INFLUENCE OF AUDIT PRACTICES ON FINANCIAL PERFORMANCE OF KENYA PIPELINE COMPANY LIMITED

Abstract

Lack of adequate empirical evidence on the significant effect of auditing management practices on financial performance in state corporations in Kenya motivated this study to investigate the influence of audit outsourcing, electronic auditing, audit reporting and audit committee composition on financial performance of Kenya Pipeline Company limited. The study was based on agency theory and transaction cost theory. The study adopted descriptive survey design. The study targeted 93 respondents where a census method was used to select all the 93 respondents to participate in the study. A total of 93 questionnaires were dispatched in the field for data collection and 87 questionnaires were returned fully filled, depicting a response rate of 93.5% which was very good for generalizability of the research findings to a wider population.  From study findings, all conceptualized study variables (audit outsourcing, electronic auditing, audit reporting and audit committee composition) significantly influences financial performance of Kenya Pipeline Company limited (dependent variable). The study concluded that, one, audit outsourcing boost financial performance because they contribute to the achievement of reliable accounting information, which produces independent, accurate and reliable financial management information, two, electronic auditing positively influence financial performance of a company because electronic auditing guarantees real time detection of financial scams thus assists in sealing financial loopholes and that audit committee composition in terms of diversity boost financial performance of a company since diversity in terms of gender, age, size checks conspiracy of audit committee members in compromising audit reports and audit fraud disclosures. The study recommended that one, companies should adopt the effective use of audit outsourcing since it produces independent, accurate and reliable financial audit information, secondly, companies should embrace effective use of electronic auditing to guarantee real time detection of financial scams thus seal routine financial loopholes and three; companies should adopt audit reporting that is based on international audit reporting standards which ensure authentic financial data captured in credible audit reports. Key Words: Audit Outsourcing, Electronic Auditing, Audit Reporting, Audit Committee Composition CITATION: Wekesa, C. O., & Malenya, A. (2020). Influence of audit practices on financial performance of Kenya Pipeline Company Limited. The Strategic Journal of Business & Change Management , 7(1), 861 – 877.