Effect of audit committee characteristics on audit effectiveness in county government of Kericho, Kenya

Abstract

The purpose of this study was to determine the effect of audit committee characteristics on audit effectiveness in Kericho County. The study population of 68 senior employees from the county governments of Kericho. Census sampling was adopted given the small population size. The study utilized a correlational research design to study the audit committee characteristics and effectiveness. Data was analyzed using both descriptive and inferential statistics with the aid of SPSS software. The study established that the selected audit committee characteristics accounted for 80.6% of the variations in audit effectiveness (R2 =.806; p<0.05). Specifically, financial expertise was established to have significant positive effect on audit effectiveness (b=0.381; p<0.05), independence of audit committee also has a significant positive effect of audit effectiveness (b=0.158; p<0.05). On the other hand, tenure of audit committee had significant negative effect on audit effectiveness (b=-0.165; p<0.05). The study found that frequency of meetings had no significant effect on audit effectiveness as the p-value was >0.05 (b=0.381; p>0.05). These findings lead to conclusion that, to enhance audit effectiveness, the audit committee should comprise diverse membership but must have an expert in finance and that, the members should be independent and serve for a fixed term. These results are significant as it provides evidence of the effect of various board characteristics on audit effectiveness from a developing country and in public sector which can be applied in policy and enrich the existing literature.