Internal auditor’s independence, firm size and financial performance of deposit taking SACCOS in Kenya

Audits are essential because of the separation of ownership and control in modern economies. Shareholders or owners delegate resources to management to enhance their wealth under this arrangement. Therefore, they want the agents to provide authentic, precise, and impeccable reports. Therefore, the research evaluated the effect of auditor independence on the performance and the moderating effect of firm size on the relationship between auditor independence and the performance of deposit-taking SACCOs in Kenya. The study was based on Agency theory. The study used a descriptive survey research technique. The study used primary data collected using structured questionnaire. A sample size of 223 was selected by a simple random sampling method from a target of 504. Descriptive and inferential statistics were used to examine the data using the SPSS 26 software. The R2 of 0.512 suggests that 51.2% of the variability in the financial performance can be accounted for by the auditor's independence. Firm Size increased the R2 to 0.714 an indication that it is a significant moderator on the relation between internal audit independence and performance. For each one-unit rise in Sacco size, the impact of the Auditor’s Independence on financial performance increases by 0.222 units substantially (P=0.000). The study concluded that Sacco size has a significant moderator in this study. The study recommended that Saccos should tailor their strategies and internal audit processes based on their size. Larger Saccos may benefit from more robust auditor independence measures and closer scrutiny of financial performance indicators. Key Words:Internal Auditor’s Independence, Firm Size, Financial Performance, Deposit Taking SACCOS