Muturi, Jane Wanjiru2025-08-042025-08-042025-06https://ir-library.ku.ac.ke/handle/123456789/31055A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment for the Award of Degree in Masters of Business Administration( Accounting Option) of Kenyatta university, June 2025. Supervisor Grace KariukiSACCOs are important players in financial intermediation and a critical indicator of how well society will fare in the future. Deposit-taking SACCOs in Kenya have been facing challenges related to financial mismanagement, fraudulent activities, and inadequate internal controls, which have jeopardized the safety and stability of these institutions. The financial performance of the SACCO sector is very weak and spread weakness to other areas, the independence, composition and technical skills of the audit committees which has often been compromised by both internal and external forces of the institutions. This study therefore sought to establish the effect of audit committee on financial Performance of deposit taking Saccos in Nairobi City County, Kenya. The specific objectives were the effect of audit committee independence; audit committee expertise and audit committee diversity on the financial performance of deposit taking SACCOs in Nairobi City County, Kenya. The underpinning theories of the study included agency theory, institutional theory and stakeholder theory. In this study, descriptive research design was adopted. The target population of this study was all deposit taking SACCOs. The unit of observation was 43 licensed deposit taking SACCOs are operating in Nairobi City County. The unit of analysis was 258 respondents comprising of Chief Executive Officers (CEOs), and audit committee members. Stratified random sampling and basic random sampling methods were used to reach the sample size of 57 respondents. Questionnaires were emailed to the respondents in order to collect primary data. Using content validity, which was employed in this study, inference is made from test scores to a wide range of items that are comparable to the test. Cronbach alpha was employed in the study to assess reliability. Diagnostic tests like the Hausman, heteroscedasticity, multicollinearity, autocorrelation, normality, and stationarity/unit root tests were used in the study. Both descriptive and inferential statistics were used in this investigation. Measures of dispersion and central tendencies were used in the descriptive analysis of quantitative data. The central tendency was represented by the arithmetic average, while the standard deviation was used to measure the dispersion of data collected from interval and ratio scales. Inferential data were examined through multiple regression analysis. The study results were presented in tabular form. Ethical guidelines were strictly adhered to throughout the research, respecting the constitutional rights of each individual. Informed consent was obtained from participants, who were assured of the confidentiality of their responses and the data collected. The research revealed that the board ensures adequate representation of independent directors on the audit committee. It also highlighted uncertainty regarding whether mechanisms are in place to maintain the independence of committee members and if tenure limits effectively contribute to the infusion of new ideas and expertise. The study found that there is open and efficient communication between the audit committee and external auditors. However, it was noted that audit committee meetings are not held frequently. Furthermore, the research emphasized the critical role of the audit committee in managing risks related to the size of the SACCO’s loan portfolio. The study concluded that the expertise of the audit committee had the most significant impact on the financial performance of deposit-taking SACCOs in Nairobi City County, Kenya, followed by committee independence, meeting frequency, diversity, and diligence, with the latter having the least influence. Moreover, it was concluded that the significant relationship between audit committee and financial performance of Deposit Taking Saccos in Nairobi City County depends on size of the Sacco. The study recommended that there is need to strengthen audit committee independence by implementing fixed terms for committee members. To boost audit committee expertise, the study suggested that targeted training programs should be provided, focusing on the specific challenges and risks inherent in the SACCO sector.enThesis