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Audit Independence: Comparing Accountability and Transparency | Homework Help

Audit Independence: Comparing Accountability and Transparency in Corporate Organizations in U.S and Kenya

The paper evaluates the value and significance of audit independence. This impacts the enhancement of accountability and transparency in corporate organizations. The research delves into the audit practices in the United States and Kenya – as the focus case study countries. The paper’s key objectives focus on; a.) evaluating the impacts of political and economic factors on audit independence in both countries, b.) assessing how enhancing internal audits – increase transparency and accountability in corporate governance, and c.) examining the key threats to the independence of auditors in the two countries. The research utilizes scholarly articles to inform the literature review and respond to the objectives of the paper. The evaluation of threats to the independence of audit practices is fundamental to improve internal and external control systems. Thus, the building of professionalism and capacity of auditors is critical for the maintenance of the independence of the audit practices impacting to accountability and transparency principles of corporate governance.

Keywords: Audit Independence, Corporate Governance, Transparency, Accountability, Internal Auditing, External Auditing.



Table of Contents

Abstract 2

Audit Independence: Comparing Accountability and Transparency in Corporate Organizations in U.S and Kenya. 4

Chapter 1: Introduction. 4

1.1.     Objectives 4

1.2.     Significance. 5

1.3.     Scope. 5

Chapter 2: Literature Review.. 7

2.1.     Audit Independence in the U.S. 11

2.2.      Audit Independence in Kenya. 13

2.3.     Impacts of Political and Economic Factors on Audit Independence in Both Countries 15

2.4.     Enhancing Internal Audits to Increase Transparency and Accountability of Corporate Governances 17

2.5.     Key Threats to the Independence of Auditors in the Two Countries 18

Chapter 3: Recommendations: Mitigation to Factors Eroding Audit Independence. 21

3.1.     Limitations of the Study and Future Studies 22

Chapter 4: Conclusion. 24

References 26


Audit Independence: Comparing Accountability and Transparency in Corporate Organizations in U.S and Kenya

Chapter 1: Introduction

In the assurance of effective internal controls, far-sighted financial management, and the pursuit of enhanced corporate governance – the practice of auditing has become a major part of every organization positioning itself for success. The capacity to deliver independent auditing processes is critical for the organization to attain the set objectives in a transparent and accountable manner (Ali Baba 2016; Fashami, Boolaky & Omoteso 2019). The paper examines the implementation of auditing in its independence in the United States as compared to Kenya. This is a comparison of auditing practices in a developed country with enormous financial capacity and developing nations that are building capacity in financial reporting, accountability, and transparency of corporate governance (Kiragu 2016; Mihret & Grant 2017). Therefore, the research is informed by the use of qualitative research of the historical model that delves into secondary resources of scholarly, journal, and peer-reviewed articles. Thus, it provides a diverse and fundamental insight on audit independence as a vital phenomenon towards attaining accountability and transparency in corporate governance in the two countries of our case study (Mokono & Nasieku 2018).


The paper focuses on three objectives of the study which focus on the practices and implementation of audit independence in the two countries of our case study. The objectives include the following: –

  • To evaluate the impacts of political and economic factors on audit independence in both countries.
  • To assess how enhancing internal audits – increase transparency and accountability in corporate governance.
  • To examine the key threats to the independence of auditors in the two countries.


The evaluation of the implementation and practice of auditing independence is vital to attain transparency and accountability in corporate governance. Auditing has become a significant practice facilitating organizations towards the realization of excellence through prudent internal controls and effective financial management that help the organizations to stay on course (Nyamori, Abdul-Rahaman & Samin, 2017; Park 2020). This study provides key insights into the enhancement of auditing independence, both internally and externally. The evaluation of auditing practices in the United States as compared to Kenya is fundamental to outline the discrepancy in ascertaining accountability and transparency in corporate organizations in the respective countries. Thus, the study adds to the body of knowledge which is essential for the advancement of auditing practices vital for the excellent performance of organizations and long-term strategic positioning (Omolaye & Jacob 2017).


