Audit Fees and Financial Performance of Deposit Taking Saccos in North RIFT, Kenya

The collapse of Deposit-Taking SACCOS and financial institutions in Kenya has caught the attention of the public and supervisory agencies to query the quality of audit. SACCO Societies Regulatory Authority on its inspection report indicated that SACCOs have been implicated in maladministration, scams and fraudulent dealings that led to their eventual collapse. SASRA also revoked licenses and rejected audited financial statements of some Deposit Taking SACCOs between 2013 to 2017.These financial scandals have been traced to poor audit quality. The study aimed to test the impact of audit quality on financial performance of Deposit-Taking SACCOs in North Rift Region, Kenya. The study sought to establish the influence of audit fees on financial performance; determine the influence of audit firm tenure on financial performance; establish the influence of auditor independence on financial performance and to determine the influence of audit firm experience on financial performance of Deposit-Taking SACCOs in North Rift Region, Kenya. This study was based on Agency theory, Role theory and the Concept of audit expectation gap, and Stakeholders’ theory. This research adopted descriptive cross-sectional research design. The target population for the study was 266 staff of all the 16 registered Deposit-Taking SACCOs in North Rift Region, Kenya. The sample size was 48 respondents comprising of chief executive officers, finance officers and internal auditors of the Deposit-Taking SACCOs selected using purposive sampling method. Primary and secondary data was used. Questionnaires collected primary data while audited annual financial statements of SACCOs provided secondary data. Inferential and descriptive statistics was used in analyzing data through SPSS version 25. It emerged that audit fees, audit firm tenure and audit firm experience have a significant positive influence on financial performance of Deposit-Taking SACCOs in North Rift Region, Kenya. Auditor independence had an insignificant positive influence on financial performance of Deposit-Taking SACCOs in North Rift Region, Kenya. The study concluded that audit quality has a positive noteworthy impact on financial performance of Deposit-Taking SACCOs in Kenya. The study recommends that regulatory authorities should formulate strict rules on audit fee charges and oversee the implementation of the same. Also, SASRA should ensure DT-SACCOs implement auditor rotation in compliance with auditing regulations and standards. DT-SACCOs to consider auditor’s professional competence and experience before initiating any audit engagement. Finally, DT-SACCOs and auditors should reinforce the professional code of ethics in regard to auditor independence in terms of familiarity between auditor and the client that may lead audit work into jeopardy.

Editorial

Welcome to the sixth issue of the Journal of Construction Business and Management. This issue will contribute scholarly discussion to the theoretical and methodical challenges impacting construction business management research and practice. The focus is to enhance the theoretical foundation for potential explanations to the various issues affecting construction operations towards assisting in the achievement of characteristics required for efficient construction organisations, projects, developments and resource use. The topics covered in this issue are related to corporate organisational effectiveness, quality management, maintenance performance, growth of the built environment professions, building regulations and contractor's risk attitudes. The issue contains six articles that were written by fifteen scholars based in Kenya, Malaysia, New Zealand, Nigeria and South Africa. The first paper by Ogbu and Olatunde evaluates the measures of corporate Organisational Effectiveness (OE) of Small and Medium-sized Enterprise (SME) contractors. The study found out that the SME contractors’ corporate OE can be measured by using corporate advantage, firm experience, certification and owner background. Also, a significant relationship was found between the OE of the firm and measures of project performance. They posit that better firm experience alone does not necessarily improve a contractor’s project performance. Paper two by Abdullahi, Bustani, Hassan and Rotimi assessed the quality management practices of Nigerian construction firms. Their study revealed that inspections and statistical quality control techniques are the most widely used quality management tools by construction firms in Nigeria. Abdullahi et al. conclude that there is a low uptake of quality management practice principles within construction organisations in Nigeria and proffered solutions to mitigate these challenges. The paper by Ajayi, Koleoso, Ajayi and Faremi evaluates the satisfaction ratings of the maintenance performance of prison facilities in South-Western Nigeria. The study revealed that prison staff were satisfied with the level of cleanliness, quality of water and control of ventilation; and partially satisfied with twenty-nine other criteria that were assessed. Ajayi et al. conclude that there is a need for continuous evaluation of prison facilities to ascertain their condition and performance levels. The fourth paper by Rwelamila and Manchidi examines the growth of professions as a consequence of the division of expert labour evolving to fill in knowledge gaps created by emergent social forces as other knowledge areas are rendered less relevant. The study shows how professional work negatively impacts on the delivery efficiencies in the project as a temporary organisation. Also, the study explains how boundary margins keep professions relational and how the dynamics of boundary work unfold in a territorial space in a project (meso) environment. The study by Omollo the author of the fifth paper investigates key barriers to the effective regulation of the building construction industry in Kenya. The article reveals that ineffective regulation of the construction industry was prompted by joint activities of building development contractors and the limitation of the National Construction Authority (the regulator). While building development contractors were found to be non-compliant with the building regulations, while the National Construction Authority fail to enforce the rules. Omollo concludes that regular monitoring and enhanced enforcement would promote compliance and sensitisation of contractors with applicable standards. Lastly, the paper by Taofeeq and Adeleke examines the factors affecting contractors’ risk attitudes in the Malaysian construction industry. Taofeeq and Adeleke found that the four leading factors influencing contractors risk attitude in the Malaysian construction industry are project-related, working capital, human-related factors and the external environment. The findings suggest that knowledge of these factors will help contractors’ decision-making processes in project management. Finally, I wish to acknowledge all authors who submitted papers for consideration, members of the JCBM Editorial Board and panel of reviewers for their support, timeous review and comments that have helped in defining and improving the quality of manuscripts published by the journal. We welcome feedback and suggestions from readers towards improving the quality of the journal and in maintaining the integrity of the findings published. Abimbola Windapo PhD Editor-in-chief

