Abstract:
One of the most important keystones and foundations of corporate governance is that
internal auditors are anticipated to work with audit committees, boards and senior
management to assist put the right tone at the top and helps to guarantee that ethical
behavior flows down all the way through the ranks to lower level employees. A viable
internal audit function is one of the most grounded devices to screen and improve
organization performance. Internal auditing and corporate governance have now
become a matter of major public concern. It is against this realization that the study
investigated effect of internal audit practices on corporate governance with focus on
health sector in Kenya. The specific research objectives were to determine the
influence of risk management, internal environment audit practices, control activities
and monitoring activities on corporate governance of the health sector in Kenya. The
study adopted Agency theory and Stewardship theory. An explanatory research design
was employed. The study sought the views from internal auditors and risk managers
of the health sector. The target population of this study was 110 auditors of referral
hospitals in Kenya of which sample sizes of 86 respondents were selected. The
research instruments that were used in this study were questionnaires and interview
schedule. The validity of the instrument was determined by the researcher using
expert judgment. Cronbach’s Coefficient Alpha was used to determine the reliability
of the research instrument. The data were then coded and entered in the computer for
analysis using the Statistical Package for Social Sciences (SPSS). The descriptive
analyses that were used include mean, percentages, standard deviation and
frequencies. Inferential statistics were used to analyze relationship between variables.
This was done using Pearson product moment correlation and multiple regression
analysis. From the model, (R 2 = .874) showing that the factors account for 87.4%
variation in corporate governance in health sector. The predictors used in the model
captured the variation in the corporate governance in health sector. The β-value for
risk management, internal environment audit practices, control activities and audit
monitoring activities had a positive coefficient, depicting positive relationship with
corporate governance in health sector in Kenya. There was a significant positive
relationship between risk management (β 1 =0.370), internal environment audit
practices (β 2 =0.613) and audit monitoring activities (β 4 =0.112; p <0.05) and corporate
governance in health sector. There was no significant relationship between control
activities (β 3 =0.153 and p value >0.05) and corporate governance in health sector. The
risk management, internal environment audit practices and audit monitoring activities
influenced the corporate governance in health sector, while control activities do not.
The study recommended that risk assessment should be led at the level of individual
organizations and over the wide range of exercises and auxiliaries of the solidified
association.