The scope of the paper focuses on providing fundamental insights essential for the mitigation of factors eroding audit independence. The capacity to resolve and ascertain audit independence is essential for corporate governance and key strategic aspect. Audit independence promises a competitive culture, strong organizational values, and a committed workforce that is determined to see the realization of success in their organizations (Minh Duc, Thi Hoang, Hoang Ngoc, Hoang Tien & Hung Anh, 2018). The capacity to realize audit independence despite being marred with problematic challenges is fundamental to the success of an organization. The compliance with international financial reporting standards and regulations is crucial to every organization and corporation striving for global status and competitiveness (Tepalagul & Lin 2015). Furthermore, the paper summarizes the limitations of the study as a projection for future research and the opportunity for further developments to audit independence.

Chapter 2: Literature Review

The existing studies and materials emphasize the importance of maintaining auditing independence as a primary aspect of attaining excellence in organizations. According to Nyaga, Kiragu and Riro (2018, p. 2), “auditing has become a crucial part of every modern organization positioning itself for excellence in internal controls, corporate governance, and sensible financial management.” This emphasizes the value of auditing in corporate governance that stipulates the practice of transparent and accountable transactions open for public scrutiny to enhance responsibility in the workforce. Kiragu (2016, p. 2) asserts that the “need to focus on corporate governance has increased particularly in the wake of economic collapse and financial crises.” The financial crises witnessed over the years causing global economic constraints and regression effects, prompt the value of implementing corporate governance practices. Kiragu (2016) further notes the significance of auditing as a feature to enhance corporate governance destined for excellence.

Mihret and Grant (2017, p. 1) assert that the study of “internal auditing as a disciplinary mechanism in the corporate governance setting of contemporary organizations is vital to enhance accountability and transparency.” Modern organizations position themselves as competitive entities through building trust and reputation as committed corporations to their customers. According to Nyamori et al. (2017), the value of transparent accounting and auditing practices enhance accountability in organizations. Park (2020) asserts the significance of internal audits as a crucial feature towards the realization of the success in the state-owned enterprises (SOEs). The auditing practices hold organizations accountable based on legal practices, policies, financial management, accounting responsibility, and provide a regulatory framework in which future evaluations can be determined. Thus, the capacity to build a strong auditing framework is crucial to clear practices of corporate governance.

Nyaga et al. (2018), in a case study evaluating the practices of internal auditing in a local government entity, emphasizes the value of maintaining the independence of internal auditing activity. According to Nyaga et al. (2018), internal auditing independence is a prerequisite towards attaining internal auditing effective in the target corporation. Kiragu (2016) states that internal audit plans are critical towards achieving the overall objectives of auditing. This can only be achieved through the assurance of internal audit independence as a key concept towards building the capacity to delve into internal controls and financial management guaranteeing effective corporate governance practices (Mihret & Grant 2017). The value of internal audit independence is a major entity vital to enhancing corporate governance in public institutions and competing corporations (Nyamori et al. 2017).

The lack of internal audit function leaves the corporations at the risk of running wide without accountability is a precondition for failure. Park (2020) asserts that internal audits play a critical role in outlining the framework of operations vital to the disclosure of key information that spurs responsible actions in the organization. Also, disclosure of financial statements subject to internal scrutiny enables organizational systems to detect potential financial risks that may impede the functionality and competitiveness of the organizations (Park 2020). This gives the auditors a leeway to operate freely as autonomous entities that can access evidence vital to enhance accountability and transparency in corporate governance (Nyaga et al. 2018).

The existing literature shows the value of establishing independent external audits as an addition to internal audits and corporate governance. According to Park (2020), the external audits “establishes a comprehensive legal and regulatory framework for public disclosure of financial and nonfinancial information about the activities of state-owned enterprises (SOEs).” The legal and regulatory frameworks that enable access to financial and nonfinancial information is critical to enhancing corporate governance practices that impact on transparency and accountability in the organization. The realization of such practices enhance the competitiveness of the organizations and enable the creating of a strong reputation and brand that is committed to values and ethical practices. The accountability and transparency of organizations impact the realization of adequate standards that govern the reporting mechanism of organizations (Nyamori et al. 2017).