Relationship Between Organisational Effectiveness and Project Performance of SME Contractors: a Developing Country Perspective

Organisational effectiveness (OE) theory provides a veritable framework for examining organisational performance. This theory has, however, made a very little inroad into construction management literature, and there are limited discussions on the domains within which construction firms can measure their OE. Besides this, the extent to which corporate OE determines a contractor's project performance is not fully understood, primarily, in the small and medium-sized enterprise (SME) contractor context. Based on data from 53 projects in higher institutions in Nigeria, this study evaluated the measures of corporate OE of SME contractors and examined the contributions of the corporate OE of the firms to their project performance. By factor analysis, it was discovered that the SME contractors' corporate OE can be measured using corporate advantage, firm experience, firm certification and firm owner background. Using canonical correlation, a significant relationship was found between the OE of the firms and the measures of project performance. The analysis further revealed that project cost and quality performances are bettered by increases in firm certification and experience, although time performance tends to worsen as a result. In addition to identifying the domains for measuring an SME contractor's OE, this study shows that better firm experience does not necessarily improve a contractors' project time performance. Construction stakeholders and the public should beware of firms that only boast of an excellent corporate advantage and ownership by prominent persons in the society, but without adequate experience and certification. Keywords: Corporate Advantage, Firm Experience, Project Performance

Friend or foe? The effects of patent attorney use on filing strategy vis-a-vis the effects of firm experience

Purpose In the intellectual property (IP) and management literature, the question of how external patent attorneys impact patent filings has been understudied. The purpose of this paper is to advance this area of research by examining how the use of external patent attorneys influences the patent filing strategies of firms and what impact firms’ level of experience with the exclusive use of in-house resources has on filing strategies. This study, thus, provides insights into the strategic dimension behind patent filing, a process which is affected by patent attorneys’ work and decision-making processes. Design/methodology/approach The econometric analysis is based on a patent database of 922,553 patents which is combined with an EPO patent database covering applications from 1990 to 2010. The authors test the hypotheses for this study using patent indicators addressing the impact of in-house firm experience vs the use of external patent attorneys on firm’s filing strategy. Findings This research finds empirical evidence that external patent attorneys’ work has an effect on patent scope, international scope, and patenting speed. Moreover, it can be shown that external patent attorneys have a positive impact on most filing dimensions, such as patent scope, international scope and the Patent Cooperation Treaty option, whereas the level of in-house firm experience has a negative impact on most filing dimensions. This implies that external patent attorneys seem to pursue a “maximization approach” while experienced firms seem to pursue a more differentiated approach to filing patents, for instance, drafting narrower and more focused patents. Practical implications The study suggests that effective filing strategies require an integrated approach between diverse IP stakeholders. More particularly, filing strategies should be communicated and aligned between all actors, including external patent attorneys in order to achieve the targeted patenting output. Originality/value The current study develops a patent filing typology, which accounts for patent attorneys’ decision options. In providing insights into patent attorneys’ work and their impacts on intellectual property rights management, the study is a useful complement to prior research, which has predominantly focused on applicants or examiners.