Rationale for use of forensic accounting in reducing audit expectations gap : a case for central Kenya cooperative societies
Abstract
This study examines the rationale for the use of forensic accounting as a mechanism for reducing the audit expectations gap. Fraudulent activities in Kenya have been responsible for widespread collapse and poor performance of firms, hence the potential use of forensic audit to detect frauds and narrow the audit expectations gap. The study tests empirically the three hypotheses that, first, the audit expectations gap exists in Kenyan audit engagements; secondly, the introduction of forensic audit will be an important mechanism in reducing audit expectations gap; and thirdly, the introduction of user education and better auditing and accounting standards are other important mechanisms for reducing the audit expectations gap. The study employs a descriptive research study design. The study uses a sample of 134 respondents, comprising of 118 cooperatives and 16 audit firms which were selected using a stratified systematic sampling approach. The data collection instrument preferred for the study was a questionnaire. The data was analyzed using inferential statistics such as Chi square statistics, f exact test, one sample and two sample tests. Study findings indicate that there is a significant difference in responses between auditors and cooperative members. These findings imply the existence of audit expectations gap in Kenyan audit engagements. In addition, t-tests indicate that forensic accounting, user education and better auditing standards are important mechanisms in reducing the audit expectations gap. The study contributes to literature on the discourse of the audit expectations gap which is scarce in Sub-Saharan Africa in general and Kenya in particular.
Description
Partial fulfillment for award of Master of Commerce
This study examines the rationale for the use of forensic accounting as a mechanism for reducing the audit expectations gap. Fraudulent activities in Kenya have been responsible for widespread collapse and poor performance of firms, hence the potential use of forensic audit to detect frauds and narrow the audit expectations gap. The study tests empirically the three hypotheses that, first, the audit expectations gap exists in Kenyan audit engagements; secondly, the introduction of forensic audit will be an important mechanism in reducing audit expectations gap; and thirdly, the introduction of user education and better auditing and accounting standards are other important mechanisms for reducing the audit expectations gap. The study employs a descriptive research study design. The study uses a sample of 134 respondents, comprising of 118 cooperatives and 16 audit firms which were selected using a stratified systematic sampling approach. The data collection instrument preferred for the study was a questionnaire. The data was analyzed using inferential statistics such as Chi square statistics, f exact test, one sample and two sample tests. Study findings indicate that there is a significant difference in responses between auditors and cooperative members. These findings imply the existence of audit expectations gap in Kenyan audit engagements. In addition, t-tests indicate that forensic accounting, user education and better auditing standards are important mechanisms in reducing the audit expectations gap. The study contributes to literature on the discourse of the audit expectations gap which is scarce in Sub-Saharan Africa in general and Kenya in particular.
This study examines the rationale for the use of forensic accounting as a mechanism for reducing the audit expectations gap. Fraudulent activities in Kenya have been responsible for widespread collapse and poor performance of firms, hence the potential use of forensic audit to detect frauds and narrow the audit expectations gap. The study tests empirically the three hypotheses that, first, the audit expectations gap exists in Kenyan audit engagements; secondly, the introduction of forensic audit will be an important mechanism in reducing audit expectations gap; and thirdly, the introduction of user education and better auditing and accounting standards are other important mechanisms for reducing the audit expectations gap. The study employs a descriptive research study design. The study uses a sample of 134 respondents, comprising of 118 cooperatives and 16 audit firms which were selected using a stratified systematic sampling approach. The data collection instrument preferred for the study was a questionnaire. The data was analyzed using inferential statistics such as Chi square statistics, f exact test, one sample and two sample tests. Study findings indicate that there is a significant difference in responses between auditors and cooperative members. These findings imply the existence of audit expectations gap in Kenyan audit engagements. In addition, t-tests indicate that forensic accounting, user education and better auditing standards are important mechanisms in reducing the audit expectations gap. The study contributes to literature on the discourse of the audit expectations gap which is scarce in Sub-Saharan Africa in general and Kenya in particular.
Keywords
Accounting fraud, Auditing, Forensic accounting