Ali Baba (2016) emphasize on the value of external auditors as core entities that facilitate the compliance of recommendations made by donors, the board of directors, funding agency, among investor stakeholders. Focusing his research on the case study of non-governmental organizations (NGOs) in Bolgatanga Municipality asserts that the use of external auditors as key to enhancing accountability and transparency in the implementation of strategic projects by the NGOs. The external auditors hold the management responsibilities of their actions and practices that impact on the growth and competitiveness of the organizations. To remain relevant and competitive in the long-term, the practices of external audits supplement the internal audits. According to Kiragu (2016, p. 3), “establishing a direct reporting relationship with the external auditors supplement the process of overseeing comprehensive financial reporting and disclosure of financial statements.” Thus enhance reliability, understandability, and transparency of the practices that prioritize risks and promote ethical values in the corporate governance and practices of an organization.

The auditing framework establishes accounting principles, standards of operations, risk prioritization and management system, timely and effective information policy, financial reporting, and disclosure, as well as promoting good values. The adoption of comprehensive recommendations made by auditors projects the organizations on a competitive path that “increases stakeholder’s confidence and attract new potential investors” (Kiragu 2016, p. 3). The implementation of auditing practices impacts on enhancing the capacity of organizations to operate on a wide-scale that induce far-reaching implementation of policies vital to the competitiveness of organizations. Thus, proper financial recording and statements disclosure enable the firms to strengthen their internal structures and capacity for continued competitiveness and operational capabilities.

Kiragu (2016) and Nyaga et al. (2018) evaluate the role of audit committees in enhancing auditing transparency. The audit committees are responsible for reviewing internal audit plans, monitor the choice of accounting principles and standards, report and quantify figures, diversify the risk management processes, and provide oversight for financial reporting and disclosure practices (Kiragu 2016). These are crucial practices that impact in enhanced performance of the auditing teams in the organization impacting to upholding of accountability and transparency in corporate governance (Nyaga et al. 2018). The efficiency in the audit committees culminates in the effects of the overall auditing processes and practices in an organization. Thus, the protection of audit committees, upholding their integrity and values are critical to providing the necessary framework for corporate governance principles.

 Audit Independence in the U.S.

The independence and quality of the auditing profession and processes play a fundamental role in advancing corporate governance. Church, Jenkins and Stanley (2018, p. 145) note that, “while independence is a theoretically appealing construct, it is fraught with practical problems surrounding its implementation, regulation, and monitoring.” As information users and producers – auditors have a profound role in enhancing the audit processes in an organization. Minh Duc et al. (2019, p. 16602240) auditor independence is influenced by auditor’s working environment factors which include “audit tenure, non-audit service, auditing fee, auditor-client relationship, size of audit companies, and corporate.” The corporate governance influences the audit independence vis-à-vis the auditor’s capacity to maintain authenticity and influence from corporate governance. The two, corporate governance and audit independence, influence each other (Figure 1). Tepalagul and Lin (2015, p. 101) evaluating articles from 1976-2013 indicate a growing tendency of key threats to auditor independence including “non-audit services, client importance, client affiliation with the audit firm, and auditor tenure.” Tepalagul and Lin (2015) echo the sentiments asserted by Minh Duc et al. (2019) in threats to auditing process independence. Thus, the quality of auditing practices and financial practices must comply with mitigating the threats influencing the audit capacity.

According to Minh Duc et al. (2019), the established factors threatening the independence and quality of auditors are prevalent in the United States. This stipulates and quantifies the establishment of the U.S. Securities and Exchange Commission (SEC) as the official body that oversees the creation of accounting and auditing standards for publicly traded companies in the United States (Gnanarajah 2017). The SEC serves the oversight body for auditing and accounting practices in the United States. The public sector is directly under the control and oversight of the SEC in determining the auditing processes, framework, and functionality in the country (Figure 2). The oversight of the auditing profession for the private sector is implemented and regulated by the Financial Accounting Standards Board (FASB). The SEC officially recognizes the FASB as the oversight body tasked with the “designated authority capable of establishing GAAP.SOX which created the Public Company Accounting Oversight Board (PCAOB) to regulate the private sector” (Gnanarajah 2017, p. 2).

