Influence of Governance Indicators on Disclosures in Performance Audit Reports: Case of National Government Constituencies Development Funds

Abstract

Auditors assume vital role in enabling the reliability of financial information by attesting to the dependability regarding monetary declarations. Conversely, studies evidences that a number of accounting and reporting irregularities and frauds in the last one decade have led to intense scrutiny of corporate governance frameworks and has since drove intense debate about issues such as accounting reports examination, audit approach, audit quality and generally what affects disclosures both in the commercial industry and in government. This study intended to explore the Influence of Governance indicators on Disclosures in Performance Audit Annual Reports: in the National Government Constituencies Development Funds. The main objectives included to find out the relationship between accountability and disclosures, to determine the effect of governance effectiveness on disclosures, to establish how regulation quality influences disclosures in the performance audit and to investigate the extent to which control of corruption affects disclosures in the performance audit report. The research work adds to the knowledge about African states Supreme Audit Institutions and Performance Audit activity by giving propositions on issues affecting disclosures in the performance audit annual reports. The study is anchored on lending credibility theory, policeman theory and agency theory. This study adopted descriptive approaches to explain the influencers of disclosures and how they translate to the final outputs in form of audit reports. The study targeted all the constituencies in Kenya which are 290 with number of target respondents specifically being Fund Account managers, district accountants, Accounts assistants, audit staff at the office of auditor general and Project Management Committee Members totaling to 1,169. Since the respondents targeted were many, and were spread all over the constituencies in Kenya, the sample size approximation used suggestions by Bartlett, Kotrlik and Higgins (2001) to arrive at a sample size of 107 respondents. The questionnaire was the main instrument for collecting primary data. Regression analysis was used to determine the cause-effect analysis while correlation analysis was applied to measure the strength of association between the study variables with the help of SPSS version 25. The findings revealed that accountability (β=0.247, p=0.001), governance effectiveness (β=0.140, p=0.036), regulation quality (β=0.413, p=0.000) and corruption control (β=0.197, p=0.000) have a positive and significant relationship on the performance of audit annual reports in the NG- CDFs in Kenya. This implies that improvement in 1 unit of the aspects related to accountability, governance effectiveness, regulation quality and corruption control improves the performance audit annual reports in the NG-CDFs in Kenya by 0.247 units, 0.140 units, 0.413 units and 0.197 units respectively. It was therefore concluded that corruption control, regulation quality, governance effectiveness, and accountability have a statistically significant and positive influence on the performance audit annual reports in the NG-CDFs in Kenya. The study recommends that NG-CDF Board in Kenya to continue with the continuous training and development of their staff to foster professionalism and quality of service delivery. This will minimize championing of the political aspect intertwined in management of CDF funds and thus will enable production of genuine audit reports which are not influenced. Additionally, the NG-CDF Board should consider liaising with the relevant departments like National treasury to ensure that budgeted funds are available in time and thus disbursements and issuing of Authority to incur expenditure is done in time. This will hence minimize cases of virement and inappropriate voting of items in the CDF vote books.