Factors Influencing Effectiveness Of Internal Audit In The Banking Sector In Kenya

Abstract

Internal audit aids organization to achieve its objectives by systematic evaluation of its risk management, governance processes and control activities. The execution of IA in the banking sector is envisioned to lessen organizational risks emanating from administration of financial resources and also increase the financial sectors’ performance hence safeguarding against bank failure. However Kenya has not been left out in bank failures in 2015/2016, three banks failed or placed under receivership including Dubai Bank, Imperial Bank and Chase bank. This study sought to determine factors influencing Internal Audit effectiveness in the banking sector in Kenya with special focus on the commercial banks in Nairobi. The study adopted a cross sectional descriptive research design involving administration of questionnaires to a sample of internal auditors from all the 40 commercial banks in Nairobi. Data analysis was carried out using SPSS version 20. The results indicated that IA in commercial banks was relatively effective and thus acted as value added service to the banks. The bank management should ensure IA has enough staff as well as ensure presence of sufficient certified IA.