Internal Control Deficiencies in 2016 Reports

Figure 2: (Source: Whitehouse, 2019).

According to Gnanarajah (2017), the Federal Accounting Standards Advisory Board (FASAB) established in the regulation of the SEC institute the financial reporting, accounting, and auditing standards. The Sustainability Accounting Standards Board (SASB) is tasked with the creation of provisional standards that provide the necessary framework for accounting and auditing standards. The SEC officially recognizes the SASB as an “official standard-setting body” (Gnanarajah 2017). The SEC has the powers bestowed to it by the U.S. Congress to oversee the countries financial reporting and accounting standards. Since the 2000s, the SEC has adopted International Financial Reporting Standards (IFRS) which emphasize the value of independent auditing practices towards enhancing corporate governance. Thus, the SEC plays a fundamental role in ascertaining auditing processes’ quality and independence.

 Audit Independence in Kenya

Kirima (2016, p. 2), analyzes the “factors that affect the performance of the internal audit function in government ministries in Kenya.” The findings state that the auditors’ working environment is instrumental in influencing their performance. The prevailing factors such as clear structure and set targets enable auditors to function effectively, competence building through professional training, the establishment of a recognition and reward system, and flexibility of the approach as critical aspects guaranteeing the independence of auditors (Figure 2). Also, government ministries in Kenya operate on the basis that they cannot audit projects they are involved in the implementation. This is critical for the development of an internal audit framework that is fundamental to the realization of effective public financial management approaches in the country (Kirima 2016).

Internal Auditor’s Involvement in Management Activities

Figure 3: (Source: Kamau, Kariuki & Mutiso, 2014).

The independence of auditors in Kenya is facilitated by the existence of auditor committees that stipulate the function and audit processes to be pursued (Kamau, Kariuki & Mutiso, 2014). In the context of Kenyan public institutions, audit independence faces enormous challenges arising from competence capacity and resources available to support the process (Mokono & Nasieku 2018). According to 20 years, Transparency International Kenya (2019) baseline survey report the Office of the Auditor-General establishes the audit standards and regulations. The key institutions integral to the conduct of public audit processes include of the Office of the Auditor-General, Parliamentary and County Oversight Committees, Civil Society, the Media, Ethics and Ant-Corruption Commission (EACC), The Office of the Director of Public Prosecutions (ODPP), and the Director of Criminal Investigations (DCI). Cumulatively, the institutions are tasked with pursuant of distinct roles stipulated in the Constitution of Kenya in reinforcing auditing standards and quality.

Ariningrum and Diyanty (2017) identify the political connections to be a profound nuisance to the independence and performance of audit processes. Kenya as third-world, political connections and interferences extensively impede the independence of auditors – at the parliamentary committees’ level, DCI, and ODPP (Nyaga et al. 2018). The transparency and accountability of auditors are fundamental is critical to ensure that internal auditors succeed in securing public funds. The strengthening of internal auditors is fundamental to attain the set objectives of the organizations and accountability of public resources (Mokono & Nasieku 2018). Amid profound corruption cases and political interferences – strong internal auditors are essential towards the protection of public funds which is an integral feature of the audit processes (Kirima 2016).

Thus, the independence of the auditing processes in Kenya is not guaranteed for a lack of sufficient capacity, resources, and competence to fully execute audit requirements. The Transparency International Kenya (2019) report shows faced by key institutions to run independent audits including inadequate staff, financial resources, logistics, preparation of the auditees, limited scope, unresponsiveness, lack of oversight, political interferences, time constraints, among others. This renders the audit independence to be questionable both at the internal and external levels of the organization. Hence, corporate governance is greatly eroded in Kenya impeding free, fair, open, and transparent audit processes.

