DOI: https://doi.org/10.1108/MAJ-06-2017-1572

Ernst & Young. (2012). Audit committee: Leading practices and trends. Ernst & Young LLP GEE.

Haddad, A., El Ammari, A., & Bouri, A. (2021). Impact of Audit Committee Quality on the Financial Performance of Conventional and Islamic Banks. Journal of Risk and Financial Management, 14(4), 176. MDPI AG. Retrieved from https://doi.org/10.3390/jrfm14040176 DOI: https://doi.org/10.3390/jrfm14040176

IIA. (2011). International Standards for the Professional Practice of Internal Auditing. Altamonte Springs, FL.: The Institute of Internal Auditors.

Machora, M. N., & Oluoch, O. (2019). Effect of Audit Committee Characteristics on Financial Reporting of Selected Saccos in Kisii County, Kenya. International Journal of Scientific and Management Research, 2(6), 82-97.

Meyer, J., & Rowan, B. (1977). Institutionalized Organizations: Formal Structure as Myth and Ceremony. American Journal of Sociology, 83, 340-363. https://doi.org/10.1086/226550 DOI: https://doi.org/10.1086/226550

Musallam, S.R. (2020). Effects of board characteristics, audit committee and risk management on corporate performance: evidence from Palestinian listed companies. International Journal of Islamic and Middle Eastern Finance and Management. https://doi.org/10.1108/IMEFM-12-2017-0347

Musallam, S.R.M. (2020). Effects of board characteristics, audit committee and risk management on corporate performance: evidence from Palestinian listed companies. International Journal of Islamic and Middle Eastern Finance and Management, 13(4), 691-706. https://doi.org/10.1108/IMEFM-12-2017-0347 DOI: https://doi.org/10.1108/IMEFM-12-2017-0347

Muthanga, R. W., & Odipo, M. (2017). The Effect of Accounting Practices on Management of Funds in Public Secondary Schools in Nairobi. International Journal of Economics and Finance, 9(3), 114-123.

Mwangi, A. K. (2018). Effect of Audit Committee Characteristics on Quality of Financial Reporting among Non-Commercial State Corporations in Kenya (PhD dissertation, Jomo Kenya University of Agriculture and Technology). DOI: https://doi.org/10.14738/abr.610.5386

https://doi.org/10.14738/abr.610.5386

Namakavarani, O. M., Daryaei, A. A., Askarany, D., & Askary, S. (2021). Audit Committee Characteristics and Quality of Financial Information: The Role of the Internal Information Environment and Political Connections. Journal of Risk and Financial Management, 14(6), 273. MDPI AG. Retrieved from http://dx.doi.org/10.3390/jrfm14060273 DOI: https://doi.org/10.3390/jrfm14060273

https://doi.org/10.3390/jrfm14060273

Ombati, C. (2016, November 3). Nicholas Muraguri grilled over fraud claims at health ministry. The Standard, Kenya.

Rahman, M.M., Meah, M.R., & Chaudhory, N.U. (2019). The impact of audit characteristics on firm performance: an empirical study from an emerging economy. The Journal of Asian Finance, Economics and Business (JAFEB), 6(1), 59-69. https://doi.org/10.13106/jafeb.2019.vol6.no1.59 DOI: https://doi.org/10.13106/jafeb.2019.vol6.no1.59

SASRA. (2021). SACCO Supervision Annual Report 2018. SACCO Societies Regulatory Authority. Retrieved from https://www.sasra.go.ke/download/sacco-supervision-annual-report-2018

SASRA. (2021). SACCO Supervision Annual Report 2019. SACCO Societies Regulatory Authority. Retrieved from https://www.sasra.go.ke/download/sacco-supervision-annual-report-2019

Setiany, E., Hartoko, S., Suhardjanto, D., & Honggowati, S. (2017). Audit Committee Characteristics and Voluntary Financial Disclosure: Review of Integrative Business and Economics Research, Vol. 6, Issue 3, 239-251.

Temple, M. (2019). The Impact of Audit Committee Size on the Quality of Financial Reporting in Quoted Nigerian Banks. International Journal of Advanced Academic Research: Social and Management Science, 2(5), 1-13

Waweru, N, (2018). Audit committee characteristics, board ethnic diversity and earnings management: evidence from Kenya and Tanzania. Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, 7(2), 59-81. https://doi.org/10.1504/IJCG.2018.10011962 DOI: https://doi.org/10.1504/IJCG.2018.10011962

Weber, L.H. (2020). Is Audit Committee Expertise Related to Earnings Quality? Evidence from Germany. Editorial Policy, 32(3).

Zayol, P.I. & Kukeng, V. (2017). Effect of Audit Independence on Audit Quality: A review of literature. International Journal of Business and Management Invention, 2319-8028.