The Effect of Financial Reporting Transparency on Audit Report Quality in Kenyan Public Universities

Abstract

This study examined the effect of financial reporting transparency on audit report quality in Kenyan public universities. The quality of audit reports in Kenyan public universities remains a concern due to inadequate financial disclosures, incomplete reporting, and limited accessibility of financial information, which undermine audit reliability and institutional accountability. Anchored on Agency Theory, the study adopted a positivist research philosophy and a cross-sectional research design. The target population comprised 175 respondents, representing five respondents from each of the 35 publicly chartered universities, including finance officers, internal auditors, accountants, and audit or finance committee members. Institutional census and purposive sampling techniques were employed. Four universities outside the target population participated in the pilot study. Primary data were collected using structured questionnaires, while secondary data were obtained from published audit reports and financial statements. Data were analysed using descriptive statistics, Pearson correlation, and simple linear regression. Findings indicated moderately high financial reporting transparency (M = 3.63, SD = 1.24) and a positive, statistically significant relationship with audit report quality (r = 0.612, p < 0.01; ? = 0.598, p < 0.05), explaining 37.5 per cent of its variation (R² = 0.375). The study concluded that transparent financial reporting facilitates reliable audit assessments by ensuring the availability of complete, timely, and accessible financial information. It recommends strengthening disclosure requirements and financial reporting practices to enhance audit credibility. The findings provide evidence to inform financial reporting policies, strengthen institutional oversight, and promote accountability in Kenyan public universities.