 Impacts of Political and Economic Factors on Audit Independence in Both Countries

The political and economic factors impact auditing independence in the U.S. as compared to Kenya very differently. Ariningrum and Diyanty (2017) assert in a country like the United States; the political connections can influence the audit process positively through increasing the inherent risk of a firm. In turn, it calls for profound scrutiny and evaluation of the financial statements and reports of an organization. In Kenya, political connections are bound to induce adverse implications on audit independence (Mokono & Nasieku 2018). Mokono and Nasieku (2018) identify the working environment of auditors as an area where political connections and interference impede the independence of the auditing process.

According to Kirima (2016), undue pressure of reprisal affects the performance and independence of internal auditors in Kenya institutions. The installation of internal audits becomes impossible with institutions marred with undue pressure for the persons with authority and compliance team. This affects the perceptions and behavior of auditors – factors that influence audit independence (Tepalagul & Lin, 2015). Ariningrum and Diyanty (2017) illustrate the value of political connections as effective in championing and calling for free and independent audit processes. The differences between the two countries revolve on the capacity building and strengthening to support the conduct of independent audits without the interferences of interested persons or parties.

The Transparency International Kenya (2019) report identifies a lack of sufficient resources and inadequate funds as major causes of inauthentic audit processes. The independence of the audit processes is eroded by the lack of oversight capacity which revolves around the economic value to strengthening the auditors’ capacity to operate independently. The lack of oversight capacity for auditing institutions and subsequent committees undermine the capacity to maintain independent audit both externally and internally respectively.

Contrary to the Kenyan audit institutions and oversight capacity for internal auditing processes, the U.S. auditing and accounting regulations are well-funded and strengthened in an oversight capacity. The SEC has profound powers and scope to execute audits on large firms impacting on the advancement of corporate governance (Gnanaraja 2017). Also, the implementation of a myriad of auditing standards and regulatory frameworks – internal audits and oversight capacity is strengthened to assure the independence of the process. This outlines a profound distinction between the U.S. and Kenyan audit processes and capacity depicting different results in the independence capabilities. Thus, the U.S. has well-established institutions and framework to sustain independent auditing process free from political and economic interferences.

 Enhancing Internal Audits to Increase Transparency and Accountability of Corporate Governances

The internal control systems ought to be properly and adequately evaluated to strengthen the internal audit. This culminates in the realization of corporate governance values of transparency and accountability in organizations. Strengthened internal control systems impact the enhancing of effectiveness and adequacy of the audit independence in meeting its mandates (Tumwebaze, Mukyala, Ssekiziyiyu, Tirisa & Tumwebonire, 2018). In a study conducted by Tumwebaze et al. (2018), the “internal audit function serves as a significant predictor of accountability.” The capacity to strengthen internal controls is critical to increasing the accountability of the organizations. According to Azizal, Ab Rahman, Alam and Said (2015), good governance practices are essential for improved accountability in the public sector.

The diversity of governance failures, corruption, government inefficacies, fraud, corruption, and the existence of poor internal controls undermine the capacity for effective financial management (Azizal et al. 2015). These comprise of the characteristics of third world countries like Kenya which suffers from rampant corruption, government inefficacies, poor internal controls, fraud, governance failures, lack of good governance practices, among other vices that impede the realization of transparency and accountability in corporate governance (Segui-Mas, Bollas-Araya & Polo-Garrido, 2018). While values of corporate governance practices are vastly championed and emphasized in the U.S., the Kenya case differs profoundly. Hence, the independence and capacity of internal audit controls show distinct capabilities to respond and deal with arising issues (Onulaka, Shubita & Combs, 2019).

According to Omolaye and Jacob (2017, p. 1), “compliance with the corporate governance principle leads to better organizational performance in financial statements and reporting.” Internal auditing plays a fundamental role in enhancing good corporate governance practices. The internal auditing serves as a tool used for monitoring the implementation and practice of good corporate governance principles (Van Liemppd, Quick & Warming-Rasmussen, 2019). Primarily, transparency and accountability are essential corporate governance principles which the implementation of internal audits helps attain. Azizal et al. (2015, p. 163) note that “the enhancement of accountability and transparency in public sectors can be attained through the strengthening of integrity system, leadership practices, and internal control systems.” Thus, resulting in the realization of better corporate governance principles and practical application of core values in the organizations (Goicoechea, Gomez-Bezares & Ugarte, 2019).

