obtaining an understanding of the audited entity. A study conducted in Nigeria by Humphrey (2007) appreciated the fact that organizations all round the world be it financial, educational, or otherwise needs auditing for proper assessment of their financial statements. In order to achieve set out goals and objectives, SACCO finances must be properly managed to get the profound results needed. Humphrey (2007) revealed that auditing in the Nigerian entrepreneurial system is relevant hence effective financial performance in any SACCO leads to the success and growth of the SACCO. That is, auditing as a tool for accountability for efficient and effective SACCO administration is a clear term study which will educate us on the importance of SACCO audit
3 and how it will affect the SACCO members if mismanagement of funds eventually occurs. In Kenya, over the past several years, internal auditing practices in most SACCOS has become a subject of interest in the auditing literature (Kibara, 2007). Before proper and sound measurement of the internal auditing practices can be done, there is need to have a clear understanding of the roles expected of auditing practice and its impact on the internal auditing practices or audit effectiveness (Kibara, 2007). However, Kibara (2007) noted that effectiveness can be described, but it is difficult to quantify and in the final analysis, effectiveness is determined by the perception of auditees. In SACCO environment, the SACCO management is the most important auditee of the internal audit department since effectiveness of the internal auditing practices can be described through the expectations of the management with regard to the internal auditing practices. The SACCO management expects the auditors to perform their internal auditing practices to a certain level that is complying with the auditing regulations. On the contrary, in a study conducted in Kajiado North District, Keitany (2000) asserted that over the years, there have been dramatic changes in the internal audit environment and these may affect the internal auditing practices . Today’s businesses rely on sophisticated electronic technology in every aspect of their operations and require timely information to make decisions regarding global operations. To accomplish this, Keitany (2000) posited that the internal auditing practices must function in a manner that is in accordance with the applicable professional standards and organizational goals. In other words, internal auditing practices appraise the effectiveness of internal control systems, which is the basis of auditing and which also includes an appraisal of the actions by management to correct situations, which are at variance with planned outcomes. Formation of audit committees is another practice which most SACCOS adopt. Senior management and the audit committee normally expect that the SACCO auditors
4 perform sufficient audit work and gather other available information during the year so as to form a judgment about the adequacy and effectiveness of the control processes (Keitany, 2000). In Kiambu County, one of the challenges facing most SACCO managers is the
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