The effect of internal auditing in enhancing financial Accountability at the water service providers in Kenya

Abstract

Internal auditing plays an important role in ensuring financial accountability within public institutions in Kenya's Water Works Development Agencies (WWDAs). These agencies, established under the Water Act 2016, are assigned to oversee water infrastructure development across the country. The study was guided by the following objectives: to assess the effect of risk assessment in enhancing financial accountability at the Water Service Providers in Kenya, to examine the influence of internal control systems in enhancing financial accountability at the Water Service Providers in Kenya and to assess the effect of auditing compliance in enhancing financial accountability at the Water Service Providers in Kenya. This study examined the agency theory, the auditor’s theory of inspired confidence and contingency theory to recognize the effect of internal auditing in enhancing financial accountability at the Water Service Providers in Kenya. In the context of a study on the effect of internal auditing on enhancing financial accountability at water service providers in Kenya, the application of a descriptive research design is both suitable and beneficial. This was because the study sought to provide a clear and systematic understanding of the current internal audit practices and how they influence financial accountability within these organizations. Descriptive research allowed the researcher to gather quantifiable information that accurately reflected the current state of affairs without manipulating the study environment. Hence, there were 55 questionnaires for the CEOs of WSPs in the regions that were included in the study. The sample size was a census approach since the population was relatively small, and the goal was to get a complete and accurate picture of the phenomena being studied. The respondents in the area were assessed using structured questionnaires in order to get primary data. The goals of the study guide development of the questionnaires' questions. There are two sections to the structured questionnaires. Part, one concentrates on the respondents' general data while, part two focuses on the questions relating to dependent and objective variables. The process of analyzing all of the information and determining which information was relevant and useful in terms of improving decision making is what was known as data analysis according to Silvia and Skilling (2012). STATA (16) and Statistical Package for the Social Sciences (SPSS) version 29 were used to do the analysis on the data that was obtained. Correlation, regression, ANOVA, and model summary was generated. Tables and figures are used to present the data. The study established that internal auditing plays a pivotal role in enhancing financial accountability at Water Service Providers in Kenya, primarily through its strong contribution to auditing compliance, which fosters transparency and adherence to financial policies. While risk assessment practices support accountability by identifying potential financial irregularities, their impact is tempered by inconsistent implementation. Similarly, internal control systems provide a framework for accountability but are weakened by gaps in ethical culture and role clarity. The findings highlight that internal auditing is a critical driver of accountability, yet its effectiveness could be further strengthened by improving the consistency of risk assessments, reinforcing control mechanisms, and expanding the scope of audits to better detect and prevent financial mismanagement.