 Key Threats to the Independence of Auditors in the Two Countries

The U.S. and Kenyan cases of auditors’ independence exhibit profound differences based on the financial capacity of the two countries. This impacts the capacity to strengthen the internal auditors and oversight capability to hold the firms and corporations accountable for their actions. Generally, the key threats that affect the independence of auditors comprise of the factors such as; “audit tenure, non-audit service, auditing fee, auditor-client relationship, size of audit companies, and corporate” (Minh Duc et al. 2019, p. 16022440; Tepalagul & Lin 2014, p. 101). These factors applied to both the Kenyan case and the U.S. case on the independence of auditors.

In the Kenyan case, additional threats impede the independence of the internal auditors. Mokono and Nasieku (2018) posit that the working environment of the auditors profoundly impacts their capacity to maintain auditing independence. The work environment is characterized by the competence of the auditors, availability of resources, financial funding, auditee preparedness, oversight capacity, technical and expert support, political interference and interests, legislations and legal framework, judicial systems, among others (Kirima 2016). The threats impede the successful realization of independent auditing processes in Kenya as compared to the United States (Onulaka et al., 2019).

Overall, the building capacity and capacities of the auditors through training and competence development are critical to enhancing independence. This creates the connotation of the value of auditing processes independence and the impacts they have on an organization (Jachi & Yona, 2019). The realization of organizational development is ascertained through good corporate governance practices. The prevalence of corruption, fraud, governance inefficacies, poor leadership, political interference result in the establishment of poor internal controls (Mokono & Nasieku 2018. The existence of poor internal control systems impedes the capacity to achieve the objectives of auditing and corporate governance practices. Thus, third world countries suffer enormously due to a lack of capacity and resources to attain internal audience objectives (Marques, 2019).

Moreover, Al Nawaiseh and Alnawaiseh (2015) assert that the auditor-client relationship profoundly affects the nature and independence of the audit processes. The economic and relationship bond influences the nature and independence of the auditing processes leading to diverse results. This is a significant threat that affects the conduct of audit activities impacting the erosion of corporate governance practices. Fashami (2019) indicates the independence of the auditor is fundamental to the realization of corporate governance principles of transparency and accountability (Jenkins & Stanley, 2019). In turn, transparency and accountability accumulate to the efficiency and productivity of the organization – including government and public enterprises (Quick & Schmidt, 2018).  Therefore, the integrity of the auditor’s function is fundamental in an organization and must be maintained for efficient and competitive operability.

Chapter 3: Recommendations: Mitigation to Factors Eroding Audit Independence

The independence of the auditor functional is paramount to the achievement of corporate governance principles. The main approach to mitigation of the auditor’s independence can be attained through “abiding with the rules of professional behavior, and exercise the suitable defensive procedures against the identified threats” (Al Nawaiseh & Alnawaiseh 2015, p. 141). The mitigation of factors that undermine the auditor’s independence require positive approach to the function through necessary support. The context of building capacity through continuous training is essential the enhance the ability of the auditors to deal with a diverse range of issues. Studies show the value supporting internal auditors to operate free void from political interferences, influence, and interests (Tepalagul & Lin 2015).

The assured way of ensuring the independence of the auditor’s function comprises of minimizing funding reliance from a power which you audit. Audits should never be directly involved in auditing of projects they were part of in the implementation stage (Hategan, 2019). The avoidance of conflict of interest is essential to ascertain objectivity in the auditing process. The audit processes should be devoid of bias and personal entangles that may negative influence the process (Emeka & Josephine, 2019).

