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Effect of Auditing on Financial Performance of Water and Sanitation Company in Kirinyaga County, Kenya

Received: 6 July 2016     Accepted: 26 July 2016     Published: 7 September 2016
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Abstract

Within the framework of modern business world, auditing is a major part of managing an organization. Audits are performed to ascertain the validity and reliability of information and also to provide an assessment of a system's internal control. The goal of an audit is to express an opinion on the truth and fairness of the organization financial statements. The theories guiding this research are the policeman theory, the lending credibility theory and the theory of inspired confidence and the agency theory. The overall objective of this study was to examine the effect of auditing on financial performance of Water and Sanitation Company in Kirinyaga County. The specific objective was to determine the influence of auditor’s independence on financial performance of Water and Sanitation Company in Kirinyaga County. The study used a descriptive survey research design targeting the top management level, middle management level and lower management level staffs of Kirinyaga Water and Sanitation Company. A sample of 42 respondents was selected from a study population of 137 staffs of the company. Proportionate stratified random sampling method was used to get the sample size. Data was collected from primary sources i.e. directly from respondents through open and close ended questionnaires. The collected data was both qualitative and quantitative. The qualitative data was analyzed using content analysis while quantitative data was analyzed using multiple regression analysis and correlation analysis. Analyzed data was then presented in form of data tables. The results of the study revealed that there is a positive relationship between financial performance success and auditor’s independence. The study therefore recommends that Kirinyaga Water and Sanitation Company should maintain and enhance audit assurance services and strong internal control environment.

Published in Journal of Finance and Accounting (Volume 4, Issue 5)
DOI 10.11648/j.jfa.20160405.14
Page(s) 271-284
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2016. Published by Science Publishing Group

Keywords

Auditors Independence, Corporate Governance, Audit Committee, Internal Audit, External Audit

References
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Cite This Article
  • APA Style

    Lucy Wangithi Munene, Mungai John Njangiru, Susan Wahito Ngungu. (2016). Effect of Auditing on Financial Performance of Water and Sanitation Company in Kirinyaga County, Kenya. Journal of Finance and Accounting, 4(5), 271-284. https://doi.org/10.11648/j.jfa.20160405.14

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    ACS Style

    Lucy Wangithi Munene; Mungai John Njangiru; Susan Wahito Ngungu. Effect of Auditing on Financial Performance of Water and Sanitation Company in Kirinyaga County, Kenya. J. Finance Account. 2016, 4(5), 271-284. doi: 10.11648/j.jfa.20160405.14

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    AMA Style

    Lucy Wangithi Munene, Mungai John Njangiru, Susan Wahito Ngungu. Effect of Auditing on Financial Performance of Water and Sanitation Company in Kirinyaga County, Kenya. J Finance Account. 2016;4(5):271-284. doi: 10.11648/j.jfa.20160405.14

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  • @article{10.11648/j.jfa.20160405.14,
      author = {Lucy Wangithi Munene and Mungai John Njangiru and Susan Wahito Ngungu},
      title = {Effect of Auditing on Financial Performance of Water and Sanitation Company in Kirinyaga County, Kenya},
      journal = {Journal of Finance and Accounting},
      volume = {4},
      number = {5},
      pages = {271-284},
      doi = {10.11648/j.jfa.20160405.14},
      url = {https://doi.org/10.11648/j.jfa.20160405.14},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20160405.14},
      abstract = {Within the framework of modern business world, auditing is a major part of managing an organization. Audits are performed to ascertain the validity and reliability of information and also to provide an assessment of a system's internal control. The goal of an audit is to express an opinion on the truth and fairness of the organization financial statements. The theories guiding this research are the policeman theory, the lending credibility theory and the theory of inspired confidence and the agency theory. The overall objective of this study was to examine the effect of auditing on financial performance of Water and Sanitation Company in Kirinyaga County. The specific objective was to determine the influence of auditor’s independence on financial performance of Water and Sanitation Company in Kirinyaga County. The study used a descriptive survey research design targeting the top management level, middle management level and lower management level staffs of Kirinyaga Water and Sanitation Company. A sample of 42 respondents was selected from a study population of 137 staffs of the company. Proportionate stratified random sampling method was used to get the sample size. Data was collected from primary sources i.e. directly from respondents through open and close ended questionnaires. The collected data was both qualitative and quantitative. The qualitative data was analyzed using content analysis while quantitative data was analyzed using multiple regression analysis and correlation analysis. Analyzed data was then presented in form of data tables. The results of the study revealed that there is a positive relationship between financial performance success and auditor’s independence. The study therefore recommends that Kirinyaga Water and Sanitation Company should maintain and enhance audit assurance services and strong internal control environment.},
     year = {2016}
    }
    

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  • TY  - JOUR
    T1  - Effect of Auditing on Financial Performance of Water and Sanitation Company in Kirinyaga County, Kenya
    AU  - Lucy Wangithi Munene
    AU  - Mungai John Njangiru
    AU  - Susan Wahito Ngungu
    Y1  - 2016/09/07
    PY  - 2016
    N1  - https://doi.org/10.11648/j.jfa.20160405.14
    DO  - 10.11648/j.jfa.20160405.14
    T2  - Journal of Finance and Accounting
    JF  - Journal of Finance and Accounting
    JO  - Journal of Finance and Accounting
    SP  - 271
    EP  - 284
    PB  - Science Publishing Group
    SN  - 2330-7323
    UR  - https://doi.org/10.11648/j.jfa.20160405.14
    AB  - Within the framework of modern business world, auditing is a major part of managing an organization. Audits are performed to ascertain the validity and reliability of information and also to provide an assessment of a system's internal control. The goal of an audit is to express an opinion on the truth and fairness of the organization financial statements. The theories guiding this research are the policeman theory, the lending credibility theory and the theory of inspired confidence and the agency theory. The overall objective of this study was to examine the effect of auditing on financial performance of Water and Sanitation Company in Kirinyaga County. The specific objective was to determine the influence of auditor’s independence on financial performance of Water and Sanitation Company in Kirinyaga County. The study used a descriptive survey research design targeting the top management level, middle management level and lower management level staffs of Kirinyaga Water and Sanitation Company. A sample of 42 respondents was selected from a study population of 137 staffs of the company. Proportionate stratified random sampling method was used to get the sample size. Data was collected from primary sources i.e. directly from respondents through open and close ended questionnaires. The collected data was both qualitative and quantitative. The qualitative data was analyzed using content analysis while quantitative data was analyzed using multiple regression analysis and correlation analysis. Analyzed data was then presented in form of data tables. The results of the study revealed that there is a positive relationship between financial performance success and auditor’s independence. The study therefore recommends that Kirinyaga Water and Sanitation Company should maintain and enhance audit assurance services and strong internal control environment.
    VL  - 4
    IS  - 5
    ER  - 

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Author Information
  • Department of Accounting and Finance, Kenyatta University, Nairobi, Kenya

  • Department of Accounting and Finance, Kenyatta University, Nairobi, Kenya

  • Department of Business and Economics, Maasai Mara University, Nairobi, Kenya

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