EFFECT OF AUDIT COMPETENCY ON THE PERFORMANCE OF MANUFACTURING COMPANIES IN RWANDA: CASE OF BRALIRWA PLC

Abstract

This study examines the impact of audit competency on the performance of manufacturing companies in Rwanda, with a specific focus on BRALIRWA PLC. Audit competency, which includes auditors' skills, knowledge, and expertise, is critical in ensuring accurate financial reporting, compliance, and overall corporate governance. By analyzing financial data and audit reports from BRALIRWA PLC over the past decade, and conducting interviews with key stakeholders, the study finds a positive correlation between audit competency and company performance. Descriptive research design was used and a population of 144 employees comprising of internal auditors, finance staff, accountants and Directors of Bralirwa Plc were targeted as respondents. Stratified sampling was adopted to select 106 respondents. Semi-structured questionnaire was used to collect data while reviewed audited financial reports was used to generate secondary data from Bralirwa Plc. In this research content validity was enhanced through the use of experts’ opinion in the area of study. A pilot test was conducted at Skol Breweries using 11 participants to determine the reliability of the questionnaires in measuring both independent and dependent variables, with a minimum acceptable threshold of 0.7. A pilot test was used as a quality control method to uncover any possible flaws or ambiguities in the data gathering process, allowing for necessary changes and improvements before proceeding to the full-scale data collection phase. Measure of central tendency and standard deviation aided in deriving fundamental material about nature of variables in a data set using descriptive statistics. SPSS version 25 was used to perform the analysis on the data that were gathered. The use of percentages, rates, and counts are all examples of descriptive statistical tests, whereas inferential statistical tests involve the use of multiple regression. A narrative framework was utilized to convey the conclusions from the thematic analysis of qualitative data, which included direct quotes from respondents. The results indicated a positive correlation between audit competency and performance, with a Pearson correlation coefficient of 0.240. This correlation was statistically significant at the 0.05 level, as indicated by the p-value of 0.014. The sample size for both variables was 104. This suggests that higher levels of audit competency are associated with better performance suggesting that greater independence of audit firms correlates with improved performance outcomes. In conclusion, this study underscores the significant role of audit competency in enhancing the performance of manufacturing companies like BRALIRWA PLC in Rwanda. The positive correlation found between audit competency and performance suggests that investing in auditor training and development can yield tangible benefits in terms of financial reporting accuracy, operational efficiency, and overall corporate governance. Further research should expand on longitudinal studies to track the long-term effects of audit competency on manufacturing company performance, considering variations across different sectors and regions. Additionally, exploring the integration of advanced technologies in audit practices could offer insights into enhancing audit effectiveness and efficiency in improving overall corporate governance and financial reporting accuracy.