In addition, the application of both internal and external auditing teams is necessary to advance corporate governance principles. The internal audit function should focus on the employees, departments, and financial reporting based on the set of standards and regulations established by the governing framework (Yazid & Suryanto, 2016). The external auditor function should complement the internal auditor function by identifying potential areas where the former missed. In the process, this culminates in the strengthening of the audit function and sealing of potential loopholes that may exist in either approach. Corporate governance principles are fundamental to promoting a culture of good governance principles including transparency and accountability (Roy & Saha, 2018). The application of the good governance principles is fundamental to the auditing processes both in Kenya and the United States (Omulaka et al., 2019).

 Limitations of the Study and Future Studies

The research is limited in the existence of materials that directly delve into the audit function in the two countries forming the paper’s analysis. The study on Kenya’s audit institutions and the role in enhancing corporate governance is minimal. It is fundamental to create vast understanding of the role and impact of internal audit functions in the country. The research is essential to inform the practices of independent audit functionalities and how they can be improved. The audit processes are marred with lack of capacity building in respective institutions in the country. The research on approaches to enhance capacity building through training and collaborative approaches is essential to the study. The reaction of different institutions tasked with regulation of audit processes in the country and evaluation of the value of political connections instead of adverse implications is missing. Thus, further study on the extensive nature of auditor function in Kenya affecting different organizations and the regulation processes is essential to add to the body of knowledge on the subject.

The research is limited in the extensive study on case studies and chow respective corporations utilize internal and external audit function to enhance corporate governance principles. This is fundamental to provide empirical evidence on the role of audit function to induce improved corporate governance practices. The organizations and public entities are subject to SEC financial reporting standards and regulation framework. The role of the SEC among other auditing and regulatory bodies is largely inadequate or missing. Further research on the audit function in the United States is essential to illuminate on the role of the SEC and other regulatory authorities.

Furthermore, the study shows the impact of audit function on improving good governance principles; transparency and accountability in the two countries. However, existing studies do not address the role of corporate governance in influencing audit function or directly enhancing the capacity for audit practices. There is need for further research to illustrate how the audit function relate with corporate governance and how they impact on the principles of transparency and accountability. Thus, future studies should emphasize on the impact of corporate governance to improvement of audit practices; internal control systems and external audit function.

Chapter 4: Conclusion

In conclusion, the research summarizes auditing as a significant practice essential for the enhance of the corporate governance. Auditing practices play a fundamental role in organizations set for excellence and success. This makes its adoption and implementation crucial in the contemporary world – applied in both the private and public enterprises. Different scholars emphasize on the value of auditing independence as a vital aspect towards of transparency and accountability principles in corporate governance practices. Further research show that auditing serves as a tool that establish the mechanism and framework for the realization of corporate governance practices and culture. Therefore, champion for its incorporation as essential part to enhance the competitiveness of organizations.

Additionally, auditing practices exist in the establishment of internal and external audit control systems. The independence of the audit approaches in an organization is vital to maintain the objectivity in pursuing its mandates. The disclosure of financial and non-financial information about the activities of public and private enterprises is fundamental in the contemporary world. The paper examines the audit independence in Kenya and the United States. The comparison evaluates the independent audit practices in developing and developed countries contributing to the body of knowledge. The audit independence in the U.S. is a serious business attributed to the availability of vast resources necessary to the achievement of its objectives. In countries like Kenya, audit independence is marred with diverse controversies and challenges that threaten its implementation and realization of corporate governance principles. Such include, bribery, fraud, corruption, governance failures, political interferences and interests, governance inefficacies, inadequate funds, among others. Thus, mark the point of distinction between the implementation of auditing practices in the U.S. and Kenya.

Finally, key threats to the functionality and independence of auditing practices as a measures to the realization of corporate governance principles of transparency and accountability include client importance, auditor tenure, non-audit services, client affiliation, size of the audit company, and corporate governance practices in the respective countries. There is profound for adherence to professional behavior and exercise of suitable practices to the threats exerted on the audit practices. As well, political interferences should be mitigated to avoid adverse implications on the functionality and responsibility of the audit processes. Therefore, developed and developing countries capacity to strengthening the capacity of the auditors is vital to maintaining their independence.

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