INFLUENCE OF INTERNAL AUDIT ON GOVERNANCE PROCESSES IN PUBLIC SECTOR: A CASE OF NATIONAL TREASURY IN THE NORTHRIFT, KENYA.

Abstract

The role of internal auditing is vital for strengthening governance processes, yet issues such as poor service delivery, inefficient resource use, project delays, and lack of value for money have raised concerns about the effectiveness of internal auditing in public governance. This research aimed to investigate the impact of internal auditing on governance processes in Kenya's public sector. The research had three key objectives: to assess the effect of internal controls, the risk management framework, and assurance and consulting on improving governance processes within the public sector. The study was grounded on systems and agency theories to explore the relationship between internal auditing and governance. A descriptive and correlational research design was employed, targeting 25 internal auditors in Kenya's North Rift region. A census approach was used to gather data from 23 participants. Data analysis included both descriptive and inferential statistics, utilizing correlation and regression analysis. Descriptive statistics involved calculating mean scores, percentages, and standard deviations, while inferential analysis was conducted using Pearson’s product-moment correlation and regression models. Hypothesis testing was performed, and qualitative data was analyzed based on the study’s variables. The results, presented through tables and graphs, indicated that all null hypotheses were rejected as the significance levels of F-statistics and Pearson’s Product Moment Correlation were found to be less than 0.05 (p < 0.05). This suggests a significant positive relationship between the variables. The study concluded that internal controls, risk management frameworks, and assurance and consulting significantly influence governance processes in the National Treasury offices in Kenya's North Rift region as shown by beta coefficients of 0.248, 0.213 and 0.244 respectively. At a 5% significance level and a 95% confidence level, the significance value for internal controls, risk management frameworks, assurance and consulting was 0.000, 0.001 0.002 respectively. Key recommendations include the need for departments to integrate internal auditing into their processes to improve risk management. It also suggests that ministries and departments should incorporate internal controls to enhance process efficiency. Additionally, the study recommends that internal auditors develop risk matrices to aid in risk assessment and strategic planning. Lastly, for assurance and consulting, departments should utilize internal audit consultancy services provided by the Internal Auditor General’s Department to enhance public trust and improve governance processes. This research was limited to auditors from the National Treasury in the North Rift region. Future research could explore other regions and public sector entities in Kenya to validate these findings and provide broader insights into the role of internal auditing in public governance