External audit as a corporate governance tool in mitigating corporate scandals and public entities’ decay. a case of Zimbabwe electricity supply authority (ZESA) holdings

Abstract

Terrible and unethical practices have occurred to the way business is conducted under the guise of parastatal status. Serious damage has been done to ethical codes of conduct held by once-trusted business professionals in state owned enterprises in Zimbabwe. Increased cases of corporate scandals in public entities and misgovernance has led the public to believe on an assertion “external audit has become a formality rather than a corporate governance tool to satisfy various interested stakeholders”. The research’s main objective was to evaluate the effectiveness of the External Audit function as a corporate governance tool in state owned enterprises and parastatals (SOEs). The research applied the mixed research methods and a combination of descriptive and exploratory research design was used. Target population comprise of 1000 ZESA employees in Harare province. Purposive sampling was used to select a sample size of 278 respondents from the target population broken down as 3 Executives, 90 Top Managerial Staff, 150 Middle Managerial Staff and 35 Lower Managerial Staff. This research was done using semi-structured questionnaires plotted on a 5-point Likert Scale and in-depth interviews to answer research questions on External Audit as a corporate governance tool in mitigating corporate scandals and public entities’ decay. SPSS was used for interpretation of data gathered using Pearson’s Chi-Square to determine relationships. Data was presented as summaries, bar charts, tables and pie charts. The research found out that External Audit is not effective as a corporate governance tool in mitigating corporate scandals and public entities’ decay. The research recommended that the government should stop political interference in the running of state entities, auditors should treat financial and pure governance matters separately before, during and after the audit process and those charged with governance should jealously follow up and implement recommendations made by external auditors timeously.