Title: Audit committees and corporate governance in a developing country

Authors: Nelson M. Waweru; Riro G. Kamau; Enrico Uliana

Addresses: School of Administrative Studies, York University, 4700 Keele Street, Toronto, ON, M3J 1P3, Canada. ' Department of Accounting, Kimathi University College of Technology, P.O. Box 657, Nyeri, 10100, Kenya. ' Department of Accounting, University of Cape Town, Private Bag, Rondebosch, 7701, South Africa

Abstract: Market regulators, commissions and accountancy bodies have recommended the establishment of audit committees as an important step in improving corporate governance. In 2002, the Kenya Capital Markets Authority required all listed companies to establish audit committees. This study examined: 1) the practices of audit committees in Kenyan listed companies; 2) how audit committees relate to other stakeholders; 3) the major achievements and challenges facing audit committees in Kenya. A questionnaire survey completed by 29 companies (60%) showed that audit committees in Kenya are more independent than audit committees of other developing countries of Africa. All the audit committees reported cordial relationships with the management, internal audit and the external auditors, and were perceived to have improved the quality of financial reporting. The findings have some implications on the Kenyan capital market as companies may now be able to attract more foreign investors.

Keywords: audit committees; corporate governance; Kenya; listed companies; internal audit; external audit; auditing.

DOI: 10.1504/IJAAPE.2011.042774

International Journal of Accounting, Auditing and Performance Evaluation, 2011 Vol.7 No.4, pp.337 - 358

Published online: 13 Mar 2015 *

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