Factors affecting auditor's independence among public institutions .A case of Maasai Mara University.

Abstract

Independence is the primary justification of the existence, and thus the hallmark of the auditing profess ion. It is recognized as the primary attribute to be maintained by auditors in all circumstances to give credibility to financial statements. The purpose of this study was to evaluate the factors that affect the auditor's independence among public institutions with reference to Maasai Mara University. The specific objectives of the study were to establish whether audit firm size affects the auditor's independence, to determine whether the audit firm's tenure has an effect on the auditor's independence, to establish whether the size of the audit fee has an effect on the auditor's independence and to examine the influence of the audit committee competence on the auditor's independency among public institutions. The study used a descriptive sample design where the qualitative and quantitative data was collected. The target population entailed all the 100 employees of Maasai Mara University working in the accounts and finance department. A total of 50(50%) respondents were selected and used for the study. The main data collection instrument was a questionnaire. For validity and reliability of the study instrument, a pilot study was conducted. The data was analysed using descriptive statistics of means, percentages and frequencies and standard deviations. The study results revealed that for most of the companies the auditors independence in public institutions was compromised and was influenced by the factors that were selected majority of the respondents noted that the audit firm size had an effect on the auditors independence. The audit fee was next, followed by the audit committee influence while auditor's tenure had the smallest effect. The study concluded that audit firm size, audit firm's tenure, the size of the audit fee and audit committee competence all have an on the auditor's independence among companies quoted on the stock exchange. The study therefore recommends that for the public institutions to be able to enhance there auditor's independence there is need to address not only the four factors described in this study but also make consideration of al the other factors and address their effect. Tbis will lead to better reporting of the financial statements and hence it will help to provide appropriate performance indicators for the firms. The study results are of benefit to not only the public institutions but also they will help stock exchange companies with challenges in audit matters. The findings will also form a basis for the profession to establish policies relating to auditor independence and also assist policy makers in their attempt to attain quality audit and the international harmonization of auditing standards.